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Collective Bargaining for Farmers 
 
 HEARING 
 
 BEFORE TJBB ' 
 
 COMMITTEE ON THE JUDICIARY 
 
 HOUSE OF REPEESENTATIVES 
 
 SIXTI-SIXTH CONGRESS 
 FIRST SESSION 
 
 ON 
 
 H. R. 7783 
 
 i 
 
 Serial 7 
 
 OCTOBER 28, 29, 30, and 31, 1919 
 
 ¥^ 
 
 53962 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 
 1919 
 
CONTENTS. 
 
 Page. 
 
 Hon. Hugh S. Hersman, Member of Congress from California 3 
 
 Hon. Henry F. Barbour, Member of Congress from California 8 
 
 Mr. .John D. Bliller, Washington, D. C - 12 
 
 Mr. Aaron Saplro, San Francisco, Calif 28 
 
 Mr. A. T. Sniythe, Charlestown, S. C, representing the South Carolina 
 
 Produce Association 57 
 
 Mr. ,Tohn D. Miller (continued) 62 
 
 Mr. E. W. BaUlerson, Philadelphia, Pa., representing the Interstate Milk 
 
 Producers' Association 91 
 
 Mr. Charles A. Ljman, secretary of the National Board of Farm Organi- 
 zations 94 
 
 Mr. .Joseph E. Hall, Caribou, Me 97 
 
 Mr. Thomas C. Atkeson, representing the National Grange, Washington, 
 
 D. C 100 
 
 Hon. Dick T. Morgan, Member of Congress 120 
 
 Mr. Benjamin C. Slarsh, Washington, D. C 123 
 
 2 
 
 
COMMITTEE ON THE JUDICIARY. 
 
 House of Repeesentatves. 
 
 sixty-sixth conqkess. 
 
 ANDREW J. VOLSTEAD, Minnesota, Chairman. 
 
 DICK T. MORGAN, Oklahoma. EDWIN Y. WEBB, North Carolina. 
 
 GEOEGB S. GRAHAM, Pennsylvania. ROBERT T. THOMAS, JE.» Kentucky. 
 
 LEONIDAS C. DYER, Missouri. WILLIAM L. IGOE, Missouri. 
 
 JOSEPH WALSH, Massachusetts. WARREN GARD, Ohio. 
 
 C. FRANK REAVIS, Nebraska. RICHARD S. WHALEY, South Carolina. 
 
 JAMES W. HTJSTED, New York. THADDEDS H. CARAWAY, Arkansas. 
 
 GILBERT A. CDREIE, Michigan. M. M. NEELY, West Vlrgina. 
 
 DAVID G. CLASSON, Wisconsin. HENRY J. STEELE, Pennsylvania. 
 
 W. D. BOIES, Iowa. 
 
 CHARLES A. CHRISTOPHBRSON, South 
 
 Dakota. 
 RICHARD YATES, Illinois. 
 WELLS GOODYKOONTZ, West Virginia. 
 
 W. C. Prhds, Clerk. 
 
 COLLECTIVE BARGAmiNG FOR FARMERS 
 
 Serial 7. 
 
 Committee on the Judiciary, 
 
 House of Representatives, 
 
 Tuesday, Octoier 28, 1919. 
 The committee met at 10.30 o'clock a. m., Hon. Andrew J. Vol- 
 stead (chairman) presiding. 
 
 The Chairjian. The committee will come to order. We will hear 
 you now, Mr. Hersman. 
 
 STATEMENT OF HON. HUGH S. HERSMAN, A REPRESENTATIVE 
 IN CONGRESS FROM THE STATE OF CALIFORNIA. 
 
 Mr. Hersman. Mr. Chairman and gentlemen, on July 24, of this 
 year, I introduced H. R. 7783. On the same day Mr. Barbour of 
 California introduced a bill that has a wording almost similar to 
 this bill. We had in view the same objects and were inspired by the 
 same desires ; that is, to clarify the situation of the farmers in regard 
 to collective bargaining. 
 
 I understand from the chairman that there are a number of mat- 
 ters that probably the committee will take into consideration and 
 
4 COLLECTIVE BARGAINING FOR EABMERS. 
 
 report out in one committee bill, and that is perfectly satisfactory 
 to myself, and I am sure it will be satisfactory to those who are 
 interested in the same bill. What we wish to do is to clarify the 
 situation as to the status of the farmers of this country. 
 
 This bill was introduced after many conferences with the farm 
 organizations of the East, and we got as nearly as possible the ideas 
 of the cooperative organizations of the West, as the long distance 
 would permit at the time I introduced the bill. 
 
 Mr. Sapiro, of California, who represents seven or eight of our co- 
 operative associations in California, is here to-day, and in due time he 
 will present to you the particular problems that affect our coopera- 
 tive associations of the West, that may not be entirely covered by 
 this bill. The chairman has asked him to present his ideas in con- 
 crete form upon this matter. 
 
 I have thought it would probably not be inappropriate for me 
 to make certain observations along the general line of farm asso- 
 ciations and then leave the further discussion of these problems to 
 gentlemen who are very much more competent to deal with them 
 in a technical way than I am ; there are certain phases of the coopera- ~ 
 tive problem that particularly impress me — it is not necessary for 
 me to call your attention to the importance of agriculture to the 
 prosperity of this Nation or to any nation. You are all familiar with 
 the history and the cause that brought about the fall of the great 
 empires of the world; able historians attribute their downfall to 
 the decay of their agricultural interest. I take it that a nation's 
 greatness and even its life depends upon having a contented and 
 prosperous rural population. The red flag never waves in a farm- 
 er's home. He is part of the nation; he owns his home; he is inter- 
 ested in preserving his possessions. Neither is he a disturbing 
 factor in industry. 
 
 I can even go so far as to say — and I believe — ^that the greatness 
 of any nation is in that altar erected in every farmer's home to the 
 glory of God and to the preservation of this nation. 
 
 The farm must produce a surplus of food supplies and it must 
 produce a surplus of healthy men, that this Nation or any other 
 nation may succeed and prosper and live. There are thirty-five to 
 forty millions of our population that are directly interested in farm 
 products and who live on the farm. In reporting out a bill that 
 affects thirty-five or forty million of the people, you certainly have 
 a most serious duty to perform not only to this generation but also 
 to the future generations. I know that these facts are well known 
 to you and that your committee is deeply interested in securing the 
 kind of laws that will more nearly accomplish these general pur- 
 poses — the upbuilding and the preservation of our great agricultural 
 interests. 
 
 I thought it would not be amiss in just a few words to call your 
 attention to cooperative marketing associations and why they are 
 necessary. 
 
 Mr. Morgan. Would it interfere with your line of thought if I 
 would ask you a question right there while it is on my mind? - 
 
 Mr. Hersman. No. 
 
 Mr. ]MoRGAx. Would this bill permit persons who are not farmers 
 to own stock in these selling corporations? 
 
]Mr. Hersmax. I am going to ask you to let one of the gentlemen 
 that will follow me bring that our clearly. They have that in mind 
 and they will bring it out more clearly than I can. 
 
 Mr. Morgan, ^''eiy well. 
 
 Mr. Hersjian. I will say that it might not be taking up too 
 much of 3'our time in a few words to sketch the importance of co- 
 operative associations and what they mean. The farmer realized 
 that it was best for himself and the consumer to have the food supply 
 of the Nation out of the hands of the speculator and the gambler. 
 You know as well as I do that the farmer has never, up to the 
 last few years, had a word to say about the price that he should 
 sell his product for. They have been in the hands of the speculator 
 since the foundation of this Government, and they have been in 
 the hands of the gambler in food supplies for all time. The farmer 
 is trying to solve their problem. He is trying to close the gap 
 between tlie producer and the consumer ; he is trying to cut out the 
 lax in transit — that is. the cost between him and the consumer. 
 Statistics show that of every $3 that the consumers of this Nation 
 pay for their food supply, the farmers get $1 and the middleman, 
 the speculator, and the gambler, get $2. The farmer is trying to 
 solve that problem. He had never been able to do it until he learned 
 how to form cooperative associations and to operate through co- 
 operative associations. He is trying to standardize his product and 
 he is trying to advertise those products. He is trying to take his 
 products to the consumer under his own name, greatly to the benefit 
 of the consumer and greatly to his own benefit. He must be organ- 
 ized as a cooperative association or he can not do those things. 
 
 Individually the farmer has no power of collective bargaining, 
 but he has the power of bargaining when he is organized. In 
 some of our western associations they have spent in three years over 
 $1,500,000 in advertising. And you know, and I know, that every 
 modern business must standardize their product and must advertise 
 their product to be successful. The farmer is trying to solve_ a few 
 of those fundamental things that I have so hastily sketched to you, 
 and he is doing far more than that ; he is increasing production at a 
 tremendous rate. If the farmer is successful, increased acreages at 
 once is the result; the cooperative association has wonderfully in- 
 creased production. I could go into this subject and show you that 
 as a direct result of the cooperative movement the planted acreage 
 has increased 200 and 300 per cent. 
 
 Now, I say the farmer, through the cooperative association, is try- 
 ing to cut this gap. He is trying to come closer to the consumer. 
 He is doing it, and the only way he has ever succeeded in doing it is 
 by this means. 
 
 Congress has realized that it was necessary in the interest of the 
 public good to allow farmers to do collective bargaining. In the 
 Clayton Act, section 6, they use these words : 
 
 That the labor of a human being is not a commodity or an article of com- 
 merce, and nothing contained in the antitrust laws shall be construed to forbid 
 the existence and operation of labor, agricultural or horticultural organizations 
 instituted for the purpose of mutual help and not having capital stock and not 
 conducted 'for profit. 
 
 The Congress tried to help the farmer solve this problem, but 
 they inadvertently used these words "not having capital §tock." 
 
6 COLLECTIVE BARGAINING POK PAEMEES. 
 
 Congress did not realize that it was as necessary for the farmer to 
 have capital stock as it is for any other business in the world to have 
 capital stock. No business can operate without capital stock, and I 
 take it that unintentionally they tied the hands of the farmer m 
 trying to aid him. ' 
 
 Mr. Steele. Is it your purpose to have capital stock transferred 
 to others outside of farmers? 
 
 Mr. Hjeesman. No, sir. You have ever since the passage of this 
 Clayton Act, tried to make temporary laws to protect the farmer in 
 this one fundamental collective bargaining. In a bill (H. R. 8624) 
 introduced and passed by the House and Senate for the distribution 
 and control of food products, fuel, and other things, you make it un- 
 lawful for a person willfully to destroy — I am not going to read that 
 whole section, but just a part of it — to willfully destroy any food 
 product, waste any food product, to hoard, monopolize and charge 
 unreasonable rates, conspire or combine, agree or arrange with any 
 other person to restrict the supply; to charge excessive prices — you 
 go on to say that that is unlawful and then immediately you go on 
 and say: 
 
 Provided, That this section shall not apply to any farmer, gardener, horti- 
 culturist, vineyardist, planter, ranchman, dairyman, stockman, or other agri- 
 culturist with respect to the farm products produced from lands owned, leased, 
 or cultivated by him : And provided, That nothing in this act shall be construed 
 to forbid or make unlawful collective bargaining by any cooperative association 
 or an association of farmers, dairymen, gardeners, or other producers of farm 
 products with respect to the farm products produced or raised by its members 
 "upon land owned, leased, or cultivated by them. 
 
 You say it shall be unlawful to do all these things ; that it is against 
 public interest to do them ; but you say that the farmer can do them. 
 You turn right around and say that the farmer has the right to do 
 them. Now, you know, and every man who voted on that bill knows, 
 that the farmer is not going to do any one of them — that he is not 
 going to destroy, that he is not going to waste, that he is not going 
 to hoard, that he is not going to charge unreasonable prices, because 
 he can not. He can not conspire, combine, or agree. You know that, 
 and that is the reason you passed this temporary law. 
 
 Only a few weeks ago we passed the deficiency appropriation bill 
 appropriating $200,000 for the Attorney General to prosecute vio- 
 lators of the antitrust laws, and you go on and say that no part of 
 this $200,000 shall be used by the Attorney General to prosecute 
 the producers of farm products and associations of farmers who co- 
 operate and organize in an effort and for the purpose of maintaining 
 fair and reasonable prices for their products. You have done every- 
 thing that you could, when you found that your laws were inade- 
 quate to protect the farmers of this Nation, by giving these tempo- 
 rary laws, in the hope that he would not suffer. Now we are coming 
 before you to ask you to clarify the situation of the farmer, so that 
 he will know definitely where he is; so it will not be necessary to 
 write on every bill a rider in order to give proper protection to farm 
 organizations. 
 
 I have had the opportunity since I have been in Congress to ob- 
 serve how the present law operates. The California Raisin Associa- 
 tion has been cited to appear before the Attorney General to show 
 cause why it should not be prosecuted criminally. That association 
 
COLLECTIVE BARGAINING EOK FARMERS. * 
 
 sent three representatives from California, and the department did 
 not do anything. They have recently been cited, to appear before the 
 Federal Trade Commission to show cause why they should not be 
 prosecuted. That means another long journey of over 3,000 miles by 
 the Cooperative Farmers' Association, and nothing will be done to 
 them. 
 
 The farmer is simply asking, and he has the right to ask, that this 
 Congress meet the question fairly — to say whether he has the right 
 to do collective bargaining or whether he is violating the law. 
 
 Mr. Walsh. The idea of their being permitted to do collective bar- 
 gaining is so that they may get better prices for their products ? 
 
 Mr. Heesman. Yes, sir. 
 
 Mr. Morgan. Is that the main proposition, or is it to reduce the 
 cost of transportation and distribution and thus, perhaps, get a less 
 price but more profit, with the object of helping the consumer as 
 well as Ihe farmer? 
 
 Mr. Hersman. I will say this, that a larger increased price to the 
 farmer, which he is entitled to, increases production tremendously, 
 and has already done so. I say further that he must have an increase 
 in price for his product to advertise his goods and to standardize his 
 goods. 
 
 Mr. Morgan. You want this organization for the purpose of get- 
 ting higher prices for the farmers, and the real object is not to cut 
 out the extra cost of distribution? 
 
 Mr. Hersman. The real object of a farmers' association, as I have 
 tried to point out, is this : To cut down the $2 between the farmer and 
 the consumer. There is $2 of the $3 that the consumer pays for his 
 product — two of those dollars go to the middleman, the speculator, 
 and the gambler. 
 
 Mr. Walsh. How does this proposed bill prevent that? 
 
 Mr. Hersman. Prevent the speculator and the gambler ? 
 
 Mr. Walsh. Prevent his getting the $2. 
 
 Mr. Hersman. It gives the farmer the opportunity, which he has 
 never had before, of handling his own products. If you were as 
 familiar with the situation as I have been — the farmer situation — ^he 
 never has been able to say what he shall sell his goods for. The 
 speculator comes around and says, " I will give you so and so," and he 
 takes it, the $1, and then the middleman takes $2 to bring it to the 
 consumer, and the consumer pays $3. Cooperative associations have 
 greatly improved the conditions of the farmer, and even under the 
 high prices they have never raised them unduly to the consumer. 
 
 Mr. Morgan. Now, do you think that the wheat farmers — ^most of 
 our farmers are wheat farmers — all over the United States ought to 
 be allowed to organize into a corporation and have one single wheat 
 corporation? Do you think that the wheat farmers of the United 
 States ought to be organized into a single corporation, through which 
 and by which the entire wheat product might be distributed and sold ? 
 
 Mr. Hersman. I will answer that by referring you to the food- 
 control act. You have said that the farmers have a right to destroy ; 
 you have said the farmers have a right to waste ; you have said the 
 farmers have a right to hoard by your own laws, laecause you know 
 he wouldn't do it. 
 
 Mr. Morgan. Now, I asked you a straight question. 
 
 Mr. Hersman. I say he has a perfect right to do it. 
 
» COLLECTIVE BARGAINING FOE FAEMEES. 
 
 Mr. MoEGAN. I am not saying what I am in favor of ; I am simply 
 getting your idea of how vou think this ought to go. 
 
 Mr. Heesman. I think the farmers of this Nation have a perfect 
 right to organize, but I will point out to you this : That it would be 
 impossible for the farmers to secure a harmful monopoly in that 
 case, because vou know as well as I do that the price of wheat is con- 
 trolled by the world-wide conditions; we are asking that he have the 
 right to do collective bargaining. The minute he abuses this privi- 
 lege or threatens to restrict commerce our present antitrust laws will 
 come in and prevent him. We are only asking simply and solely 
 that he have a right to do collective bargaining. He can not bargain 
 alone, and we ask you to let him bargain with his fellows for the 
 mutual benefit of himself and of the consumers always. 
 
 Mr. Morgan. You place no limitation on it in your bill, as I under- 
 stand it. All the raisin growers, for example, might be in one asso- 
 ciation. 
 
 Mr. Hersjian. We place a limitation upon him by our very laws, 
 because you say he can not have an unrestrained monopoly to operate 
 his business in restraint of trade. 
 
 Mr. Walsh. Are the farmers suffering for lack of this legislation? 
 
 Mr. Heesman. The farmers are suffering for the lack of this legis- 
 lation, Mr. Walsh, because in every bill you realize, and every 'man 
 in Congress has realized, that they have tried to give him this pro- 
 tection of collective bargaining. 
 
 Mr. MoEGAN. Is that in good faith or just as a compliment to the 
 farmer ? 
 
 Mr. Heesman. I wouldn't reflect on the Congress of the United 
 States by saying that it was not done in good faith. 
 
 Now, Mr. Chairman, there are gentlemen here very much more 
 competent to continue this discussion than I am. I am going to ask 
 that you call on these gentlemen in the following order: Mr. Bar- 
 bour is here from California and is very much interested in this 
 bill. I would like to have Mr. Barbour say something now if he 
 desires. 
 
 STATEMENT OF HON. HENKY E. BAKBOUR, A REPRESENTATIVE 
 IN CONGRESS FROM THE STATE OF CALIFORNIA. 
 
 Mr. Barboue. Mr. Chairman, there are some things. I might say 
 in regard to this bill, but the officers of the California Associated 
 Eaisin Growers, which is vitally affected by this legislation, are to 
 appear here in Washington again next month before the Federal 
 Trade Commission, and they have asked for the privilege of being 
 heard by the committee. They were here in September and appeared 
 before the Department of Justice to show cause why they should not 
 be indicted and prosecuted. The Department of Justice has taken 
 no action up to the present time. I was present at those hearings, 
 and I am absolutely satisfied that they made out a convincing case! 
 I never heard a clearer case in any court room, or for that matter 
 anywhere else. The matter has been referred to the Federal Trade 
 Commission, and they are again ordered to come back to Washing- 
 ton from California. They will be here next month. Now, they have 
 got to show cause to the Federal Trade Commission why they should 
 
< COLLECTIVE BARGAINING FOR FARMERS. 9 
 
 not be indicted. I have already spoken to the chairman about the 
 matter. If those men can be hea,rd, they can present the matter much 
 more clearly and in detail than I can, although I am familiar with 
 the California Associated Raisin Co., having represented the organi- 
 zation and having handled a large part of the legal work when it 
 was organized. But these men are practical men, and I assume that 
 the committee wants to hear more from the farmers and not' so much 
 from the lawyers. 
 
 I would offer this suggestion though, Mr. Chairman, that if it is 
 possible for the committee to take early action on this measure, and 
 the conuiiittee looks with favor upon this proposed legislation, it will 
 be of great assistance to our people in California, because this is the 
 ■second time — next month will be the second time within about six 
 weeks that they have been brought over here to show cause why 
 they should not be indicted. It is getting to be a pretty serious 
 proposition with us. 
 
 Mr. Httsted. What is the difference in principle, if there is any, 
 hetween a manufacturer doing this thing and a farmer doing it ? Is 
 there any difference whatever? 
 
 Mr. Barbour. I think so. I don't think it is possible for the 
 farmers to combine in restraint of trade like it is for the manufac- 
 turers. As Mr. Hersman has pointed out, Mr. Husted, these organ- 
 izations have resulted in greatly increased production. Now the 
 California Associated Raisin Growers' Co. was organized in the 
 year 1912 — we started the organization then, and it was completed 
 in the year 1913. At that time the production of raisins in Cali- 
 fornia, which produced all of the raisins produced in this country^ — • 
 and they are practically all produced in the district which I repre- 
 sent — was about 116,000 tons a year, and each year they had a big 
 hold-over crop to meet the crop of the next year. Now, at that time 
 the growers were not marketing their own products; they were in 
 the hands of speculators who apparently, or theoretically, or on the 
 surface of things, bid agaiui^t each other, but who practically agreed 
 on the price they would offer the grower, and the grower had to 
 take it or leave it. 
 
 Mr. Htjsted. I am in entire sympathy with the idea, but I wanted 
 to find out why, if it is applied to the farmers, why it should not 
 iilso be applied to the manufacturers. 
 
 Mr. Barbour. You mean the exception? 
 
 Mr. HusTED. Yes ; why they should not have the benefit of it. I 
 am entirely in sympathy with the idea that the farmers should 
 have it. 
 
 Mr. Barbour. I think there is no similarity in the conditions under 
 which they work and under which they produce. 
 
 Mr. HusTED. What is the difference in principle? If collective 
 bargaining is a bad thing in principle, why isn't it just as bad a 
 thing for the farmers as it is for the manufacturers ? 
 
 Mr. Barbour. Because the result of this legislation will be bene- 
 ficial to the country at large, if applied to the fanner. As I started 
 to point out, it will increase production, and has increased produc- 
 tion, and it will result in the product going to the consumer cheaper 
 and in better condition than it used to go when there was this com- 
 petitive bidding among the so-called packers out there. Of course, 
 
10 COLLECTI\TE BARGAINUvTG FOE PAKMEES. 
 
 that opens a large field, I realize, Mr. Husted, but to give my answer- 
 briefly, the conditions are so dissimilar that the same rule should 
 not be and can not be applied to the manufacturer and the farmer. 
 
 Mr. Morgan. Mr. Barbour, as I understand it, one of your reasons 
 in favor of this bill is that it will increase production? 
 
 Mr BAEBOtTR. It has increased pi-oduction, Mr. Morgan — organiza- 
 tion has. 
 
 Mr. MoEGAN. The question is, would that really always work out 
 in that way? For instance, I was in the South last April and I 
 noticed all thi-ough the papers there that they were carrying on an 
 agitation to organize the cotton farmers, not for the purpose of 
 increasing the production of cotton, but for the purpose of decreas- 
 ing it. That is apparently what they were using their organization 
 for. Now, isn't there danger that "if the farmers in general, the 
 wheat farmers, the corn farmers, the live-stock producers, each 
 organized separately, and each one has an organization, isn't there 
 danger that they would understand that principle that reduction 
 of production would give them more profit ? 
 
 Mr. Barbour. I don't think so, Mr. Morgan, for this reason: If 
 we are producing, say, raisins — that are produced in rny district— 
 and the farmer is getting a good price for those raisins, there is 
 no way of keeping other farmers or other individuals from planting 
 vineyards. They may have as many organizations or as strong an 
 organization as they can, but there are thoiisands and hundreds of 
 thousands of outsiders who would see a chance to make a profit, and 
 you can't prevent them from setting out vineyards. 
 
 Mr. Morgan. That was the argument of the trusts, you know. 
 They claimed that if the trusts made big money there would be other 
 trusts organized, and in the end it would greatly help the people. 
 
 Mr. Igoe. Under this bill, as I understand it, the producers might 
 be shareholders in a large organization, and anything then that 
 the producers would do, or the managers would do, would be out- 
 side of the law. Now, might it not be likely that the effect would 
 be that those who are not in such associations would be at a disad- 
 vantage in the same way that in the manufacturing industry those 
 who are not in the combination or trust are at a disadvantage? 
 
 Mr. Barbotte. I don't think so. I think the organization would 
 stabilize the price of the product, ao that the outsider would, and 
 our experience has been in California that the outsider has profited 
 more than the insider. 
 
 Mr. Igoe. But this is a very large proposition and extends into 
 the whole field of production and it practically compels everyone to 
 join, because it goes to the marketing and to all the processes that 
 may be necessary between production and final sale to the consumer, 
 no matter how many different steps may be necessary to bring it 
 to the point where it can be consumed. 
 
 Mr. Barbour. But I think our experience in California answers 
 your question. The organization each year fixes a price to the 
 grower members, you see, that it is going to pay them for their 
 product. Now, there are a lot of fellows skirmishing around on 
 the outside, many of them with large capital, who are packing and 
 marketing raisins. They go out and attempt to keep a certain num- 
 ber of men out of the organization, because the growers contract 
 
COLLECTIVE BARGAINING FOE FAKMBES. 11 
 
 with the organization provides that they shall deliver their crops to 
 the organization. They go out and one of their methods is to con- 
 tinually offer a little higher price to the outsider in order to keep 
 him out of the association. There is competition of the most strenu- 
 ous i kind between the organization and the outsiders, and really the 
 outside fellow, if he stays out, while he brings down on his head a 
 certain amount of unpopularity in the community, nevertheless if 
 he has got the backbone to withstand that, he makes more for his 
 product than the man on the inside. That has been our experience 
 out there during six or seven years of organization. 
 
 Mr. Igoe. All 3'ou have to do is to organize an association big 
 enough and give each fellow a share of stock, and you can manipulate 
 production to your heart's content, or you can let it go. Under this 
 bill there is nothing in the world to prevent this association from 
 doing everything it jDleases that might be criminal under the regu- 
 lar statutes, and it might be just as extensive and more extensive 
 than anj' combination that has ever been formed. 
 
 Mr. Barbour. I think the conditions in farming are such that it 
 is impossible for that situation to result. 
 
 Mr. Gabd. I suppose the conditions in farming, general farming, 
 the production of grain, wheat, and corn are not similar to the con- 
 ditions pertaining in the growing of raisins, are they ? 
 
 Mr. Barbour. No; I will say this — and I want to be perfectly 
 frank with the committee — that nature has given practically to the 
 congressional district that I represent a monopoly of the raisin- 
 growing industry ; not an entire monopoly, but the great percentage 
 of the raisins produced in the United States are produced right 
 there. But there are lying idle and vacant out there to-day thou- 
 sands and thousands of acres that can still be planted to raisin 
 vineyards. There is no limit almost to the amount of raisins that 
 we can produce in this section of the country. 
 
 I started to say something a moment ago in regard to the in- 
 crease of production. 
 
 Mr. Gard. What I have in mind is whether your proposition pre- 
 sents conditions of local application or general application to the 
 entire farming industry. 
 
 Mr. Barbour. Well, I will confess I am not— I don't feel 
 competent to discuss the situation from the standpoint of a general 
 farmer, because I am a lawyer. While I am familiar with the raisin 
 situation and- know it pretty thoroughly, when it comes to wheat- 
 growing in the Middle West and dairying in the East, there are 
 other gentlemen here who can probably discuss that much more in- 
 telligently than I could. 
 
 Mr. Steele. Under the phraseology of this act, would it be your 
 V bought that a corporation organized under its terms would be still 
 under the jurisdiction of the Federal Trade Commission as to un- 
 fair competition? 
 
 Mr. Barboue. I think so. 
 
 Mr. Steele. The language seems to be so general as to exclude it 
 from the operation of the law. 
 
 Mr. Barbour. The purpose of the legislation is to give the farmer 
 the opportunity simply to organize and sell his product collectively. 
 Now, if he puts on an unconscionable price or an unfair price, there 
 ought to be some Government authority that will prevent him from 
 
12 COLLECTIVE BARGAINING FOE FAKMEES. 
 
 charging such unfair price. That is, only right and honorable and 
 honest, and the farmers of my district are not asking for the priv- 
 ilege of charging unfair prices. They want a fair price and they 
 never did have it until they organized. They vs^ere the prey of the 
 packers out there. And, as I started to say, when they organized, 
 there were 116,000 tons of raisins produced annually in California, 
 and to-day, six or seven years later, with a crop 25 per cent short, 
 they are producing 175,000 tons of raisins, and the president of the 
 association stated to me when he was in Washington last month to 
 appear before the Department of Justice, that they could sell 50,- 
 
 000 tons more if they had produced them. They had orders for that 
 many more and could not fill them. 
 
 Mr. Hersman. The next witness will be Mr. Miller, and he will 
 tell you who he represents. He represent a large deputation of east- 
 ern farmers. Then after that I will ask you to hear Mr. Sapiro, who 
 represents eight cooperative associations, and will present to you his 
 ideas. 
 
 STATEMENT OF MR. JOHN D. MILLER, REPRESENTING THE 
 NATIONAL BOARD OF FARM ORGANIZATIONS, WASHINGTON, 
 D. C. 
 
 The Chairman-. Please state your full name and just whom you 
 represent, Mr. Miller. 
 
 Mr. Miller. My name is John D. Miller, and my Washington 
 address is the office of the National Board of Farm Organizations, 
 1731 I Street NW. My home address is Susquehanna, Pa. Send 
 messages to 303 Fifth Avenue, New York City. 
 
 Mr. Morgan. Excuse me just a moment there — who are the of- 
 ficers of this national organization? 
 
 Mr. Miller. The National Board of Farm Organizations? 
 
 Mr. Morgan. Yes, sir 
 
 Mr. Miller. I have here a letterhead of that organization which 
 
 1 will be glad to file, if you care to have it. There is a long list of 
 them. 
 
 Mr. Morgan. I would like to have that filed. 
 
 Mr. Miller. I will be glad to file it. 
 
 Mr. Morgan. Can't you tell us something about what this or- 
 ganization is? 
 
 Mr. Miller. Yes, sir. The organization is not one that has in- 
 dividual members. It is an affiliation of organizations. 
 
 Mr. Morgan. Now what organizations are affiliated? 
 
 Mr. Miller. It is an affiliation of great farm organizations. 
 Among the organizations there are some 14 or 15 of them which 
 appear on the letterhead. 
 
 Mr. Morgan. What are some of the leading ones? 
 
 Mr. Miller. Among the leading ones are the Farmers' Union, the 
 great farm organization of the South, and extending up through the 
 West. They have, as I understand it, now, a membership of about 
 800,000. 
 
 The next larger in number, perhaps, is the Milk Producers' Fed- 
 eration, which is an affiliation of milk producers' organizations a 
 national one, that has about 400,000 members, all of those being 
 
COLLECTIVE BARGAINING FOB FARMERS. 13 
 
 heads of families, of course, they represent a population of five 
 times the number. 
 
 The- Farmers' Equity Association, the PenuKvlvania State 
 Grange 
 
 Mr. MoKGAN. Xow, that is just simply tlie Pennsylvania State 
 Grange ? 
 
 Mr. Miller. Yes, sir, 
 
 Mr. Mokgax. It doesn't include the National Grange? 
 
 Mr. Miller. The National Grange is not affiliated with this na- 
 tional board, but at my left sits Mr. Atkeson, the Washington rep- 
 resentative of the National Grange, who is here in thorough coopera- 
 tion with our organization and with us in asking for this legislation. 
 
 Mr. Morgan. Now, there is some other organization here, I think 
 Mr. George P. Hampton is the president of it — that is not in your 
 organization ? 
 
 Mr. Miller. That is not connected with this organization in any 
 way, shape, or form. 
 
 Mr. Morgan. The farmers, then, have these two organizations here. 
 How many do they represent? 
 
 Mr. Miller. I can't tell you, Mr. Morgan, how many farmers are 
 represented by Mr. Hampton's organization. I believe I can tell 
 you who I represent. 
 
 Mr. Morgan. Well, I think it is always well before committees 
 to understand just who men represent. 
 
 Mr. Miller. Yes, indeed. I believe that it is fair to say, Mr. 
 Chairman — it may be accurate to say — that the different represent- 
 atives here of farm organizations perhaps represent more of the 
 farmers of America than have ever been represented before any con- 
 gressional committee before. 
 
 Mr. Walsh. What is the purpose of these various organizations? 
 What are they organized for? 
 
 Mr. Miller. Which organizations are you referring to ? 
 
 Mr. Walsh. Any of these that you mentioned. 
 
 Mr. Miller. These that I have mentioned? The National Board 
 of Farm Organizations is simply an association in which the other 
 national farm organizations may aiiiliate for concerted effort. Now, 
 these member organizations are organized for different purposes. 
 
 Mr. Walsh. What are some of them ? 
 
 Mr. Miller. The Milk Producers Federation, for one, are the dif- 
 ferent associations of milk producers that supply milk to most of 
 the cities of the Union — the larger cities. The farmers union of the 
 South is both an educational and, in a sense, a commercial organiza- 
 tion, seeking to make collective sales of the farm products of their 
 members. . . . 
 
 The grange is largely an educational and also a social organization, 
 but in some of its activities it engages sometimes— the local or State 
 granges, at least — in buying and selling collectively. So that the 
 organizations that are affiliated with this national board are of dif- 
 ferent types, and in the whole fairly represent the different types of 
 farm organizations throughout the country, I believe. 
 
 Mr. Morgan. I would like to ask you another question. Is this 
 National Board of Farm Organizations a corporation ? 
 
 Mr. Miller. No, sir ; it is purely a voluntary association. 
 
14 COLLECTIVE BARGAINING FOE FAEMERS. 
 
 Mr. Morgan. Have you a constitution and by-laws ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Morgan. Would you object to filing a copy of those with your 
 statement ? 
 
 Mr. Miller. I would be very glad to do so, if you desire it. 
 
 Mr. Lyman. Will you see that we have that, please? 
 
 Mr. Miller. Yes. 
 
 Mr. Morgan. \Vhat position do you occupy? You say you repre- 
 sent this board ; what position do you occupy ? 
 
 Mr. Miller. I am one of the directors, and by authority of a reso- 
 lution of the board of directors I am here representing the association. 
 
 Mr. Morgan. Now, do you belong to some of these — are you a 
 member of one of these subsidiary organizations? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Morgan. What one? 
 
 Mr. Miller. I am the vice president and general counsel for the 
 Dairymen's League, an organization of 77,000 dairy farmers, who 
 supply milk to the city of Greater New York and the entire metro- 
 politan district. 
 
 Mr. Morgan. Are you an attorney by profession, or a dairyman? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Morgan. Are you an attorney by profession? 
 
 Mr. Miller. Yes, sir; and I have been a daiiyman for 35 years. 
 I live on a farm where I have lived for 35 years, and manage it. 
 
 Mr. Morgan. And you are a lawyer, besides ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Ctjrrie. Your association, you say, delivers milk to these great 
 municipalities ? 
 
 Mr. Miller. We furnish it. We deliver to the dealers, the mid- 
 dlemen. 
 
 Mr. CuRRiE. That is what I was going to inquire. Now, is there 
 another federation or organization which attends to the distribution 
 of the milk ? 
 
 Mr. Miller. Yes; there is — in New York, you mean? 
 
 Mr. Ctjrrie. You mentioned New York. Now, what is your no- 
 tion about that, as to whether — does your organization which pro- 
 duces and furnishes to this secondary, or second organizations, the 
 milk — do you contend for a different plan, or are you satisfied with 
 having those two organizations, one to produce and deliver to the 
 other, and the other to attend to the distribution to the consumers ?^ 
 
 Mr. Miller. In answer to that question, there is such a feeling ot 
 hostility between our organization and the organization of dealers 
 that I am somehow reluctant to discuss their activities. I sometimes 
 think that I stand up so straight that I lean over backwards in that 
 respect. 
 
 Mr. Ctjrrie. I am asking for a definition of the policy of your 
 organization. 
 
 Mr. Miller. What our organization is now doing largely, in a 
 smaller way — a few farmers are proceeding in another way, but 
 what our organization is lai'geh' doing is selhng milk to the dealers, 
 who take it at a receiving station in the country, near the farms 
 transport it to the city and there distribute it. There ai'c a few in 
 
COLLECTIVE BARGAIjSTING FOB EARMEES. 15 
 
 ■our district, a few local farmer-owned receiving stations. These are 
 largely, however, manufacturing plants. 
 
 We attempted to go into New York to distribute milk a few years 
 ago, and we found that as farmers we had absolutely no knowledge 
 of the labyrinthic subterranean channels, physical, political, and 
 commercial, of that city, and we soon left and got out. 
 
 Mr. Ctjkrie. What I am trying to find out, is it both with your 
 knowledge which you possessed theretofore and your experience 
 that you have gained since — whether you are still satisfied with 
 the arrangement whereby the milk federation produces and delivers 
 to this second organization to distribute ? Do you find any fault with 
 that system, or is your organization satisfied with it ? 
 
 Mr. MiLLEE. We are utterly dissatisfied with it, but I don't know 
 that I can suggest a remedy any further than to permit this organi- 
 zation liberty of action and then have the consumers organized — and 
 this is what personally I have been urging upon the public in New 
 York, to have the consumers organized, meet with us, and around 
 the same table solve our mutual problems. The vice of present con- 
 ditions is that the two classes most greatly interested, the consumers 
 and the producers, never meet. 
 
 Mr. CuRRiE. I was just going to suggest to you that I understood 
 from your statement that your organization deals entirely with the 
 other organization, while there are some individual producers of 
 milk which endeavor to distribute directly through their own 
 farmer organizations. 
 
 Mr. Miller. Those individual associations are formed largely of 
 men who are members of our parent association. Locally they have 
 purchased or constructed a plant. These are largely manufacturing 
 plants, because as a rule an efficient manufacturing plant will re- 
 alize niore to the farmer to manufacture milk and its various prod- 
 ucts and all of its by-products — an efficient plant will return more 
 money to the farmer than does the price that they receive for milk 
 that goes into the city. 
 
 Mr. Steele. How is the price arranged between your organiza- 
 tion and the purchaser from your organization? Who fixes the 
 prices ? 
 
 Mr. Miller. It is by barter, by agreement. 
 
 Mr. CuERiB. What do you say as to whether the profits made by 
 this distributing agency in New York, or any other city which which 
 you are familiar, as to whether their products are reasonable or un- 
 reasonably high ? 
 
 Mr. Miller. Again I say I am reluctant to express an opinion 
 upon that, for this reason : I know that there are hundreds of thou- 
 sands of people in New York City that believes that the members of 
 our organizations are profiteers. Now, I know they are not. 
 
 Mr. CuERiE. Your organization does not profiteer ? 
 
 Mr. Miller. No, sir ; and while it does seem to me that the spread 
 between the price paid to the farmer and that charged to the con- 
 sumers is very, very wide, yet I am not prepared to say that their 
 expenses are not very, very high. 
 
 Mr. HtrsTED. Isn't the object of this bill to enable the farmers to 
 maintain selling agencies? 
 
 Mr. Miller. Yes, sir. 
 
16 COLLECTIVE BARGAINING TOR FARMERS. 
 
 Mr. HusTED. Now, does it go any further than that ? 
 
 Mr. Miller. That is the idea, to maintain joint selling agencies, 
 with power for the farmers to act jointly, collectively. 
 
 Mr. HusTED. So that they can do business directly with the con- 
 sumer and cut out the middleman ? 
 
 Mr. Miller. That is one of the great purposes, that we may 
 shorten the distance between the producer and the consumer. 
 
 Now, Mr. Chairman, I started to tell of the organizations that i 
 represented, and had not yet fully completed that. 
 
 I have in my hand a letter from Mr. Charles S. Barrett, the presi- 
 dent of the National Farmers' Union. That is one of the associa- 
 tions affiliated with our national board. I would like to read this 
 letter into the record, if I may, as it expresses the thought ot Mr.. 
 Barrett and his organization. 
 
 AVashington, D. C, October 27, 1019. 
 John D. Miller, Esq., 
 
 1731 I Street NW., Washington, D. C. 
 
 My Deae Sib : I regret that my duties elsewhere will prevent my attendance- 
 at the hearing tomorrow before the Judiciary Committee of the House on the 
 Capper-Hersman bill. As you have been authorized to and requested to repre- 
 sent the National Board of Farm Organizations in support of such measures,. 
 I will appreciate It if you will at such hearing also represent the National 
 Farmers' Union in support of the bill. It is vital to organized farmers that 
 they have the clear right to make collective sales of their farm products to the- 
 same extent and with the same liberty of action as in making individual 
 sales. With this right so clear as to remain unchallenged, organized farmers 
 can do much to eliminate the speculator and gambler in foods and to see that 
 those engaged in legitimate distribution do not exact excessive profits. 
 
 I want to assure you that in your appearance before the committee you have 
 not only my sympathy and support but that of the organization which I 
 represent. 
 
 I hope you will feel free to make any use of this letter that you may desire- 
 before this committee. 
 
 C. S. Baeeett, 
 President of the National Farmers' Union. 
 
 I also have a letter from the Iowa Farm Bureau Federation which 
 was just handed to me. I will read one paragraph of it. 
 
 Mr. Morgan. What is that organization — do you know? i 
 
 Mr. Miller. It is an organization of farm buieaus, composed of 
 farmers, that are organized in what are called farm bureaus. 
 
 Mr. Morgan. Is that work done under the Agricultural Depart- 
 ment? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Morgan. Under the county agents? 
 
 Mr. Miller. The county-agent system; yes, sir. [Reading:] 
 
 Our federati(in went on official record last week for the Capper-Hersman bill. 
 Letters requesting its support have already gone to all our Senators and Rep- 
 resentatives. What else can we do to help it along? 
 
 Now, Mr. Chairman, addressing a committee of lawyers, I know 
 it is not necessary for me to discuss the law. You know the law bet- 
 ter than I do ; and what I am going to endeavor to do is to show the 
 justice and the necessity of this bill, knowing full well that if you 
 and your colleagues in Congress are convinced of that you will find 
 verbiage in which to give that right. 
 
 In some respects, gentlemen, it may hardly be the psychological 
 time to bring this before Congress, because of certain national move- 
 ments, which I will not discuss ; but I submit to you that if this right 
 
COIiLECXIVE BABGAINING FOE TARMERS. 
 
 17 
 
 which the farmers ask should be granted to them, that there should 
 be no hesitation on the part of the committee or of Congress because 
 of any activities that any other organizations are noW engaged in. 
 
 Mr. CtTREiE. Right there, if the gentleman will pardon me, the 
 press states that the heads of the American Federation of Labor are 
 now negotiating with the heads of various farm organizations with 
 the idea of cooperation, and I think I can say organization, with the 
 object of affiliation. Speaking for your organization, and with your 
 knowledge of the views entertained by other heads of the farm 
 organizations, do you know whether that is under contemplation? 
 
 Mr. Miller. In answer to that question, permit me to say that I 
 have full authority from my organizations to represent them on this 
 bill. I have no authority to represent them upon anything else, and 
 I hope that j'ou will therefore not press the question as to their rela- 
 tion with others, because I have no right to speak for our organiza- 
 tion on those questions, and I have always found, Congressman — and 
 I know you will agree with me — that the public never disassociates 
 what one says on occasions like this — ^what he says in his representa- 
 tive capacity from what he says as an individual. 
 
 Mr. CuEKiE. I think, however, that the committee are entitled to 
 know, if you have an opinion and are consonant with the opinion of 
 others, because I believe the Committee on the Judiciary, above all 
 other committees of the House, are impressed with the seriousness 
 of a large organization when its numbers become so formidable that 
 it might be able to coerce the Government into taking positions that 
 it might not otherwise like to take; and I can see myself, speaking 
 individually, a very serious menace if the farm organizations coop- 
 erated and joined with the American Federation of Labor. 
 
 Mr. Miller. Might I be permitted to divide up my answer to that 
 into two paragraphs? 
 
 First, as a menace and to coerce the Government, I will say franklj^ 
 that in the many discussions that are going on as to the choppy and 
 turbulent seas ahead, I somehow feel a sense of security, of detach- 
 ment, if you will. I don't believe that that feeling of security is 
 based upon ignorance of present conditions, tendencies, and dan- 
 gers. They are obvious to all, but it is rather based upon a profound 
 belief in the sanity and loyalty of the great mass of our American 
 people. I will grant you that as this wave of hysteria is sweeping 
 over the land and' over the world, there are men, many thousands of 
 men, if you will, seizing upon this opportunity to promulgate their 
 damnable doctrine of the destruction of the rights of personal liberty, 
 personal security, and private property ; but my sense of security is 
 in the profound belief that those many thousands of men are but a 
 handful to the millions of loyal Americans that will spring up to 
 crush insurrection whenever and wherever it appears. Therefore, 
 there is no power in this country that can coerce the Government. 
 The Government is still master of its destiny ; the sovereign people 
 through you, their representatives, can enforce their sovereign will, 
 and there is no power in this country greater than the Government 
 itself. 
 
 Mr. CuREiE. If the gentleman will pardon me just a minute, I 
 would have the gentleman uiiderstand this, that I am quite like him- 
 self; while a lawyer, my training has been acquired upon the favm, 
 
 1.52695—19 2 
 
18 COLiiECTIVE BAEGAINIH-G FOB FAKMEES. 
 
 and I appreciate the farmers' problems, and I think above all other 
 factors they are the one greatest stabilizing influence in the Nation, 
 and I bank upon them. I am speaking now individually, but in spite 
 of what the gentleman says I think that organization, where there is 
 concentration of power within a few chosen leaders, if they repre- 
 sent too many men, that they are able to bring, in fact, I know they' 
 are able to bring influences upon the Government which they ought 
 not to be able to bring. I am not criticizing the gentleman, but I 
 would be very glad to know— although I am not pressing it— whether 
 these press reports that we read are well founded. Xow, if the gen- 
 tleman doesn't know 
 
 Mr. Miller (interposing). I do not know, and I will say this: The 
 leaders of farm organizations were invited by organized labor to join 
 in a call for a conference at which representatives of both of these 
 organizations would be invited. These leaders all declined to join in 
 that call. That is a matter for their organizations to determine, any- 
 thing to the contrary that appears in the press notwithstanding. 
 
 Mr. Morgan. This is preliminary, but I would like to know — you 
 say you represent and of course you do — ^this organization, and Mr. 
 Barrett, who is of ocurse well known, represents the Farmer Union. 
 Now, then, you come here and you support this bill. Is your posi- 
 tion a conclusion by you or have these various organizations taken 
 some kind of vote on it? Have the local organizations passed upon 
 these questions, and are you expressing their views, or is your view 
 here what the constituted leaders here at Washington have decided 
 what you want to do? Has there been some expression of the ranlr 
 and file of these various organizations on this proposition ? 
 
 Mr. MiLLEE. I am very glad that you have asked that question; 
 otherwise I might have omitted stating the facts. The different or- 
 ganizations that are affiliated with the national board have all — or 
 nearly all of them — adopted resolutions urging the passage of this 
 bill. The farmers themselves want this bill. 
 
 In September there was present at the semiannual conference of 
 the National Board of Farm Organizations some 200 or more dele- 
 gates from — ^how many States, Mr. Lyman ? 
 
 Mr. Ltman. Thirty-one. ^ 
 
 Mr. Miller. From 31 States, representing their organizations, and 
 they adopted a resolution in favor of the Capper-Hersman bill. This 
 is a movement from the ground up, and the bill has been in prepara- 
 tion for some time — why, as long ago as a year ago last December the 
 Milk Producers' Federation, of Chicago, received a request from 
 some of their locals to have this done, and a resolution was then 
 
 adopted 
 
 Mr. Morgan (interposing). You understand my question is not to 
 embarrass you or indicate in any way that I am unfavorable in any 
 way to the bill. 
 
 Mr. Miller. I appreciate that. 
 
 Mr. Morgan. Of couise, I represent a farmers' district, and I sim- 
 ply wanted to bring out a point that I think ought to be made clear. 
 Mr. Miller. Of course, I am glad to have the committee ask ques- 
 tions, and I will answer them if I can, and if I can not I will sav so 
 Mr. Yates. Some of the milk associations in Chicago are now be- 
 ing prosecuted, are they not ? 
 
COLLKCTIVB BARGAINING FOR FARMERS. 19 
 
 Mr. MiU/EE. They are being prosecuted under the State antitrust 
 law. The indictment charges them with conspiracy and combination 
 in restraint of trade. The conspiracy was proven by the district 
 attorney by introducing in evidence a resolution of their board, fix- 
 ing the price that they would ask for milk, and the overt act was 
 proven by showing that they went out and tried to get that price, 
 and I think that particular price at that time was obtained, although 
 sometimes they get the price they ask and sometimes they have to 
 take the price that the dealers offer, and sometimes it is compromised, 
 
 Mr. Yates. Does that case have anything to do with this question ? 
 In othei- words, does the Illinois law now make an act an offense 
 which would not be an offense under this proposed bill ? 
 
 Mr. Miller. The prosecuting attorney claims that the Illinois act 
 did make it an offense at the tune the acts for which these naen were 
 prosecuted were committed, but since that time the legislature of 
 Illinois has passed a law amending the law of the State, giving 
 farmers the complete right and power to do that which in this bill 
 the fanners are asking the Federal Government to do. New York 
 has done the same thing. The milk orgaiiization in New York was 
 prosecuted a year ago last January. They were indicted. The legis- 
 lature met about the same time, and their attention being called to it, 
 they very promptly amended that law. The indictment was there- 
 upon dismissed. - 
 
 Mr. Yates. Are these men in Illinois doing what you call collective 
 bargaining? Are they being prosecuted now for doing that? 
 
 Mr. Miller. I believe so. 
 
 Mr. Igoe. There has been a great deal of confusion about these 
 reported prosecutions, or proposed prosecutions, under the Federal 
 law. Has the Department of Justice indicted or brought about the 
 indictment in the Federal courts of any of these associations of milk 
 producers ? 
 
 Mr. Miller. I believe not, but they are under investigation now. 
 
 Mr. Igoe. I understand. Has the Department of Justice indicated 
 in any way to the bona fide members of producers associations that 
 under the antitrust laws as they now stand, the Federal antitrust 
 laws, that they would be prosecuted for doing, for instance, what 
 you say the fanners in New York and the farmers in Illinois have 
 clone? ' 
 
 Mr. Miller. Yes, sir; there has been such an intimation, and that 
 intimation was in the form of an invitation by the Fedeiral district 
 Mtomey of New York City inviting the officers and directors of that 
 farm organization to appear at his 6ffi.ce at certain times for alleged 
 violation — ^that was the word used — of the antitrust act, giving its 
 date. 
 
 Mr. Igoe. Has the Department of Justice here issued any state- 
 ment to those association^ or to the officers in regard to the policy 
 of the Department of Justice? 
 
 Mr. Miller. I don't think so. 
 
 Mr. Igoe. No indictments have been so far found ? 
 
 Mr. Miller. No, sir. 
 
 Mr. Igoe. And the prosecutions that have been Commenced, the 
 indictments that have been found have all been under State laws? 
 
20 COLLECTIVE BAEGAINING FOB FABMEES. 
 
 Mr. Miller. Yes, sir. But may I submit right there 
 
 Mr. Webb (interposing). Does that apply to all farm organiza- 
 tions? I mean, has any farm organization been indicted by the 
 Federal Department of Justice ? 
 
 Mr. Mtt.t.to b. I don't know that it has. You see, ever since the 
 Clayton Act was passed, in very many of the deficiency appropria- 
 tion bills at least, there have been these provisions that Congressman 
 Hersman called your attention to, prohibiting the use of any part 
 of that fund for that purpose. 
 
 The Easin Growers' Association of California has been investi- 
 gated, and it was understood for the purposes of indictment, but it 
 has now been turned over to the Federal Trade Commission. 
 
 Mr. Webb. The fact is that the Department of Justice has not 
 indicted any farm organization so far? 
 
 Mr. Mnj^E. I don't think they have. But let me call to your 
 attention the importance of this : These men engaged in these farm 
 organizations to efficiently manage this business have got to invest 
 large sums of money in their country plants and manufacturing 
 plants, and their legal advisers in Boston, in New York, in Chicago, 
 in Philadelphia, in Pittsburgh, are saying to them, ", You can't safely 
 do it under the uncertainty; with which your organization is now 
 confronted." ' ' 
 
 I submit to you that it is not fair to farmers, and it is not fair to 
 the Department of Justice, to leave this uncertainty. This collective 
 bargaining should be made clearly lawful or clearly unlawful. The 
 present uncertainty is intolerable. 
 
 Mr. Steele. Are you familiar with the milk association case of 
 Boston, decided a year or two ago ? 
 Mr. Miller. No ; I am not. 
 
 Mr. Steele. I don't know whether there were farmers in there or 
 not. I think some of them were. 
 
 Mr. Yates. I live in Illinois, and I want to laiow — I am confronted 
 with the fact that some act of those milk producers has been consid- 
 ered such a serious violation of the law that those producers have been 
 indicted in Illinois. 
 Mr. Miller. In Illinois ; yes, sir. 
 
 Mr. Yates. Now, if your bill — I think I am in favor of it — I am 
 inclined to think I am — provides that a thing shall be permitted to 
 be done which the Legislature of Illinois considered so serious that 
 they made it a penal offense, and what I want to know is, what differ- 
 ence is there ? Wherein is Illinois wrong ? 
 
 Mr. Miller. Illinois has admitted it, sir. At the last session of 
 the legislature they amended their laws to do there exactly what we 
 are asking you to do here in this bill. 
 Mr. Yates. That is what I wanted to bring out. 
 Mr. Igoe. Have you got the language of the Illinois act that meets 
 the situation? 
 
 Mr. Miller. I don't believe I have. 
 
 Mr. Igoe. Does it provide that they may cooperate and have capital 
 
 stock? ^ 
 
 Mr. Miller. It doesn't go into as many details. 
 
 Mi". Igoe. That is a point I am trying to get at. Does it permit 
 
 a corporation with shares of stock and dividends, and all that sort 
 
 of thing, not merely an association— a voluntary association as is 
 
COLLECTIVE BAEGAINING EOB FARMERS. 21 
 
 permitted under the amendments in the Clayton Act, but as em- 
 bodied in this bill, to permit associations with capital stock in the 
 neighborhood to engage in all the various activities that any corpora- 
 tion might engage in ? 
 
 Mr. Miller. No ; and my mind don't! run with you to that extent. 
 If this bill does do that, it ought to be amended; but you wiU find 
 that it simply applies to associations that are making collective sales 
 of the products of the members — making collective sales. They can't 
 buy and sell and become profit associations. If they do, they auto- 
 matically place themselves without the scope of the protection of 
 this statute. 
 
 Mr. Igoe. Under this bill, Mr. Miller, they may manufacture. , 
 
 Mr. Miller. Their own products, yes ; and ought they not to have 
 that right ? Must we always leave (that to the middleman ? 
 
 Mr. Igoe. It goes beyond that ; it permits some producers, merely 
 by having shares of stock, to turn over their product or not to turn 
 it over, as they please, and engage in the entire business from start 
 to finish ; engage in all the various activities throughout the United 
 States, the various processes of one kind or another ; whereas people 
 who do not — stock may be held by outsiders, so far as that is con- 
 cerned ? , 
 
 Mr. Miller. No ; my mind doesn't go with you there. I think we 
 have carefully excluded the outsider. 
 
 There are a few local organizations that urged, when this bill was 
 in course of preparation, that the bill be so drawn that if a majority 
 of the members were producers, their organizations should be in- 
 cluded, but it was concluded to restrict it to producers, and they 
 should have the power to cooperatively churn ,their milk into butter, 
 to make it into cheese, to make it into condensed milk; they should 
 have the power collectively to pack their frui|:s. Why, is it going to 
 be necessary for all time that these things that must be done by some- 
 body are to be turned over to the middle man? We think that is 
 sound economic policy and that the good of all the people will be 
 promoted, by permitting the farmer whoproduces these things to 
 process them until they reach the stage where they are fit f oi' con- 
 sumption. It will stand for economy ; it will stand for efficiency ; and 
 it will stand for a promotion of agriculture. 
 
 Now, may I right at this point— ^the question was asked by one 
 member of the committee, who, I think, has since retired, why, if this 
 power is granted to farmers, why shouldn't it be granted to oth,er 
 business ? Mr. Chairman, I see you are looking at your watches. Any 
 time that you care to have me suspend I will do so. 
 
 The Chairman. No ; proceed, Mr. Miller. 
 
 Mr. Miller. Now, if this bill gives to farmers any unjust privileges, 
 it ought not to be passed. If, on the other hand, it simply places the 
 farmers upon an equality with the . great organizations with whom 
 they must deal, then it ought to pass. I think we all agree on that. 
 Now, does it? . . 
 
 Many of you gentlemen have noticed in the newspapers recently 
 advertisements of Swift & Co., designed to inform the people how 
 they are philanthropists, and that such profits as accrue to them, are 
 purely incidental to their main business, which is tbat of public 
 service. Now, in that advertisement they state that they h£j.ve 30,000— 
 over 30,000-— shareholders. That corporation owns many plants, 
 
22 COLLECTIVE BAEGAINING ■ FOE FARMERS. 
 
 widely separated. Those 30,000 shareholders of Swift & Co., through 
 the agency of the corporation in which they have vested the title to 
 their properties and products, collectively sell and collectively buy. 
 In other words, the law as it now is has furnished to big business— 
 if you will use the term, and I do not use it in an offensive sense, 
 because I am not jet convinced that business necessarily is bad be- 
 cause it is big— but the law has given to big business an adequate, con- 
 venient, workable method of bargaining collectively. You gentlemen 
 can think of other corporations with many more thousand stockholders 
 than Swift & Co. 
 
 Now, let us assume that there are 30,000 ranchmen that produce the 
 cattle and the hogs that go into these plants. Now, it is impossible 
 for the farmers to vest the title in those 30.000 ranches in a corpora- 
 tion — ^not impossible in law but impossible in fact — and it would not 
 be expedient; it would be detrimental if it could be done. Therefore 
 the law as it stands at present does not afford those 30,000 ranchmen 
 a convenient, workable, available method to collectively sell their 
 cattle. 
 
 Mr. Steele. They have the same right as Swift & Co., haven't 
 they? 
 
 Mr. MnxER. No; because ranchmen can not use the corporate 
 method, and the only way they can collectively bargain is to meet 
 in an organization and appoint a joint selling agency. 
 
 Mr. Steele. They have the same right to combine as Swift & Co., 
 subjected to the antitrust laws. 
 
 Mr. Miller. No ; in the way Swift & Co. are doing, it is absolutely 
 lawful, because the title to all the properties and plants is vested in 
 the corporation that has a legal entity, so it is only one person, an 
 aji;ificial person, it is true, but is only one person that is doing that 
 bargaining; but in fact, it is the 30,000 shareholders that are doing 
 it through the agency of that one person, the corporation. 
 
 Now, the 30,000 ranchmen that supply the cattle and the hogs, 
 they must one by one, meet the representatives of those 30,000 share- 
 holders of Swift & Co., in which case they are absolutely powerless; 
 you all loiow that, and all they could do would be to accept the 
 price the other fellow offered. If they had the power, the clear 
 power, the clear right, to combine, to form an organization, appoint 
 that organization their sales agent to go out and determine prices and 
 ask the prices at which they are willing to sell, they could thus meet 
 upon a common level the representatives of Swift & Co. in bargain- 
 ing. Farmers can not protect their fair right of property as it is? 
 at present by single bargaining. 
 
 Mr. Webb. Are they liable to prosecution under the antitrust laws? 
 
 Mr. MiLLEE. Yes, absolutely, unless we are saved by the present 
 section 6 ; and it is because the present section 6 is somewhat obscure 
 and its construction doubtful that the farmers are anxious to have 
 it made absolutely plain, so that they may know their exact status. 
 
 Mr. Webb. Now, take it under section 6 of the Clayton law, do 
 you think that such an organization would be unlawful? 
 
 Mr. Miller. I am inclined to think that my opinion as a lawyer 
 would agree with yours; and if we knew that all the prosecuting 
 attorneys would take the same view, and all of the judges, we would 
 feel safer; but able lawyers disagree upon that question. The Fed- 
 
COIiLECTrVE BABGAINING FOE TABMEKS. 23 
 
 eral district attorneys are disagreeing upon it and are investigating 
 men who are doing those very things. 
 
 Mr. Webb. I am the author of that provision. I offered it on the 
 floor of the House as an amendment for that purpose, but what I 
 would like to have would be an opinion from the Supreme Court 
 of the United States on this question. Then Congress would have 
 a perfectly clear understanding of what we can do. 
 
 Mr. Miller. May I make this suggestion, that most of the leaders 
 of the present farm organizations, eliminating from what I am now 
 going to say my own personality entirely, most of the leaders of 
 these farm organizations are men of high repute. They may have 
 ambition in diflferent directions, but in none of them does that ambi- 
 tion take the direction of going to jail, and an indictment puts a 
 blot on a man's reputation. You all know it, you lawyers, even if 
 it is followed by acquittal. 
 
 Mr. Steele. As well as upon his business. 
 
 Mr. Miller. Ybs, sir; as well as upon his business. Now, why 
 should the leaders of these farm organizations be compelled to im- 
 peril their reputations by taking these risks? What would be the 
 result of it? I say to you gentlemen frankly, not that the farmers 
 will ever be Bolshevists or anarchists, but there are radicals among 
 the farmers, and the effect of it would be that the present leaders 
 of these farm organizations who are sane, conservative men, it 
 would mean that those men will not remain always the leaders and 
 take the risk and imperil their reputation by indictment. 
 
 Mr. Webb. Just one more question. You say this organization, 
 the raisin organization, is typical of the organizations that you want 
 to form? 
 
 Mr. MiLLEE. I am not familiar enough with the raisin organiza- 
 tion to say. 
 
 Mr. Webb. I understand the Department of Justice declined to 
 prosecute that organization, and that they are to have a hearing 
 before the Federal Trade Commission next month. Now, supposing 
 the Federal Trade Commission says, " No ; this organization is not 
 violating the law." And this raisin organization is a typical one of 
 the others you would like to form under this bill; then you would 
 think this would not be necessary, wouldn't you ? 
 
 Mr. Miller. No, sir; I would still think this amendment is ab- 
 solutely necessary. The Department of Justice, as I understand it — 
 I have had no consultation with them— turned this over to the Fed- 
 eral Trade Commission with a statement that they had no funds to 
 investigate. 
 
 Mr. Webb. You know it is a fact that they have investigated it? 
 
 Mr. Miller. It is not only investigation. Congressman ; it is a fact 
 that good lawyers are disagreeing on it now, and that the Federal 
 district attorneys are investigating. Now, ordinarily investigations 
 result in indictments ; not always. 
 
 Mr. Webb. In how many places have they been making investi- 
 gations ? 
 Mr. Miller. In California, Chicago, New York, and Philadelphia. 
 Mr. Webb. Now, when were these actions begun, and what results 
 have been secured ? ' 
 
 Mr. Miller. Will you permit me to take just five minutes of your 
 time to tell when it was done and how it was done in Chicago ? 
 
24 COLLECTIVE BAKGAINING JOE FARMERS. 
 
 Mr. Webb. Yes ; that is what we want to know. 
 
 Mr. MiLLEE. It illustrates, gentlemen,"" the necessity for this bill. 
 
 The milk producers of Chicago are now on trial, under indictment 
 found in the latter part of the year 1917. 
 
 Mr. Webb. That is, in the Federal court ? 
 
 Mr. Miller. No ; in the State court. 
 
 Mr. Steele. Is that under Federal or State law ? 
 
 Mr. Miller. Under State law. Now, immediately after that in- 
 dictment was found, that very farm organization was called to the 
 assistance of Mr. Hoover in order to carry out his war work. He and 
 his representatives met with them and "helped them fix prices — in 
 many cases they determined the prices. Well, of course, the Chicago 
 authorities saw that it would be somewhat ironical to try these farm- 
 ers in one building in Chicago for committing an act, when at the 
 time of the trial they in another building were doing the same things 
 in cooperation with and at the request of the Federal food adminis- 
 trator. So, the prosecution of that indictment was postponed until 
 after the war. It was thought, however, that it was coming on for 
 trial last April. I will not weary you with this, but I think when I 
 get through with it you will see its bearing on this question. I am 
 going to &,sk you to characterize the acts of the employees of the Fed- 
 eral Department of Justice there, and I am going to try to tell you 
 the story without passion. 
 
 At the time when it was thought that this trial was to come on in 
 March, by a system which seems largely peculiar to Chicago and New 
 York, the newspapers began to have inspired interviews, explaining 
 the inquities of these accused men. All this, of coui'se, so that the 
 prospective bureaus might be fully informed and be prepared to do 
 them exact justice. Hy what, I am sure, must have been a coinci- 
 dence, just at that strategic time the Federal district attorney got 
 busy, and this is what he did. Now, Mr. Chairman, I don't believe — ■ 
 I have no knowledge one way or the other — ^but I don't believe that 
 that able lawyer and upright man, the Attorney General of the 
 Ignited States, ever approved or had any knowledge of what was done 
 there; this was done through the district attorney's office. At the 
 same hour, on the same day, say, at 10 o'clock in the forenoon, two 
 sleuths, intelligence officers, detectives, appeared in the office of the. 
 secretary of that organization with a subpoena duces tecum, to pro- 
 ceed forthwith before the Federal grand jury, bringing all the papers 
 and records. A like subpoena was served on the president in his ad- 
 joining office by two others; and at the same hour, about, of the same 
 day, at about 30 or 35 other points over that big territory, running 
 out 100 miles or more, that supplies Chicago with milk, other sleuths 
 entered the residences of the officers of the local fann organizations 
 subordinate to the parent one, Avith a lilce subpoena. 
 
 Now, those farmers out through the country were intelligent men 
 selected for their officers, because they were intelligent and trust- 
 worthy, but of course they were not lawyers, and they did not dis- 
 tinguish between a subpoena duces tecum, requiring their appearance 
 forthwith, because they were told by the detectives that they must 
 go with them to Chicago on the train, and they did not distmo-uish 
 between that paper and a warrant of arrest ; and so, all over*' that 
 territory, the telephones were humming with the information that 
 the Federal district attorney had thrown out a dragnet and sent out 
 
COIiLECTIVB BAKGAINING FOB FABMEKS. 25 
 
 * 
 ^warrants for the arrest of 35 or 40 farmers whose only offense was 
 that they met and combined to make joint sales of their products. 
 
 I want to tell you what took place with one of them. When one 
 of these men— this information, of course, was given to me by others, 
 but I think it can be verified if the committee at any time cares to 
 investigate it — one of those men when they reached Chicago was 
 taken mto an upper room with two of the detectives, seated by a 
 desk, they questioning him. By and by one of the detectives, with 
 some ostentation, put his hand into his pocket and drew out a re- 
 volver and laid it on the desk with a significant look at the farmer. 
 They went on asking questions, he answering them as best he could, 
 and by and by the detective picked up the revolver again and 
 twirled the cylinder or twirled the revolver, and with another sig- 
 nificant look at the farmer, said, " Does this make you nervous ? " 
 Those men were not accused of bomb-throwing or arson. Now, we 
 think, gentlemen — • — 
 
 Mr. Webb (interposing). Do you know the name of that detective 
 who did that? 
 
 Mr. Miller. I do not, sir. 
 
 Mr. Webb. You want to find it out and have him kicked out of the 
 service. That is what you ought to do. 
 
 Mr. Miller. Rather, if I may be permitted to say, I think the law 
 should be so clear that if any ambitious district attorney challenges 
 this right, that we may all know that they are doing it for some pur- 
 pose other than that of vindicating the majesty of the law. 
 
 Mr. Morgan. Now, may I ask you — I asked this question of Mr. 
 Barbour — you take the wheat farmer — and J^he farmers in my dis- 
 trict are wheat farmers, corn farmers, too, and they have consider- 
 able stock — do you think that under this law the wheat farmers of 
 the United States could organize into one selling corporation and 
 sell collectively — all the wheat farmiers of the United States? 
 
 Mr. Miller. I believe they could, and I believe it would be a great 
 boon to both the farmers and the consumers if they could do it. I 
 don't believe they ever would do it, because there are so manj^ of them 
 and they are too widely separated. 
 
 Mr. Morgan. You know this is a wonderful age, and all that is 
 necessary to do that would be for a few intelligent men to go to 
 work and organize a corporation covering the entire Nation. It could 
 be done, unquestionably. Now, then, these organizations — of course 
 we assume that the farmers of the Nation would be as good as the 
 average of other people, but is there some danger that the farmers, 
 who are more or less selfish like the rest of us, might be inclined to 
 want a little more for their wheat than people in the towns and cities 
 believe they ought to have? Is there any danger in permitting the 
 farmers absolute, complete, unlimited, and unrestricted authority 
 and power and the right to organize to sell what they produce in a 
 collective way ? Now, is there any danger? 
 
 Mr. Miller. I don't think there is; and if I should be mistaken; 
 and later it should be made to appear that these organizations are 
 abusing that power. Congress will have complete power to regulate 
 them. What we are asking-— don't assume in advance that we are 
 going to do it, and so embarrass us in the work that we are only 
 just starting. , 
 
20 COLLECTIVE BARGAINING FOE FARMERS. 
 
 Mr. Webb. Now, what has been the result of other Federal inves- 
 tigations? You haven't told us that. What has happened in these 
 other investigations? You say the Federal department has made 
 them. 
 
 Mr. Miller. In New York the investigation — and permit me to 
 say here that it was carried on in a very gentlemanly, courteous 
 manner; there were'no circumstances of oppression or intimidation— 
 and I think there was not in Philadelphia, but we do not know— it 
 was only two or three weeks ago that they were investigated, and 
 what the result will be we don't know. 
 
 Mr. Yates. AVere there any results of this investigation carried 
 on by the United States district attorney's office in Chicago, who 
 sent out these detectives — vou said these detectives were sent out by 
 the district attorney, did you not ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Yates. That is Mr. Kline. 
 
 Mr. Miller. I believe that is his name. They started out from 
 his office. 
 
 Mr. Yates. What followed ? Any action at all ? 
 
 Mr. Miller. No indictments. 
 
 Mr. Yates. Any action by the Federal authorities ? 
 
 Mr. Miller. I have been told by a gentleman who has attended 
 the trial, the present trial under the State law, that the Federal dis- 
 trict attorney or his deputy is sitting there watching it closely day 
 by day, and the farmers there, I understand, are expecting to be 
 indicted. 
 
 Taking up again the question, Mr. Morgan, of the advisability 
 or the danger of the wheat growers, may I suggest to you that, as 
 Mr. Hersman so well stated, that if every wheat-growing farmer in 
 this country was organized into one great association, they must 
 still sell their wheat subject to world-wide competition. 
 
 Mr. Morgan. Right there — that is true, but suppose this Nation 
 has 250,000,000 bushels of surplus wheat for export. Now if you 
 centralize the selling interest — that is the one organization that con- 
 trols the sale of that 250,000,000 bushels of wheat on the world's 
 market — don't you believe, that they could sell it at a better price 
 than they could if it was in the hands solely of grain dealers and 
 ordinary commercial organizations? 
 
 Mr. Miller. I believe the farmers would get a better price ; and if 
 they did not, their leaders would not know their business. But that 
 better price would be beneficial to both the farmers and consumers 
 alike, for this reason 
 
 Mr. Morgan (interposing) . It would seem to me that one great dif- 
 ficulty about the wheat farmers is that when their wheat is thrashed, 
 a good percentage of them have to sell it immediately or want to sell 
 it immediately. Their business demands it. The grain buyers buy 
 it and very naturally the grain buyers like to start the market low. 
 The dealers naturally make more money if they buy at a low price 
 and the market keeps on growing. By and by the big dealers have 
 a large percentage of this surplus wheat in their control, and then 
 they put the price up, and they sell it at the best price they can. So 
 I think it would be of immense advantage to the wheat farmers if 
 they could organize in some way so that they could have something 
 to say about what they would sell their wheat for. I believe in that- 
 
COLLECTIVE BARGAINING FOB FARMEES. 22 
 
 but th&re is another responsibility, we do not want to create organiza- 
 tions that might be unjust to the people who live in the towns and 
 cities. • 
 
 Mr. MiLLEE. Absolutely not. 
 
 Mr. Morgan. I have given a good deal of thought in my own mind 
 to trying to provide some plan, to think out some theory of my own, 
 some machinery by which that could be done, and I am still studying 
 on the subject ; so I am really getting information. 
 
 Mr. Miller. In your statement you have suggested a thought that 
 was in my own mind, and that is that the crop of wheat as it is gar- 
 nered is more than three hundred times as much as will be consumed 
 in a day.- Somebody must hold it. The vice of present conditions 
 is that the farmer is compelled to sell. He doesn t have the facili- 
 ties for holding it; some of them don't hav&the finances to hold it, 
 and they are forced, one by one, to sell that wheat to the middleman, 
 who does hold it ; and after the great bumper crop has been garnered 
 into the elevators of the middleman then the price begins to soar, 
 and that is penalizing and discouraging production. 
 
 May I just read into the record one thought on that 
 
 Mr. Morgan (interposing). Not ojily that, but it is defrauding the 
 farmers. 
 
 - Mr. Miller. Yes, sir. Now, may I read into the record one thought 
 which appears in a statement filed by the farmers' representative at 
 the industrial conference ? The early dissolution of that conference 
 left this resolution to go with that of many other groups, of course 
 not acted upon, but this discussed the question of bumper crops and 
 low prices, showing how large production now is penalized and 
 imderproduction encouraged because of the very conditions of which 
 you have spoken and which farm organizations with liberty of action 
 under the law could correct. [Eeading:] 
 
 In 1910 we produced over 11,000,000 bales of cotton ; in 1911 we produced 
 15,000,000 bales, and yet received $60,000,000 less for the 1911 crop. In 1915 
 we produced 1,025,000,000 bushels of wheat and received $942,000,000 for it. 
 In 1916 we produced 640,000,000 bushels and received $1,020,000,000 for it. 
 
 In both cases society had the benefit of those great increases in pro- 
 duction ; but as to cotton, the farmer received $60,000,00,0 less than 
 nothing for the additional cotton that he produced. 
 
 Mr. Morgan. Now, I don't want to take up the time; but do you 
 think there is any danger of the farmers reducing production ? Now, 
 you know in the South there has been agitation to reduce the produc- 
 tion of cotton, and is there danger now that if this unlimited author- 
 ity was given the farmers would takes advantage of that principle and 
 say, " We will curtail the production of wheat, and that will make 
 less surplus to sell abroad on the world's market, and we can get a 
 bigger price " ? Now, is there danger of that ? : 
 ; Mr. Miller. I can't bring my mind to' the thought that there is any 
 grave danger of that, because of the economic and industrial condi- 
 tions under which the farmer operates. 
 
 Mr. Morgan. You know that agitation exists in the South. 
 
 Mr. Miller. But what I do say, and say with all the emphasis pos- 
 sible, is that the farmer ought to have the right to survey his prospec- 
 tive demand as best he can, the same as any other producer and man^ 
 uf acturer, and then not produce so much that he must sell it at a loss. 
 
'28 COLliBCTIVE BAEGAINING FOR FABMERS. 
 
 Mr. Morgan. That is all right if it is not an entire, complete 
 monopoly. Then there might be danger, it seems to me. 
 
 The Chairman. Mr. Miller, if you will suspend now, we will take 
 a recess until 2.30 this afternoon, as there is something coming up m 
 the House that requires our attendance. 
 
 (Whereupon, at 12.20 o'clock p. m., the committee recessed until 
 2.30 o'clock p. m. this day.) 
 
 Committee on the Judiciary, 
 
 HoTTSE of Representatives, 
 Wednesday, October £9, 1919. 
 The committee this day met, Hon. Andrew J. Volstead (chairman) 
 presiding. ^ 
 
 The Chairman. The committee will be in order. We are ready to 
 proceed, Mr. Sapiro. 
 
 STATEMENT OF MR. AARON SAPIRO, ATTORNEY AT LAW, SAN 
 
 FRANCISCO, CALIF. 
 
 Mr. Sapiro. Mr. Chairman, I am here as attorney for the Cali- 
 fornia Prune & Apricot Growers (Inc.), the California Bean Grow- 
 ers' Association, the Poultry Producers of Central California (Inc.), 
 the Central California Berry Growers' Association, the California 
 Pear Growers' Association, the California Associated Olive Growers, 
 the California Tomato Growers' Association, the Cooperative Seed 
 Growers' Association, the Growers' Packing & Warehousing Asso- 
 ciation, and as organizing counsel for the Oregon Growers' Coopera- 
 tive Association and the Oregon Growers' Packi'ng Corporation. All 
 of these associations or corporations are purely cooperative market- 
 ing associations of producers, actually operating and doing business 
 in the State of California or in the State of Oregon. 
 
 The California Prune & Apricot Growers, for example, has 7,400 
 different members or stockholders. All of them are prune or apricot 
 growers, marketing their crops through the association. The total 
 of the associations here mentioned are handling in 1919 approximate- 
 ly $60,000,000 worth of products, all of which are handled coopera- 
 tively. 
 
 The ,committee, as I understand, is now considering the question of 
 the exemptions of cooperative marketing associations of farmers 
 under the antitrust laws of the United States. In California, proba- 
 bly more than in any other portion of the country, they have had to 
 meet the problems of associations organized for the purpose of col- 
 lective marketing, and problems of collective credit and collective 
 financing and purchasing of supplies, and, therefore, the California 
 associations or organizations have met these Federal problems, and 
 desire to have their attitude explained in detail to this committee 
 prior to action on the antitrust law amendment. 
 
 In the first place, in paragraph 6 of the Clayton Act, as we now 
 have it, there is an exemption for farmers' cooperative associations. 
 The exemption is in these terms : 
 
 Nothing contained In the antitrust laws shall be construed to forbid the ex- 
 istence and operation of labor, agricultural or horticultural organizations In- 
 
COIJiECTIVB BABGAINING FOE FAKMEES. 29 
 
 stituted for the purposes of mutual help and not having capital ' stock or con- 
 ducted for profit, or to forbid or restrain the individual members of such 
 organizations from legally carrying out the legitimate objects thereof, nor shall 
 such organizations or the members thereof be held or construed to be illegal 
 combinations or conspiracies in restraint of trade under the antitrust laws. 
 
 There are certain portions of that amendment that are considered 
 a bit _ambiguous. The key to the amendment is the exemption of 
 organizations instituted for the purpose of mutual help and not 
 having capital stock or conducted for profit. 
 
 Mr. Igoe. What are you referring to now? 
 
 Mr. Sapieo. The present Clayton Act. The first problem that has 
 been raised, and it has been raised, for example, by the Federal 
 district attorney at San Francisco, was whether the phrase " Not 
 conducted for profit " would permit the growers of an association 
 to get profits as separate from the profits of the orgariization.' 
 
 The second was whether the " Not having capital stock," and the 
 ternx "Conducted for profit" are coordinate or exclusive; that is, 
 whether an association had to come under both of those headings or 
 either of those headings. The usual interpretation among the Fed- 
 eral officers is that an association to come under this exemption must 
 be both a noncapital stock association and be not conducted for 
 profit, and that an association may be considered a nonprofit asso- 
 ciation if it does not make profits for the association as such, but 
 does make profits, however, for its members. In any event there has 
 been a great deal of confusion as to the proper interpretation of 
 those terms, but in the California experience there has been proved 
 the necessity for widening the terms even where the meaning is clear. 
 
 I will take the liberty of explaining certain of these forms of 
 organization in California, which will make the problem Y£ rv 
 definite for this committee. In Calif ornia,! first, they have a non- 
 profit, noncapital stock association, built up in locals and then con- 
 centrated in a central exchange. The California Fruit Growers' 
 Exchange handles the orange and citrus business of California in 
 this manner. There are a great many local associations throughout 
 the State and the grower has his contract with the local association, 
 and then the local associations have their contracts with the Cali- 
 fornia Fruit Growers' Exchange, which then does the marketing 
 for the entire group, and it does the routing of cars and takes care of 
 all of their general problems of advertising, and so on. That is one 
 form of organization. 
 
 The second form of organization is a nonprofit, noncapital stock 
 association, in which there is one association for the entire State, 
 and in which the members make their marketing contract directly 
 with the central association. A typical example is the California 
 Bean Growers' Association — ^not the lima bean association, but the 
 California Bean Growers' Association, which handles the small 
 whites, the large whites, and so on. In this association the bean 
 growers of the State, from the south to the north, make their con- 
 tracts with this one central association, which does the marketing 
 directly for this entire group. Third, there are corporations with 
 capital stock, some of them organized as locals, which also have the 
 central corporation with capital stock. There are others like the 
 California Prune & Apricot Growers, which is a corporation with 
 
80 COLLECTIVE BARGAINING FOE FARMEKS. 
 
 capital stock, in which all the growers from the south to the north 
 make their contracts directly with this central corpora.tion. 
 
 Mr. Igoe. Are there stockholders in it? 
 
 Mr. Sapieo. Yes; all of these growers are stockholders. Nobody 
 could get a contract with that corporation unless he is a propor- 
 tionate stockholder. Every man who has a bearing acre must sub- 
 scribe for one share of stock for each bearing acre of prunes or 
 apricots, so that you get a proportionate stockholding association. 
 
 Mr. Igoe. Is he obligated, by reason of being a stockholder, to 
 market his entire ci-op through that association? 
 
 Mr. Sapieo. Yes. 
 
 Mr. Igoe. Is he forbidden to dispose of it outside of that asso- 
 ciation ? 
 
 Mr. Sapiro. I Yes. I will give an analysis of the general terms of 
 the contracts we have. 
 
 Mr. Igoe. I did not wish to interrupt you. 
 
 Mr. HusTED. Do these associations have by-laws and constitutions? 
 
 Mr. Sapieo. Yes. 
 
 Mr. HusTED. Will you furnish those? 
 
 Mr. Sapieo. We will file all you wish. 
 
 Mr. HusTED. I would like to have all of them in the record. 
 
 Mr. Sapieo. Of the different classes? 
 
 Mr. Hij^sTED. Showing the complete organization. 
 
 JVJr. Sapiro. Yes; we will furnish that. In these corporations no 
 stockholder can become a stockholder except in the proportionate 
 method, so that the actual representation of each grower in the 
 corporation is parallel to his average total representation as such. 
 
 Then there are other so-called cooperative corporations in Cali- 
 fornia in which this proportionate stockholding idea is not carried 
 out, but in which the growers form substantially all of the stock- 
 holders, although there may be some nongrower stockholders. There 
 are at least two of that class of corporations in California, organized 
 along that line, but, as a whole, those five classes include everything 
 in California that operates as a cooperative organization of growers 
 for the marketing of farm products. 
 
 Three of the organizations for which I am regular counsel are 
 capital-stock corporations of this land, the California Prune & 
 Apricot Growers, the Poultry Producers of Central California, and 
 the California Associated Olive Growers. In all of those three they 
 have this system of proportionate stockholding, and in all three 
 they have this rule, that a man who is a stockholder — I mean a local 
 stockholder — must market his products through the association- that 
 is, all his products of the particular variety which that association 
 handles. 
 
 There are different kinds of contracts. The contracts are made 
 between the individual growers and the local associations, such as 
 the California Fruit Growers' Exchange, or with these central asso- 
 ciations where there are no locals. The conti'acts are either agency 
 contracts, ill which the grower makes the corporation or association 
 his marketing agent, as such, and in which the agent grades and 
 sells his product for him and gives him the proceeds of the sale less 
 the cost of doing business, or the contracts are in the form of sale 
 contracts. In the case of the California Prune and Apricot Grow- 
 ers the individual makes a sale contract with the corporation, and 
 
COLLECTIVE BABGAINING FOB FABMEES. 31 
 
 he sells, his products to the corporation on the condition that the 
 corporation resell them and give, him all of the resale proceeds, 
 whatever they may be, less a 5 per cent deduction for doing business, 
 and then, if there is anything over out of this 5 per cent deduction 
 that has to go back to the growers on theii' tonnage basis. In short, 
 .5 per cent is made the limit that can be made the cost of doing 
 business. 
 
 Mr. Igoe. Is the interest measured at the end of each year ? 
 
 Mr. Sapiro. At the end of each crop year ; not the fiscal year. 
 
 Mr. Igoe. Does the interest on their proportionate lepresentation 
 in the company remain fixed? 
 
 Mr. Sapiko. The stock condition remains fixed, except that as a 
 man has acreage which comes into bearing which was not originally 
 bearing he has to take out additional shares of stock. In the non- 
 profit, noncapital stock associations in some cases they have cumu- 
 lative property rates, cumulative profit rates, depending upon the 
 deliveries of each year, add cumulatively. 
 
 Mr. Igoe. Is the stock of a man reduced if he should give up a 
 part of his acreage? 
 
 Mr. Sapiko. No; but if they sell out completely and cease to be 
 growers, then the association makes an effort to buy them out. In 
 the case of the ppultry producers, that is a part of the articles of in- 
 corporation, which is valid under the California law, we compel 
 them to sell to the association. 
 
 Mr. Morgan. Is there more than one poultry association in 
 California? 
 
 Mr. Sapiro. Yes. There is one for central California and there 
 is one for southern California. Those two associations handle, I 
 understand, two-thirds of the eggs of the State. , 
 
 Mr. Morgan. They have a division of the two, and they do not 
 conflict with each other? 
 
 Mr. Sapiro. There is a natural division there. Southern Cali- 
 fornia is organized distinctly in the egg business from the northern 
 part of the State. 
 
 Mr. Morgan. How about these other associations. 
 
 Mr. Sapiro. The California Prune and Apricot Growers' Associa- 
 tion is the only prune and apricot association in the State which is 
 organized to market these two products, having a practical mo- 
 nopoly. The Congressman yesterday was slightly inaccurate in his 
 statement. There is not any question as to the fact that you must 
 face a problem of commercial monopoly with quite a few of the 
 California products, particularly with things like walnuts, almonds, 
 olives, raisins, dried peaches, and dried apricots, and products of 
 that kind, because over 90 per cent of all .the products raised in the 
 United States of those varieties are raised in California, .so that 
 as the marketing associations there become well organized there will 
 be a condition Avhere 75 per cent of the California organizations 
 have a practical monopoly, without any questioji, in the State of 
 California. 
 
 The Chairman. The competition, if any, comes from without? 
 
 Mr. Sapiro. The competition comes in sortie cases from outside 
 nations, and then in a great measure from the State itself, because 
 there is no association which has over 83 per cent of the gi-owers of 
 
32 COUOECTIVE BARGAINING FOE FABMEfiS. 
 
 any variety within itself. There are always outside growers in the 
 State of California. 
 
 Mr. Igoe. I want to find out a little more about the grower who 
 becomes a member and then gives up his farm or ranch, or what- 
 ever it may be, or vineyard. Is there any provision in the law of 
 California which enables one of these associations to compel that 
 man, if he ceases to engage in this enterprise, to surrender or sell 
 his stock back to the corporation? 
 
 Mr. Sapiro. Under the law of California you may make as a part 
 of your articles, and likewise as a part of your crop agreement with 
 that member, an agreement whereby he will sell his stock to the 
 corporation under the conditions named by the corporation, at the 
 order of the corporation. 
 
 Mr. Igoe. When he goes out of business he is by contract compelled 
 to sell when the corporation insists upon the sale? 
 
 Mr. Sapiro. Yes; and we have that as a provision in the articles 
 of incorporation and printed on the face of every stock certificate. 
 He gets back the full value of his stock, and he is completely pro- 
 tected, while the cooperative associations in that way maintain their 
 status as purely growers' associations, or pure grower corporations, 
 and they get no outside interests in them. 
 
 Mr. HusTED. I understand you to say that not more than 85 per 
 cent of the growers were in any one of these organizations, or cor- 
 porations ? 
 
 Mr. Sapiro. That is correct. 
 
 Mr. HusTED. What percentage of the production would that be? 
 
 Mr. 'Sapiro. The same percentages would probably follow; that 
 is, you mean for the nonprofit associations of California? 
 
 Mr. HusTED. What I mean is this: Eighty-five per cent of the 
 growers might represent 95 per cent of the production, or they might 
 represent a good deal less than 85 per cent of the production. 
 
 Mr. Sapiro. That is correct. 
 
 Mr. HtTsiTiD. As a matter of fact, is practically all of the products 
 controlled by these organizations? 
 
 Mr. Sapiro. No. 
 
 Mr. HusTED. Are there any independent large growers outside 
 that control a substantial part of the production ? 
 
 Mr. Sapiro. Yes. When we use these percentages, we usually 
 figure on a tonnage basis and not by individual growers, because 
 our only data comes from the reports' of the tonnage production of 
 these things in California, as conipared with the total production 
 handled by the cooperative marketing associations. 
 
 Mr. HusiTSD. The purpose of my inquiry was to find out how, 
 serious this outside competition is. 
 
 Mr. Sapiro. It is very serious. As an instance I will cite the 
 California Prune and Apricot Growers. They will handle this year 
 between 60 and 65 per cent of the prunes of the State. We have 
 had representatives of the so-called speculative packers solicit our 
 growers and guarantee to pay them whatever the associations would 
 pay, plus liquidated damages, plus a bonus of a cent a pound, if 
 they wo^uld only break their contracts with the association. The 
 speculative packers are very bitter in their war* on the cooperative 
 associations of California, but the growers, as a whole, have been 
 exceedingly loyal to their associations, even in the face of a money 
 
COLLECTIVE BAKGAINING FOE FAEMBKS. 33 
 
 loss. This year the prune growers set their price for prunes to the 
 trade at approximately 3 cents a pound less than the speculative 
 packers were actually paying the growers, and on the day the price 
 was set the speculative packers started to go among our growers 
 and tell them they were losing money by belonging to our associa- 
 tion, but the defections were very few, because we established that 
 figure on the understanding that the association would receive a 
 price which would absorb the entire crop and there would be no 
 surplus left over until 1920. 
 
 Mr. Morgan. Do the growers know before they produce this crop 
 what it is going to bring?' 
 
 Mr. Sapieo. No. 
 
 Mr. Morgan. Do they agree first to a certain price ? 
 
 Mr. Sapiro. Take, for example, the California Prune and Apricot 
 Growers' contract. They get 4 cents a pound on delivery — that is, 
 as an advance payment — and nobody knows what the balance of the 
 price may be. It may be i cents or it may be 8 cents more. What- 
 ever the resale price may be, that is what the contract agrees to give 
 them, less the cost of doing business. 
 
 The thing is absolutely cooperative on that basis, and this organ- 
 ization pays the 4 cents as an advance. 
 
 Mr. Morgan. You do the best you can? 
 
 Mr. Sapiko. I beg pardon? 
 
 Mr. Morgan. These sales agencies do the best they can for the 
 grower ? 
 
 Mr. Sapiro. Exactly, except for this point, that they use all the 
 foresight that is possible. They try to foresee the absorbing power 
 of the world's market, alld if they feel the absorbing power is too 
 small, they take on cooperative advertising as an expense of market- 
 ing, to induce the people to eat these things, and tell them how to 
 prepare them, and they standardize them on very high standards of 
 quality so as to make- their food products acceptable. The prune 
 growers have, on their calculations received, stated that the normal 
 crop in California in 1924 will be from 320,000,000 to 400,000,000 
 pounds a year. The absorbing power is less than 200,000,000 pounds 
 a year. Therefore they are going to start an advertising campaign, 
 so that there will be no overproduction. That will begin next month. 
 They are spending a great deal of money to induce the growers to 
 produce prunes of a high quality. 
 
 This gentleman asked about all these contracts. These contracts, 
 as a rule, provide for compulsory delivery for a number of years. 
 They will read, perhaps, to the effect that the grower agrees to deliver 
 to the association for marketing all of the prunes and apricots pro- 
 duced by him for a period of five or seven years, or three years, with 
 the option of two years more, or something of that kind. These 
 contracts are enforceable contracts. The California courts have 
 granted us specific performance against the growers who have vio- 
 lated their agreements, and it is to the interest of these associations 
 to compel performance of the contracts, because they sell a great 
 deal of these products in limited futures, and they must have the 
 products to deliver ; and, likewise, they have built up a huge organ^ 
 ization on the theory that they will have that amount of product, and 
 therefore they Can not afford to have a welching grower ; so the con- 
 
 142695—19 3 
 
34 COLLECTIVE BARGAINING FOR FARMERS. 
 
 tracts are made legally tight, and in every instance thus far where 
 they have been brought up in California — and there have been 14 
 cases — ^the courts have sustained the contracts, and have in some in- 
 stances even granted specific performance of the contracts. In every 
 instance in which it has been requested they have granted an injunc- 
 tion against a grower selling his products outside of the association. 
 
 Mr. Walsh. What do you mean by specific performance — com- 
 pelling them to plant a crop ? 
 
 Mr. Sapiro. No ; compelling them to deliver their products. The 
 contract does not provide that a man must plant a crop; it simply 
 provides that if he has a crop he must deliver it for marketing to 
 the association, and on that they have granted specific performance. 
 
 Mr. Walsh. These growers, in some instances, are tied up for 
 seven years under such a contract as that ? 
 
 Mr. Sapieo. Yes. 
 
 Mr. Walsh. And to a fixed price ? 
 
 Mr. Sapiro. The prices paid are fixed by the board of directors of 
 these associations, and the boards of directors in each instance are 
 the growers themselves and are members of the association, and the 
 decision thej^ make affects their own eggs or prunes, or whatever it 
 is, the same as those of every other member in the association. AU of 
 these contracts provide for pools — say pools of prunes or pools of 
 apricots — and then they have these pools priced. They have pools 
 by sizes. The 30-40 prunes are together ; the 40-50 ; the 50-60 — ^that 
 is, so many prunes of a certain size to a pound. Then there are some 
 other pools by gi'ade. The sun sweet standard are all pooled sepa- 
 rate. The growers' standard are pooled separate, and then the off 
 grade; so every man who delivers anythlbg that becomes an ulti- 
 mate part of these ultimate pools gets a pro rata from the proceeds 
 of that pool. All of the pools are made by the directors. 
 
 Mr. HusTED. These contracts compelling delivery of products 
 have been held by the courts not to be in restraint of trade ? 
 
 Mr. Sapiro. Yes. 
 
 Mr. HtrsTED. By what courts? 
 
 Mr. Sapiro. These cases have not yet come up to the supreme court 
 of the State. They have all been in the superior courts of the State 
 and have been handled there judiciously, and these particular points 
 have all been argued before competent judges. We have the Cart- 
 right Act in California, which is a statute against monopolies. The 
 Cartright Act has been quoted, of course, by all the attorneys on the 
 other side, and likewise these Federal laws, but in every single in- 
 stance the courts have sustained these contracts. 
 
 The Chairman. Is the Cartright Act anything like our antitrust 
 law? 
 
 Mr. Sapiro. Xo. It is framed to prevent monopolies, but at the 
 same time it states that producers of any single commodity are ex- 
 empted for the purpose of procuring a reasonable price for that com- 
 modity, so that the defense, on an attack under the Cartright Act, is 
 invariably a reasonable price defense. 
 
 Mr. CtTRRiE. Are there appeals now pending before your supreme 
 court on this point? 
 
 Mr. Sapiro. There is one appeal pending in the appellate court on 
 the right of the association to a permanent injunction in one of these 
 prune suits. 
 
COLLECTIVE BABGAINING FOB FAKMERS. 35 
 
 Mr. CtJERiE. And the question is as to whether or not these con- 
 tracts' are in restraint of trade ? 
 
 Mr. Sapiro. There is an appeal pending before the supreme court 
 in one of these cases wliere a permanent injunction was granted to 
 the association against a man named Nielson in Sacramento. 
 
 Mr. CuRRiK. Has that been heard before your supreme court? 
 
 Mr. Sapiro. No; the appeal was, filed possibly in June, and it 
 probably will not come up for argument for over a year, and no 
 briefs, have been filed yet in the supreme court. There are some 
 thorough briefs on that matter. The decision will probably not be 
 rendered within two years. 
 
 Mr. Walsh. Do I understand you to say that they have pools of 
 different grades of these commodities? 
 
 Mr. Sapiro. Yes; with the prunes -and apricots the growers' de- 
 liveries are divided up according to standard, size, grades, and so on. 
 
 Mr. Morgan. What does that term " pool " mean? 
 
 Mr. Sapiro. They are pooled. Each grower delivers a certain 
 amount of prunes. When you sell these prunes you do not sell them 
 just as prunes; you sell them on the basis of size, 30-40's, etc., and the 
 retail price is based according to whether they are sun-sweet standard, 
 growers' standard, or off standard, so in order to make a commercial 
 basis of sale they form pools. All the money that is taken in from the 
 sale of 3CM:0's, sun-sweet standard, or growers' standard is turned 
 into one pool, and that is divided then between the growers who con- 
 tribute prunes to that pool. 
 
 Mr. Morgan. And that is the way a man is paid for the stuff he 
 produces ? 
 
 Mr. Sapiro. Exactly. They pool them according to the grade of 
 goods and the size. 
 
 Mr. Walsh. What is it that you are seeking to do that you can not 
 do under existing law ? Of the different things you are now doing, 
 what is it particularly that you are seeking by this legislation that you 
 are unable to do at the present time ? 
 
 Mr. Sapiro. I tried to make clear at the start that most of these 
 associations that have no capital stock are doing these matters legally, 
 and there is no form of interference with them. 
 
 Mr. Morgan. Either nationally or State? 
 
 Mr. Sapiro. There has not been any interference, either national or 
 State. The associations that have paid capital stock have had inter- 
 ference with them. They considered capital stock essential, and I can 
 explain why. Take the poultry producers. The poultry producers, 
 in order to merchandize eggs properly, must store in the spring, In 
 the four months of the spring, in California, at any rate, they produce 
 almost 70 per cent of all the eggs produced in the year. If they 
 started in and sold those right offhand, and did no storing, when the 
 fall and winter months came the price of eggs would probably be a 
 good deal in excess of a dollar a dozen, so that in the season of large 
 production the operators store their eggs for the season of lean pro- 
 duction. In order to do that the banks are willing to advance 80 per 
 cent of the value of the eggs at the time they go into storage, but that 
 other 20 per cent has to be secured somewhere, and therefore it was 
 cpnsidered essential, both by the banks and primarily the poultry pro- 
 ducers, that it be a capital-stock corporation. This corporation h^s 
 $230,000 paid up in capital stock, and it can store eggs and do it upon 
 
36 COLLECTIVE BARGAINING FOR FARMERS. 
 
 a fair commercial margin. Before any of these organizations are 
 formed in California they always consult the bankers, because we 
 \Yant to make certain that the association is headed right from a finan- 
 cial standpoint. 
 
 We consider it particularly essential that the growers be pro- 
 tected from getting into some sort of a scheme which will not stand 
 up financially and commercially, and in that respect we have fol- 
 lowed the advice of the bankers as to the best form of association, 
 and whether they would give us credit if it were a noncapital stock 
 association, or whether they would give us credit only if it became 
 a corporation, and in the latter case we carry out this proportionate 
 stockholding idea and include only producers in this corporation 
 that I have mentioned, so as to make it as bona fide as can be done 
 under existing law. Under these corporations the growers do have 
 gi-eater protection, but without a clear exemption under the law, 
 they may meet permanent interference. 
 
 Yesterday the chairman asked if there had been any definite inves- 
 tigation into the matter of these associations by the Federal board. 
 There have been. Mr. Webster, of the Department of Justice, and 
 Mr. Kelly, of the Department of Justice, made an investigation into 
 these California corporations and associations, at the express request 
 of the department, within the last three months. They took it up 
 personally with my own office, and they are making an inquiry not 
 merely with respect to the size and form of the organization, such 
 as the member inquired about a minute ago, but from the stand- 
 point of its commercial operations, and we are very gladly giving 
 them copies of the minutes of our meetings at which the prices were 
 made and such other documents as would enable them to see that 
 the associations were conducted not merely for ■ the good of th& 
 growers but without harm to the general consuming public or to 
 the general public at large. 
 
 Mr. HusTED. As I understand it, your point is that you can do as 
 individuals with a central organization what you are not permitted 
 to do as stockholders of a corporation, and you want to overcome 
 that handicap? 
 
 Mr. Sapieo. No ; my point was that the law, as it now reads, has 
 some ambiguities. It states that the exemption applies to associa- 
 tions not having capital stock or conducted for profit. That, on the 
 face of it, excludes any association or cooperative corporation with 
 capital stock. Consequently it raises an ambiguity as to the term 
 " conducted for profit." ■ We did not raise that ambiguity. It was 
 raised by the Federal officials. They said it could be interpreted to 
 mean that the individual members could not make a profit, although 
 the consensus of opinion seems to be that " conducted for profit " 
 applies to an association as such and not to the individual growers. 
 
 There was also a question as to whether you would have to meet 
 both of those requirements — that is, not for capital stock and not 
 to be conducted for profit — or whether the term " or " was alter- 
 native; so, in order to clear up these ambiguities, and to give such 
 protection to these cooperative associations or corporations as west- 
 ern experience has demonstrated was necessary, we suggested an 
 amendment to the law, and I trust the committee will find itself 
 favorable to the amendment. 
 
COLLECTIVE BARGAI-NING FOR FARMERS. 37 
 
 At the suggestion of your chairman, I condensed the requirements 
 of the cooperative association into one paragraph, and I would like 
 to submit that to this commitee as a paragraph which will include 
 every single thing requested in the bill that was referred to yester- 
 day to give greater protection to the growers' associations on points 
 that I would like to discuss. 
 
 Mr. Morgan. Before you you into that I would like to ask one 
 question. You speak about the poultry and egg business. Why 
 is it necessary that the California business of that kind be organized 
 more so than in other States, or is it organized in each of the other 
 States? 
 
 Mr. Sapiro. I do not think it is more necessary that it be organ- 
 ized in California than in the other States, except that in California 
 they have done it. 
 
 Mr. Morgan. Have they done it generally in other States? 
 
 Mr. Sapiro. No. In California there are 20 of these large State- 
 wide cooperative associations. It happened there that the idea of 
 cooperative associations on a large scale has spread like fire. In the 
 East they have had what they call local cooperative associations. 
 There are almost thousands, you might say, of local shipping asso- 
 ciations, elevator associations, local milk associations, and creameries^ 
 and all kinds of cooperative businesses, but it is primarily on the 
 Pacific coast that you will find these associations organized on what 
 you would call a commercial control of one particular subject. If 
 you- take the shipping associations and these creameries, there is 
 nothing in any one association to be a real factor in making a na- 
 tional market price, and you will find the opposite in some of these 
 California associations. 
 
 Mr. Morgan. Do you believe these associations could be organized 
 for wheat growers, the corn growers, and producers of that kind ? 
 
 Mr. Sapiro. You asked that yesterday, and I at that time won- 
 dered whether I ought to disclose a thing which is under considera- 
 tion. I decided, after a conference, that it was proper to do so. 
 The wheat growers of the Northwest have met on that very point, 
 and I was called in as special counsel on that matter solely. because 
 of the experience of California on this point, and a plan is now being 
 worked out for presentation to a committee of wheat growers early 
 in December. 
 
 The Chairman. Who are the parties in interest? 
 
 Mr. Sapiro. I can not give them, sir. They are the wheat grow- 
 ers primarily of the Northwest. 
 
 Mr. Morgan. What do you mean by the Northwest, North Dakota? 
 
 Mr. Dter. Do you mean Minnesota ? , 
 
 Mr. Sapiro. No ; Montana, Washington, Oregon. California, and 
 some of the other Western States. 
 
 Mr. Dyer. Oklahoma is not in it, is it ? 
 
 Mr. Sapiro. No. 
 
 Mr. Morgan. Is it contemplated to make this a nation-wide asso- 
 ciation? 
 
 Mr. Sapiro. It is contemplated now to make State organizations 
 first in which the wheat men will concentrate their marketing, and 
 then coordinate the State associations and the National Wheat Ex- 
 change. Then representatives will be asked from the Federal Ee- 
 serve'^Board and the Federal Trade Commission and three to be ap- 
 
38 COLLECTIVE BARGAINING FOE FARMERS. 
 
 pointed by the Department of Agriculture, so as to conserve the pub- 
 lic interests in the handling of the product. 
 
 Mr. Morgan. Why should you take on the Federal Trade Commis- 
 sion and the Agricultural Department with the wheat growers and 
 not take them on with the fruit growers ? 
 
 Mr. Sapiro. In California we have done that. On the board of 
 directors of the California Prime and Apricot Growers' Association 
 there is a gentleman assigned by the State Market Growers' Ex- 
 change. 
 
 Mr. Morgan-. You have no national representative, and yet you 
 grow prunes for the whole Nation, and not for California. 
 
 Mr. Sapiro. But there it has been formed purely as a State associa- 
 tion, there being no members in it except the prune growers of Cali- 
 fornia. In this wheat exchange there are men in it from the States 
 of Washington, Oregon, Montana, California, etc., so that national 
 representation becomes necessary. 
 
 Mr. Morgan. The idea would be that this national exchange would 
 have a sort of power to fix the price, it would be a sort of semigovern- 
 ment business, whereby they would agree upon what wheat ought to 
 bring, and that would be considered a fair price, or something of the 
 kind. 
 
 Mr. Sapiro. I Mould put it this way : At the present time the wheat 
 growers feel that their price is fixed through artificial manipulation 
 in a great measure, primarily by the so-called packers of Chicago, 
 namely. Armour and Swift, and they feel that the public is a great 
 deal safer where the control of the wheat market is in the hands of 
 the growers' cooperative group than when the control of the wheat 
 market is in the hands of the speculative packers. 
 
 Mr. Morgan. If we amend this law at all, would you be in' favor of 
 doihg it so that it would permit the wheat growers, the corn grow- 
 ers, and live-stock growers, as well as the poultry producers, to form 
 associations whereby they could do their marketing through a cen- 
 tralized marketing association? 
 
 Mr. Sapiro. Yes. 
 
 Mr. Morgan. If you have any legislation at all, it ought to be so 
 that all these various agricultural producers in certain lines could 
 organize, and to some extent centralize the marketing of their prod- 
 ucts through a central sales agency. 
 
 Mr. Whalet. Wliy hot include cotton, too? 
 
 Mr. Sapiro. The cotton growers are considering that very thing, 
 and there will be a conference of them in two weeks to determine how 
 to work that out. There has been correspondence with them, and I 
 think there is some hope in that problem. 
 
 Mr. Dter. Under that theory, they can control the price of cloth- 
 ing and everything. 
 
 Mr. Morgan. Excuse me, but he did not answer my question. I 
 do not want to interrupt, but I want to get his idea, because I am 
 a wheat grower. I would not want to legislate for the prune growers 
 unless we are going to legislate for the benefit of the corn and wheat 
 producers also. Would it be possible to amend this law so as to al- 
 low the wheat growers and the corn growers and the cattle pro- 
 ducers the same privileges as the prune growers or the poultry pro- 
 ducers? 
 
COLLECTIVE BARGAINING FOR FARMEKS. 39 
 
 Mr. Sapieo. Absolutely. In answer to the suggestion of this gen- 
 tleman, and likewise the suggestion of this gentleman, as to why 
 we make a distinction, because I assume that is a basic question, be- 
 tween the manufacturer and the farmer, I will say this, that the dis- 
 tinction comes in practice. The farmer in this country has been sub- 
 jected to speculative control more than any other group of producing 
 elements, manufacturing or otherwise, that this country has ever 
 known. 
 
 The farmer is not in a situation like the small manufacturer, where ~ 
 he can keep in touch with the market, and he is not in a situation 
 where he can have any control of the market. The average farmer 
 does not pretend to be a good business man, and the theory of co- 
 operative associations is to encourage his production as a farmer 
 and keep him as a farmer and make production profitable for him as 
 a farmer, and to enable him in cooperation with other farmere to 
 engage the best talent in the land to market his product and pur- 
 chase supplies for him on a cooperative basis, and advertise his 
 goods, in which case he is a factor in a real business, and not in a 
 speculation. 
 
 Now, from the standpoint of basic economic theory, there is not 
 any distinction between the production of one thing that is essential 
 to life, and the production of another thing that is essential to life. 
 I state that openly and frankly, but from the standpoint of actual 
 practice, and in many particulars from the standpoint of the ex- 
 perience of this country it has been shown that the farmer has been 
 the most helpless person, commercially, except with the aid of the 
 Government or a cooperative association, this country has known. 
 
 Mr. Morgan. Where are prices fixed on any particular ptpducts; 
 say wheat, corn, or poultry ? 
 
 Mr. Sapiro. The wheat growers have their price dictated to them 
 by the Chicago packers. 
 
 Mr. Morgan. As a matter of fact, the exchanges fix the price, do 
 they not ? 
 
 Mr. Sapieo. The exchanges are pretty well controlled by that 
 kind of an element. 
 
 Mr. Morgan. They fix the price so far as the farmers are con- 
 cerned. Would it be your idea to get the price fixed, and not specu- 
 lative, and abolish the exchanges ? 
 
 Mr. Sapieo. I think that would be an inevitable part of it. I think 
 everything that is primarily a speculative factor in dealing with 
 American farm products must ultimately be abolished. 
 
 Mr. Morgan. You believe, for the benefit of the farmer, as well as 
 the consuming public, you ought to abolish all the exchanges, the 
 wheat exchange, the poultry exchange, the cotton exchange, and all ? 
 
 Mr. Sapiro. I think, for the benefit of the farmer and the consum- 
 ing public and the social state as a whole, they all ought to be abol- 
 ished, if there was no real necessity for their activity, I would not 
 for a minute think of handling the problem without establishing a 
 world-wide information bureau, without establishing an absolute 
 collective credit plan, without establishing standardizing methods 
 and complete warehousing methods, and all those factors of efficient 
 business methods which the exchanges have produced must be con- 
 tinued in cooperative associations ; but I certainly believe that every- 
 thing which gambles in farm products ought to be eliminated. 
 
40 COLLECTIVE BARGAINING FOB FARMERS. 
 
 Mr. Morgan. The Census Bureau supplies you with statistics as 
 to the production part of it ? 
 
 Mr. Sapiro. That is not fast enough. Those statistics are not suf- 
 ficient to meet the purpose. You would have to maintain offices, you 
 would have to have ageAts all over the world the same as the specu- 
 lators do. You would have to go into their game. 
 
 Mr. Morgan. Do you think the Government ought to go into the 
 exchange business, too ? 
 
 Mr. Sapiro. Not in any sense. Where I have suggested Govern- 
 ment representatives it has been with the view that in the event any 
 one of these associations ever takes the bit in its teeth and starts to 
 run away there would be a person there who could take care of the 
 public interests. 
 
 In California we asked for representatives of the State govern- 
 ment, and they sit as directors on these various boards, and if any- 
 thing comes up which they do not feel is good for the public prima- 
 rily, they come out with a strong objection. With the wheat ex- 
 change you would have a different problem. You would have, first, 
 the problem of collective credit, and, therefore, it was wise to have 
 somebody suggested by the Federal reserve baiik whom they could 
 recommend to us as fit to make collective credits. They suggested a 
 representative of the Federal Trade Commission, who could take up 
 national and international competition ; and then we suggested a rep- 
 resentative of the Agricultural Department, representing produc- 
 tion as a whole, the general publid interests, and the question of 
 finer standards in wheat. 
 
 Mr. Igoe. I do not want to interrupt the speed of your statement, 
 but I would like to know about this. Have you discussed this partic- 
 ular bill ? I was not here yesterday afternoon. 
 
 Mr. Sapiro. No. 
 
 Mr. Igoe. Do you intend to take that up this morning? 
 
 Mr. Sapiro. I did not mean to devote that much time to the con- 
 sideration of the wheat question and these other things. Do you wish 
 that I get back to the bill ? 
 
 Mr. Igoe. What I was anxious to find out was if this bill that we 
 are considering is enacted into law, what *ould there be to prevent, 
 say, one of these independents that we were speaking of just now, 
 going about trying to get members of the exchange or association to 
 violate their contracts, from continuing to do that? Suppose one 
 of those independents was a producer out there and undertook to 
 organize a rival exchange or association; would it not only be nec- 
 essary that he should get these growers in as stockholders, and that 
 then he could make a sort of contract, and the only limitation would 
 be that the ultimate return must not exceed the interest rate in that 
 State? 
 
 Mr. Sapiro. I am not speaking for this bill. If I may be pardoned 
 for just a few minutes, I will give an analysis of why we object to 
 certain portions of this bill and will present the paragraph that was 
 drawn up at the express suggestion of Mr. Volstead, but I want to 
 say that even with this paragraph the question will apply, and I will 
 disf'uss it just for a moment. 
 
 Mr. Walsh. Do you contend that some legislation along this line 
 will reduce or have some effect on the cost of living? 
 
COLUSCTIVE BARGAINING FOR FARMERS. 41 
 
 t 
 
 Mr. Sapiro. I would say that, in the larger sense, the one thing 
 that will reduce the cost of living is increased production, and any 
 legislation which the Judiciary Committee may enact which will 
 make production profitable to the farmer, which will take him out 
 of the hands of the speculators, will increase production, and, as a 
 natural incident, will lower the cost of living. We must assume for 
 that purpose that the channels of distribution are not completely con- 
 trolled by the speculators, so that the public will get some of the 
 benefit of this increased production. 
 
 Mr. Walsh. Do you know of any instances where the cost of living 
 has been deci'eased as the result of legislation ? 
 
 Mr. Sapieo. I know of instances where the cost of living has been 
 decreased by cooperative associations, not by legislation. I have 
 here a chart showing the products in California which were con- 
 trolled by the cooperative associations and the products that were not 
 controlled by the cooperative associations. From the year 1912 to the 
 year 1917 the increase on the noncooperative products was over 112 
 per cent. 
 
 Mr. Walsh. What were those products? 
 
 Mr. Sapiro. Potatoes, onions, and a great many things of that 
 kind. The increase on the so-called organized products was less than 
 40 per cent at that time. 
 
 Mr. Walsh. What were those products? 
 
 Mr. Sapiro. Those were prunes and apricots and other similar 
 products. 
 
 Mr. Walsh. Products that were grown chiefly in California, were 
 thev not ? 
 
 Mr. Sapiro. This only represents the California associations. 
 
 Mr. Walsh. But potatoes are grown everywhere. 
 
 Mr. Sapiro. Yes. 
 
 Mr. Walsh. Prunes are grown chiefly in California? 
 
 Mr. Sapiro. Yes. Let us take onions. California is the largest 
 factor, with Texas, in the onion market and produces practically 
 everything, and is an enormous factor there, and the prices are way 
 up high. 
 
 Mr. Walsh. What does it show on eggs? 
 
 Mr. Sapiro. Our production on eggs — I could not give you those 
 figures, but the increase was less than 80 per cent for those years, 
 although the cost of feed had gone from 60 cents per bushel on their 
 meal to over $2 a bushel ; that is, the meal that they used for feeding 
 the poultry. 
 
 Mr. Walsh. Did I understand you to say that the reason the asso- 
 ciations in California prefer to store their eggs was in order to pro- 
 tect the public from $1 a dozen price in the fall ? 
 
 Mr. Sapiro. No ; I say that in the interest of good merchandising 
 every merchandiser stores overproduction of a period in which the 
 greatest production occurs to the time when the lean production 
 occurs. That is absolutely a universal custom. 
 
 Mr. Walsh. Eggs are products that could be stored and kept over 
 by the consumer, if they are available, are they not ? 
 
 Mr. Sapiro. Yes ; we sell them for that purpose. We advertise to 
 the people that they could get good white eggs in March or April, 
 and store them away for themselves, and save themselves all kinds of 
 expense, if they want to. 
 
42 COLLECTIVE BARGAINING FOE TARMEKS. 
 
 The Chairman. They would have to have cold-storage facilities, 
 would they not? . , 
 
 Mr. Sapiro. No, sir; they can put them in water glass. Quite 
 a few people in California do it. 
 
 Mr. HusTED. Can you explain how the farmer can deal more effec- 
 tively with the consumer under this proposed legislation than under 
 existing methods? * 
 
 Mr. Sapiro. I have not attempted to explain that at all. I under- 
 stand the associations are not primarily concerned with trying to 
 get direct contact between the purchaser and the consumer. 
 
 Mr. HusTED. I understood you to say you wanted to get rid of the 
 speculator. 
 
 Mr. Sapiro. They tried to get rid of speculative distribution, but 
 they I'ecognize the necessity for some distributing middleman. They 
 either have to be that distributing middleman themselves, or they 
 have to recognize the existing distributing middleman, but in every 
 instance they try to get rid ot the speculative middleman. 
 
 Mr. HusTED. You tliink that under this legislation you can more 
 effectively get rid of the speculating middleman than you can under 
 yoiir existing method ? 
 
 Mr. Sapiro. I will state that in California, cooperative associa- 
 tions have dealt, as far as their contracts are concerned, with the food 
 distributors more than the old-time speculative brokers did. I 
 could show it with prunes. When the prune contracts are matured 
 the association sells to the brokers, each of whom is required to 
 name the person to whom or for whom he is selling or buying. Now, 
 the name shows whether or not it is a broker or a real distributor. 
 If the name indicates that a sale is for the account of another broker, 
 not for the distributor, the sale is not confirmed, and wherever the 
 association finds that their contracts have been speculated with — ^that 
 is, that the delivei'v of the prunes is made to somebody other than 
 is named in the original brokerage firm order — that man gets no 
 further order until he shows complete good faith. 
 
 Mr. HusTED. Can you not do that just as well under your existing 
 methods of doing business? 
 
 Mr. Sapiro. Can we not do it just as well ? AVe are doing it. 
 
 Mr. Htjsted. Can you not do it just as well as you could under 
 this proposed legislation? 
 
 Mr. Sapiro. We are doing it, but, as I pointed out before, it is be- 
 ing done with corporations with cajsital stock, and we are not certain 
 whether that is exempted under the Clayton Act as it now stands. 
 The Federal authorities claim it is not. 
 
 Mr. Husted. Your position is that you are doing riglit, but you 
 want to be sure that j'ou will be left alone ? 
 
 Mr. Sapiro. Yes. 
 
 Mr. Steele. You want to go beyond the State border ? 
 
 Mr. Sapiro. We do now. There is not anything in the present 
 law that would prevent a cooperative association, without capital 
 stock, from doing that just now. 
 
 Mr. Steele. How could they finance it? The farmers have not 
 got any money to finance their crop. That is the question I put a 
 while ago. 
 
 Mr. Sapiro. Would the committee permit me to explain exactly 
 what the California Bean Growers' Association is doing to secure 
 
COLLECTIVE BARGAINING FOR FARMERS. 
 
 43 
 
 collective credit ? The California Bean Growers' Association has no 
 capital stock, but the growers are bound, however, to deliver their 
 beans to the association. The method, for instance, which has been 
 worked is this: The grpwers deliver their beans at the warehouse. 
 They receive warehouse receipts. The warehouse receipts are handed 
 Over to the California Bean Growers' Association. The association 
 then delivers these warehouse receipts to a trust company in Cali- 
 fornia. The trust company takes the warehouse receipts, specifying 
 the number of bags of the different varieties — for example, 100,000 
 bags of small whites, or black eyes, or whatever the figure may be — 
 and then they calculate on the loan value for these beans, of, say, 
 3^ cents a pound. 
 
 Then they issue a series of $10,000 notes in serial numbers. Each 
 one of the notes and the receipts shows that it covers such and such 
 a number of bags of beans, calculated on a 3^-cent loan basis. Each 
 of the notes bears 6 per cent interest. Each one of the notes is for 
 full six months'^ maturity, because that is the ultimate maturity 
 allowed for agricultural paper under the Federal reserve act. Then 
 the association takes these notes to any bank in the State and borrows 
 money on those notes with the distinct right to say that the Federal 
 reserve bank in our district will rediscount them as agricultural paper 
 on just those terms. That is the arrangement with the Federal 
 reserve bank. Then the association takes this money that it gets 
 from the banks, which is about 3^ tjehts per pound, and it makes the 
 first payment to the grower of 3 cents a pound, the half cent being 
 reserved for paying warehousing charges, insurance charges, and re- 
 sacking charges that occur during the warehousing. 
 
 The various banks throughout California are taking this paper. 
 One bank alone put in for $2,000,000 worth of that paper. That 
 paper has six months' maturity. The bank can put all of it in the 
 Federal reserve bank if it chooses, because the Federal reserve bank 
 told us in advance that they would take it, or it can resell it to other 
 banks that want that kind of security. As the beans are sold prior 
 to the maturity of the notes, the money is paid into the trust com- 
 pany, which tlien releases the Wfil'ehouse receipts covering the beans. 
 Then the trust company retains 3|- cents a pound, plus enough to 
 cover interest to the maturity of the note, and the balance is carried 
 over, and the trust company then pays 4 per cent interest on the 
 money from the date of the payment to the trust company to the 
 date when the money is to be paid out on the maturity of the note. 
 
 The balance of the money, the difference between the 3f cents a 
 pound and whatever the sale prjce may be, is paid to the association 
 and becomes a part of either the small-white pool, the large-white 
 pool, the black-eye pool, and as the money in that pool becomes 
 enough to warrant 1 cent per pound payment to the growers then- 
 that amount is paid out to the growers in that pool. In that way 
 we have absolute collective credit for the growers. No grower is 
 paying more than 6 per cent for his money this year in California on 
 beans, and no grower there has to sign a one-day note and be under 
 the fear that to-morrow, if the banker does not like his looks, he 
 will call his collateral and throw his beans on the n^arket. In this 
 way the bean speculators are prevented from dumping the beans on 
 the market before they get a market. 
 
44 COLLECTIVE BABGAINING FOE FAKMEKS. 
 
 In California we have solved that problem this year. There is no 
 capital in the California Bean Growers' Association; none at all. 
 It was just a case of using the collective idea and then using the 
 resources of the Federal reserve bank,, and our problem is solved 
 for that in California. 
 
 Mr. Steele. Does the association make any profit out of it ? 
 
 Mr. Sapieo. Certainly not; the association is purely a nonprofit 
 association. 
 
 Mr. Steele. Whatever profit is realized is distributed among the 
 growers ? 
 
 Mr. Sapiro. There is not any profit. Wliatever the proceeds may 
 be are divided in the pools among the growers. 
 
 Mr. Steele. Then the proceeds that are derived from the associa- 
 tion go back to the growers? 
 
 Mr. Sapieo. To the individual growers. 
 
 Mr. MoEGAN. You say they loan 3^ cents a pound ? 
 
 Mr. Sapieo. Yes; on a pound. 
 
 Mr. MoBGAN. How much is paid by the public ? 
 
 Mr. Sapieo. The present market price is between 6 and 6| cents, 
 and they loan us 60 per cent of the market value. The Federal re- 
 serve officers said they would consider that a fair and legitimate 
 margin. 
 
 Mr. Morgan. A 60 per cent margin or a 40 per cent margin ? 
 
 Mr. Sapieo. They loan us 60 per cent. They wanted 40 per cent 
 margin. 
 
 Mr. Steele. Who fixes the price of beans ? 
 
 Mr. Sapieo. It is controlled by factors beyond California. Beans 
 are produced all over the United States, and it is necessary to meet 
 commercial conditions all over the country. 
 
 Mr. Steele. You receive a price of 6^ cents a pound? 
 
 Mr. Sapieo. That is what the association has received for beans, 
 so that constitutes the basis of sale. 
 
 Mr. Dyeb. Does your amendment take care of the milk-producer.s' 
 associations ? 
 
 Mr. Sapieo. It takes care of any farm producers. 
 
 Mr. Dyeb. Suppose they fix a price, then what? 
 
 Mr. Sapieo. I did not get the point. 
 
 Mr. Dyee. Suppose the milk producers or dairy men fix the price 
 of milk to the public, to the consumer, would your amendment cover 
 that? 
 
 Mr. Sapieo. Surely. 
 
 Mr. Dyeb. So they could go ahead and do that ? 
 
 Mr. Sapieo. Surely; if they have not capital stock, they do that 
 now. In California we have an association of dairy men which has 
 no capital stock, and they fix the price, and there has been no inter- 
 ference with them, as far as I know, from the Federal authorities. 
 
 Mr. Dyee. They can abuse, that privilege by charging the public a 
 high price, can they not ? 
 
 Mr. Sapieo. There is no question that there is always a possibility 
 of abuse of that situation. In practice I think the abuse has been very 
 rare, because there is one practical check, and that is when you make 
 the price artificially high you induce a great many men to overpro- 
 duction, and overproduction is the thing that has broken the farmer's 
 chance of profits every time, so that the cooperative associations as a 
 
COLLECTIVE BAEQAINING FOE FAKMEES. 45 
 
 whole, make more money in the long run if their prices are stabilized 
 downward rather than stabilized upward. 
 
 Take the experience of the California prune and apricot growers. 
 In the three years in which they have been operating, in the first 
 year of the three years, they made their own price, and then the second 
 year the Government made the price. In the first year they made 
 the price below the speculative packers' price ; they made their price 
 lower than the price speculative packers were paying the growers, 
 and this year thciy have come 3 cents below the price speculative 
 packers were paying the growers on the date they made the price. 
 
 They always feel that they will make more money in the long run 
 if they depend on a small profit and upon a large volume rather than 
 upon large profits on a small volume. If they make things, cheap, 
 people will eat them ; if they make things high, people will seek for 
 substitutes. They know that they are in that business for a long time, 
 and their attitude is different from that of the speculator. 
 
 The packer's interest is different from that of the grower. He is 
 purely a speculator and has no interest in keeping a permanent in- 
 vestment in the land or in producing prunes or apricots, while the 
 grower has his land and his trees there, and he knows he is going to 
 make that his life business, and in the cooperative associations the aim 
 is to see that the volume is large. 
 
 Mr. Steele. In the bean association, who fixes the sale price ? 
 
 Mr. Sapiro. They have a sales committee. The sales committee 
 keeps in touch with the product out West and with the product and 
 sales in the East. As far as this association is concerned, California 
 does not produce any beans that are not produced elsewhere in the 
 United States. The Lima Bean Association is in a different situation 
 from the California Bean Growers' Association. They can not fix the 
 price on California small whites without considering first the Jap- 
 anese kotenashi, which is very much like it, and also the Michigan 
 and New York small whites. They have to take into consideration 
 all the commercial conditions. 
 
 Mr. Steele. Who fixes it? 
 
 Mr. Sapieo. The sales committee. 
 
 Mr. Steele. You referred a while ago to a combination among 
 the producers of the different States. If that were done, then the 
 national committee would fix this price? 
 
 Mr. Sapieo. Correct. 
 
 Mr. Morgan. The next step in the bean combination would be to 
 form a union within the United States of the Michis'an, New York, 
 and California bean growers? 
 
 Mr. Sapiro. I have not suggested that. 
 
 Mr. Morgan. Is not that the logical thing to do ? 
 
 Mr. Sapiro. I should think so, but there are no steps on at the 
 present time to form such a thing, because there are no real coop- 
 erative associations of growers marketing their own products, except 
 in California, on a State-wide scale, and in New York, in one dis- 
 trict on a small scale. 
 
 Mr. Morgan. Would you suggest that this legislation be such 
 that it would permit an organization of cpmbined growers of the 
 United States? 
 
 Mr. Sapiro. I think it does it now. 
 
 Mr. Morgan. You think it does? 
 
46 COLLECTIVE BAEGAINING FOB FAKMEBS. 
 
 Mr. Sapieo. I think that the present Clayton Act would permit 
 that. 
 
 Mr. MoKGAN. Would you thinlc that the bean growers of the 
 United States could go into a sales organization for the purpose 
 of marketing their products, under the present law ? 
 
 Mr. 3apiro. Yes. 
 
 Mr. MoHGAN. Then what do you want this legislation for ? 
 
 Mr. Sapiro. Perhaps I did not make myself clear on that. I 
 emphasized the fact that there were three different kinds of these 
 associations. For example, one is corporate in forn^, like the Cali- 
 fornia Prune and Apricot Growers' Association, and it is not clearly 
 exempted under that act. As a matter of fact, I do not believe 
 it is exenipted at all, and if that form of association is allowed to 
 exist, it can not exist without capital. The bankers would not 
 back it. 
 
 Mr. Igoe. Have you got a suggestion that would allow the gi'ow- 
 ers to do that, and yet protect the public against the use or abuse 
 of that privilege by it? 
 
 Mr. Sapiro. There is always a possibility, although it is slight, 
 of that abuse. The public has to take its choice between a market 
 controlled by the growers and a market controlled by the specu- 
 lators. 
 
 M37. Igoe. I was just wondering whether the law you suggest 
 might not allow the speculators to come in and take advantage of 
 it, and our last condition might be worse than the first. 
 
 Mr. Sapiro. Let us take that problem. That is the question you 
 asked yesterday. May I read this, gentlemen. I suggest the follow- 
 ing as a substitute for section 6 : 
 
 Nothing contained in the antitrust or other laws of the United States shall 
 be construed to forbid the existence or operation of cooperative agricultural, 
 viticultural, dairy, or horticultural organizations of producers, not organized 
 or not operated for profit of such organizations, but for the purposes of mutual 
 help or of cooperative or collective processing, handling, or marketing of farm, 
 orchard, dairy, plantation, ranch, or vineyard products of their members, 
 whether such organizations are cooperative in form or otherwise, with or 
 without capital stock: {Provided, That payment on stock or membership certifi- 
 cates of not to exceed the legal rate of interest in the State where organized, or 
 in any event 8 per centum per annum shall not affect the status of such organiza- 
 tions of producers) ; nor shall any such organization or the members thereof or 
 the contracts made betweien such organizations and th^ir members or stockholders 
 be held or construed to be illegal contracts, combinations, or conspiracies in 
 restraint of trade or commerce or conspiracies to monopolize or attempt to 
 monopolize any part of trade or commerce or a yioaltion of the laws of the 
 United States. 
 
 Mr- Igoe. May I ask you a question right there? The Federal 
 Trade Commission, in its investigation of the packers, made much 
 of the fact that they were controlling or seeking to control some 
 600 articles. It developed here on a hearing that in marketing 
 various by-products, including, for instance, oleo, they were reach- 
 ing out and endeavoring to gain control of the butter industry. 
 
 Now, may I ask you what is to prevent one of these concerns' from 
 organizing an association and inviting in these people whose prod- 
 ucts they now purchase and giving them a share of stock in one of 
 these concerns and making contracts with them for the purchase of 
 the products of their farms, dairips, etc. ? 
 
 Mr. Sapiro. Would you consider that a cooperative association ? 
 
COLLECTIVE BARGAINING FOE FABMEKS. 4T 
 
 Mr. Igoe. It is cooperative in the same sense, it seems to me, that 
 your California associations are, except that the 
 
 Mr. Sapiro. I would ask would you consider that a cooperative 
 association ? 
 
 Mr. Igoe. I would say so, because of the fact that when they go 
 into a stock concern they purchase a share of stock and are to get a 
 return for their product in proportion to what they furnish. The 
 limitation on return, it seems to me, would not be any protection at 
 all, because, as I recall, the packers, as an evidence of their com- 
 plete innocence, say that they only make about 5 or 6 per cent, and 
 that seems to be the only protection in it. I am speaking about the 
 abuse of the privilege, if we pass a law to permit producers of farm 
 products to combine. That is the thing that worries me. 
 
 Mr. Sapiro. First, would you consider a corporation like Armour 
 & Co., which, perhaps, may do a bit of producing on its own hook, a 
 producer ? 
 
 Mr. Igoe. As to what it produces, yes. 
 
 Ml'. Sapiro. I think that the courts would hold against you; that 
 a corporation in which the element of production is not the primary 
 factor but is a subordinate factor is not a producer. 
 
 Mr. Igoe. Not the concern itself, but it has been developed, for 
 instance, that they have subsidiaries, for instance, and no one knows 
 who the actual stockholders are. They have, in other words. State 
 corporation. 
 
 Mr. Sapiro. May I give you an illustration? Armour & Co. con- 
 trols and owns the Sutter Basin Co., of California. The Sutter 
 Basin Co. pfoduces beans. The Sutter Basin Co. is a member of the 
 California Bean Growers' Association. Its vice president, Mr. Mad- 
 dock, sits on the board of directors of the California Bean Growers' 
 Association. There are other bean growers, of course, in that asso- 
 ciation who represent collectively about eight or nine times as many 
 beans as the Sutter Basin Co. Mr. Maddock's beans are sold by the 
 others — not the others' beans sold by Mr. Maddock — and far from 
 Armour & Co. controlling the bean growers' association, the bean 
 growers' association compels Armour & Co. to pool its beans in with 
 the beans of the smallest bean grower of the State, so that the man 
 who delivers 100 bags of beans to the association gets as much for 
 his 100 bags as the Armour people do for their 100,000 bags if they 
 have that many. 
 
 In short, we have exactly that illustration in California, and there 
 we show that where they come in through one of these subsidiaries 
 they subject themselves to the cooperative method rather than sub- 
 jecting the cooperative method to speculation. 
 
 Mr. Igoe. The difficulty about that has been in other places that 
 while they start out with a very small part of the whole, as they do 
 of the beans, if a method is provided under the law whereby a stock 
 concern may legitimately be formed, I do not think it would be very 
 long before you would find that this Sutter Basin Co., or whatever 
 you call it, in California, or some other concern somewhere else, 
 would build about itself in some kind of organization authorized 
 by this law, some sort of scheme whereby they would get control, 
 because everything they do afterwards in the marketing of these 
 beans would be perfectly legitimate. . 
 
48 COLLECTIVE BARGAINING FOE FABMEKS. 
 
 Mr. Sapieo. May I suggest, first, that that situation does not exist, 
 and perhaps you could legislate against it when it occurs. Secondly, 
 nothing that we are asking here would even touch that, because if 
 they wanted to do that thing they can do it by a noncapital stock 
 association formed exactly as the California Bean Growers' Associa- 
 tion is to-day. But what would you suggest as a method for enabling 
 the bona fide prune growers to protect themselves in that situa- 
 tion^ 
 
 Mr. Igoe. I am not here to make suggestion. I am here to listen 
 to your suggestions. 
 
 Mr. Sapieo. To form a cooperative association where it is essential 
 that they have capital stock? In short, I think it is unfair to deny 
 relief to a bona fide group of producers in a form of association or 
 organization that they have found essential because of the fact that 
 there may be in the future some abuse of that by nongrower groups,, 
 when it is well known that the cooperative associations thus far have 
 not abused that situation. 
 
 Mr. Igoe. But the antitrust legislation has been necessary because 
 somebody did abuse it. 
 
 Mr. Sapieo. But they have that very situation in the cooperative 
 association that you mention, and the result is not harmful. 
 
 Mr. Igoe. I am simply seeking light in regard to the matter, and 
 in framing legislation it may be well to consider what somebody 
 else can do with it who is not so benevolently inclined as the bean 
 growers of California. 
 
 Mr. Sapiro. I think that is a wise viewpoint, but what I am try- 
 ing to bring out is that not only is that situation contrary to the 
 actual experience of these cooperative associations, and, on the 
 other hand, the bona fide growers who request this relief absolutely 
 need, it for their livelihood, and they are certainly entitled to as 
 much consideration from that standpoint, as is thie suggestion of ' 
 what might happen in the future. 
 
 Mr. Igoe. I wanted to mention one other thing. Let us take that, 
 for instance. What would be the result if Armour & Co., or some 
 of the others, tried to work through a bona fide corporation? 
 
 Mr. Sapieo. If they were a bona fide corporation — ^bona fide be- 
 cause there were producers in them who were marketing their stujff — 
 they could never handle their own goods on a better basis than that 
 of the other ; men, nor could they, by themselves, determine the 
 selling o^ commercial factors. The other men would have something 
 to say, because Armour could not appoint all the directors ; Armour 
 could not appoint all the sales committee, so that you have the nor- 
 mal protection, first, of practice, and, second, the theory that you are 
 working for a corporative corporation and not for a normal stock 
 corporation. 
 
 Mr. Igoe. Wouldn't it be necessary to have Federal regulation for 
 such an association? 
 
 Mr. Sapieo. I think, thus far, they have been pretty well controlled 
 automatically. If they were to get in the habit of abusing that 
 privilege, it may be necessary. 
 
 Mr. Igoe. Of course, it is in its infancy now. 
 
 Mr. Sapieo. Some of the California growers' associations are over 
 20 years old. 
 
COLLECTIVE BARGAINING FOR FARMERS. 
 
 49 
 
 Mr. Igoe. I mean as to the extent of the business conducted by the 
 cooperative associations, as compared to the whole business of the 
 United States in the various products that might be covered under 
 such a law. 
 
 Mr. Sapiro. Still, they are not small. In California alone, they 
 are handling this year almost $300,000,000 worth of products out of 
 a total production of less than half a billion, so that they have been 
 developed in California, and in the Northwest as a whole, to a very 
 great extent. They give a demonstration on all these problems, both 
 as to the possibility of abuse and the possibility of good to the com- 
 munity. 
 
 Mr. Morgan. Let me ask you this question. This legislation is 
 supposed to give exemption under the antitrust law. Of course you 
 are familiar with these cooperative farm marketing associations in 
 other countries? 
 
 Mr. Sapiko. Yes, sir. 
 
 Mr. Morgan. It struck me whether it would not be better, from a 
 national point of view, for Congress to enact a law which would 
 authorize, in its general terms, the organization of cooperative farm 
 credit societies and farm marketing societies, and to some extent 
 standardize these organizations and encourage their organization 
 all over the United States. If it is a good thing for California, 
 or for one State and for one product, it ought to be a good thing 
 for all. 
 
 Mr. Sapiro. The Department of Agriculture has done an enor- 
 mous amount of work in attempting to encourage the formation of 
 these associations all over. 
 
 Mr. Morgan. What would you think of the proposition of enact- 
 ing some legislation along the lines suggested — allowing these cor- 
 porations to orga,nize, giving them some scope as to what kind of an 
 organization they want to form and to some extent restrict them 
 under the Federal Trade Commission ? 
 
 Mr. Sapiro. I would certainly rather stake our reliance on what we 
 think is the automatic economic necessity than on any specific, inflex- 
 ible law of that kind. We feel that if an exemption of this kind is 
 granted, it will not only permit these organizations to be formed for 
 the good of the producer, but that the public will reflect the benefits 
 of it. 
 
 Mr. Whalet. How long has this bean association been organized ? 
 
 Mr. Sapiro. Three years. 
 
 Mr. Whaley. How do the prices to the consumer compare under 
 that cooperative association with the prices as they were before? 
 
 Mr. Sapiro. You are asking a question that is probably not going 
 to bring out the point you want to emphasize. The bean market has 
 been pretty thoroughly broken in the past few years, due to the in- 
 troduction of oriental beans in the American market. The price in 
 1916, the year in which the organization was being formed; the 
 price to the grower was from 12 to 13 cents a pound from the specu- 
 lative packers, and to the consumer, perhaps 25 cents. This year, the 
 prices to the grower are between 6 and 6| cents, and the price to the 
 consumer between 10 and 15 cents, but the association does not claim 
 credit for bringing down the price of beans. That is not really a 
 typical instance. 
 
 1.52695—19- — 4 
 
50 COLLECTIVE BAEGAINING FOE FARMERS. 
 
 Mr. Whalet. Then before, the price to the consumer was higher? 
 
 Mr. Sapiko. t'es; but I don't say that is due to the cooperative 
 association at all. It is due to the fact that oriental beans were 
 thrown upon the American markets and broke the price to a point 
 where it is not profitable to grow beans. 
 
 Mr. Whalet. You are making a comparison of what years? 
 
 Mr. Sapieo. The years 1916-17— the crop of 1916 sold in 1917— 
 and the year§ 1918-19. ' 
 
 Mr. Whaley. What were they in 1915? 
 
 Mr. Sapiro. I could furnish you those figures, but I would not like 
 to give them offhand. 
 
 Mr. Whalet. I would like to ha\e them over a series of years, for 
 the pui-pose of comparison. 
 
 Ml-. Sapieo. I will furnish them. 
 
 Mr. Morgan. You are aware that in foreign countries these soci- 
 eties, both to market their product and get credit, are authorized by 
 law? 
 
 Mr. Sapiuo. Take in Denmark, with eggs. They have one asso- 
 ciation that is handling about 16,000,000 dozens of eggs a month. 
 It is the largest in the world. 
 
 Mr. Morgan. If the law has pi'oved beneficial there, and I think 
 history shows it has, why wouldn't it prove beneficial here? 
 
 Mr. Sapiro. We do not know how inflexible that law would be. 
 We have attempted in this act to provide for the organization of 
 these cooperative associations without interfeiing with a single politi- 
 cal or economic institution. 
 
 Using every existing facility we could do this without the organi- 
 zation of the farm credit scheme as they have it in Denmark or 
 any other country. We could do it under the Federal reserve act, 
 if only thej' will give us the assurance that Ave will not be bothered 
 improperly on the charge of Federal violations. 
 
 Mr. Morgan. You take beans — you spoke about how they finance: 
 that crop. Of course there are othei' crops not so easily handled 
 as that; crops that are not so substantial, more perishable. 
 
 Ml'. Sapieo. Take prunes. For prunes we have worked a col- 
 lective credit plan so that we got 10,000,000 on the 1919 crop at 
 4| per cent for the growers. 
 
 Mr. Morgan. Take live stock, for instance. 
 
 Mr. Sapiro. I can not answer on live stock. I do not know any- 
 thing about the problem. 
 
 Mr. jSIorgax. Well, I just wanted to see. It occurred to me — of 
 course, you understand that there Jiad been a committee ~ sent to 
 Europe especially to investigate, not only the credit system, but 
 also the cooperative system. 
 
 Mr. Sapiro. Yes. One of the members of that committee was 
 Col. Weinstock, of California. 
 
 Mr. Morgan. Of course. Congress did go along and enact the 
 farm loan act, but Congress hasn't finished its program. The 
 thing has been allowed to die out. We didn't furnish the short- 
 term credit that the farmers need. Xeither did we furnish any 
 assistance to this cooperative method of marketing. I think we 
 oup-ht to take it up, myself. 
 
 Mr. Yates. You think what? 
 
COLLECTIVE BAEGAINING FOR FAEMEES. 51 
 
 Mr. Morgan. I think Congress ought to take up this question of 
 cooperative production and sales and credits for the farmers. 
 
 Mr. Igoi,. These California gentlemen seem to be anxious to get a 
 legal organization that could go out and get the credit. They want 
 to get legislation so that they can be sure that they have the legal 
 right. 
 
 Mr. Sapiro. If you can legalize us, we can get the credit. 
 
 Mr. Morgan. The great trouble is from the outside standpoint. 
 You will find very great opposition to this legislation on the outside. 
 I think, for that reason, in all legislation we ought to do something 
 to protect the public and make the public fully satisfied. 
 
 Mr. Sapiro. I would welcome any public representation on every 
 board of directors. As a matter of fact, we do it in California. I 
 would like to put into the record certain points on which I offered 
 suggestions this morning. Section 6 is pei-haps a better protection 
 to the farmers of the countiy than the bill you considered yesterday. 
 The first point is that I think that the labor matter ought to be kept 
 separate. I do not see the necessity of putting them both in the 
 paragraph. The second is the substitution of the word " vitacul- 
 tural" for " vineyardists " in line 10. Third, that, the words "Not 
 organized for profit " be omitted. I feel that if that bill went before 
 the Supreme Court in its'present language, the Supreme Court would 
 immediately hold that that is class legislation. The Supreme Court 
 has already thrown things out on that basis. That is one of thei 
 points we fear more than anything else. Likewise, as a matter of 
 policy, for the protection and security of the passage of this, I think 
 it is essential to emphasize the nonprofit idea ; that these are not or- 
 ganizations for profit, but for cooperative marketing. 
 
 Mr. Morgan. As a matter of fact, you do expect the farmers to 
 profit by this. 
 
 Mr. Sapiro. The individual, but not the organization. There is a 
 legal distinction. It has been thrown at us often enough. 
 
 Mr. Morgan. I do not think there is anything in that. 
 
 Mr. Sapiro. I wish you could convince every Federal district at- 
 torney on that. 
 
 Mr. Steele. What particular decisions have you in mind when 
 you say the Supreme Court has ruled? 
 
 Mr. Sapiro. I haven't got it here, but I can get them for you 
 Then, the next point of importance was to use the word "organiza- 
 tion " wherever possible. " Cooperative organizations " instead of 
 "associations." California law distinguishes between an association 
 and a corporation and we have had some embarrassment in dealing 
 with the various district attorneys in the courts there when Ave used 
 this term association. If you could use the tenn "organization" in 
 your act, you would help not only the California groups, but all the 
 groups in the Northwest, where they permit associations and dis- 
 tinguish them from corporations. 
 
 Mr. Steele. You use the term " not organized for profit." Sup- 
 pose you were organized and the actual situation would, show a 
 profit, would you then come within the language? 
 
 Mr. Sapiro. The language is " Not organized for the profit of such 
 organization." 
 
 Mr. Steele. It could become a charitable organization and dis- 
 tribute the stock. 
 
62 COLLECTIVE BARGAINING FOR FARMERS. 
 
 Mr. Sapiro. In the contract it provides usually for certain deduc- 
 tions, and then provides that any balance is to be divided among the 
 growers on a tonnage basis. 
 
 Mr. Steele. You differentiate between the organization and the 
 consumer ? 
 
 Mr. Sapiro. Not the consumer, the grower. 
 
 The Chairman. You are not organized as a corporation and have 
 no legal entity. 
 
 Mr. Sapiro. In California you can organize as an association or a 
 corporation and, in either case, you have a legal entity. 
 
 Mr. Morgan. Suppose this law was put this way: That this law 
 should not be considered to prohibit the organization, could not 
 dealers in lumber, or producers of lumber, provided they organized 
 not for profit of the organization — couldn't the large lumber pro- 
 ducers, lumber owners, go into an organization and form an organi- 
 zation whereby the profits could not go into the organization? 
 
 Mr. Sapiro. We do not for a minute say that we have in mind that 
 the growers should not make money by the operation of the coopera- 
 tive association. 
 
 Mr. Morgan. Then, iten't it a misnomer to say " Not organized for 
 profit?" 
 
 Mr. Sapiro. I didji't raise this point. The Federal district attorney 
 at San Francisco threw it at me. I would be perfectly willing to let 
 it rest where it is, if somebody wouldn't raise the point against us. 
 We waiit to eliminate these ambiguities. They have raised these 
 questions very much to the harm of the corporations and the asso- 
 ciations, and we are constantly called upon to prove that we are in 
 the clear. 
 
 Mr. Igoe. You have the bill of Mr. Hersman there. What is your 
 comment on lines 17 to 2-1: ? 
 
 Mr. Sapiro. I have no comment on it. I incorporated that in the 
 other. 
 
 Mr. Igoe. I think there is some comment necessary on lines 14 and 
 15, where it speaks of products produced by members or share 
 holders. 
 
 Mr. Sapiro. That raises the question of the landlord with a thou- 
 sand acres of beans. He himself farms a hundred acres ; the balance 
 he leases out. He gets half the beans for his rent. He doesn't ac- 
 tually produce those beans. The California law makes a distinct 
 difference between a cropping contract under which the title would 
 remain in the owner and a lease contract, under which the title would 
 remain in the grower. In that case a landlord who got the beans 
 could not put them through the association, although he is a bona- 
 fide member and himself a producer. 
 
 Mr. Igoe. These lines 17 to 24 are pretty broad. 
 
 Mr. Sapiro. The way we framed it is " Contracts between such 
 organizations and their stockholders." 
 
 Mr. Igoe. You changed it that way? 
 
 Mr. Sapiro. In this suggestion I have made. 
 
 Mr. Igoe. That is not Mr. Hersman's bill. I asked you if you haiL 
 any comment on the language he used. 
 
 Mr. Sapiro. I don't want to be put in the position of making too 
 many comments on Mr. Hersman's bill. 
 
COLLECTIVE BARGAINING FOR FARMERS. 53 
 
 Mr. Igoe. I am simply asking you if the broad exemption in Mr. 
 Hersman's bill was thought necessary by you. 
 
 Mr. Sapiro. The only exemption should be as to contracts be- 
 tAveen the grower and the association. 
 
 Mr. Igoe. According to the language, Mr. Hcrsman is going to 
 allow them to roam around through the United States and do any- 
 thing they want in restraint of trade. That is the language of his 
 bill. 
 
 Mr. Sapiro. That is probably just loose language there. I am 
 certain he had in mind the preliminary contract between the asso- 
 ciation, as such, and its growers. 
 
 Ml-. Igoe. I was trying to get from you what you thought was 
 absolutely necessary for the proper functioning of this association 
 that you referred to. 
 
 Mr. Sapiro. The way we have covered it is to say any such or- 
 ganizations or the members thereof, or the contracts made between 
 such organizations and its members or stockholders shall not be 
 held to be illegal. 
 
 Mr. Igoe. There is no comparison between that language and 
 what is in the bill. 
 
 Mr. Morgan. Do you think there is an anomaly between union 
 labor and what they call collective bargaining of labor and collective 
 sales agencies such as your organization? 
 
 Mr. Sapiro. I think it is absolutely parallel. We have the actual 
 producers, the actual workers, uniting for themselves and trying 
 to get something beyond the cost of production, so that they can 
 keep in business and increase their production. 
 
 Mr. Igoe. As I understand you, all you want is a law to specifically 
 permit these organizations, and after they are formed, as to any 
 relations they have with other people in the United States, either 
 corporations or other dealers, that they shall be governed by exactly 
 the same law as governs private concerns. 
 
 Mr. Sapiro. I wouldn t put it that way, because the exemption 
 goes further than that. 
 
 Mr. Igoe. If they should do things which should be considered 
 unfair, in competition with concerns organized for profit, you would 
 want them to be punished. 
 
 Mr. Sapiro. I would like to have an example. Do you mean that 
 if they should sell to one group of buyers on better terms and condi- 
 tions than to another ? Yes ; they should then be punished. 
 
 Mr. Igoe. What you are interested in is to have recognized the 
 form of the organization ? ^ 
 
 Mr. Sapiro. The validity of it. 
 
 Mr. Igoe. Then, having been organized, if this association goes out 
 in business and reverts to practices that, as to others, would be a viola- 
 tion of the law, you are not seeking exemption ? 
 
 Mr. Sapiro. No. 
 
 Mr. Whaley. In the broad language which you refer to, wouldn't 
 that exempt them from a Federal commission ? 
 
 Mr. Sapieo. I am not asking that. The California groups do not 
 ask for that exemption. 
 
 Mr. Igoe. My attitude has been governed largely by what I find in 
 this bill, and I would say that the language I have called attention 
 
54 COLLECTIVE BARGAINING EOR FARMERS. 
 
 to is SO broad, if adopted, it would take away absolutely any safe- 
 guard at all and allow these people to go out and do anything, and 
 the other people would be governed by the restrictions. 
 
 Mr. Sapiro. I had no such personal idea. I had in mind validating 
 the basic contract between the organization and the producer. Thep, 
 after they are organized, if their operations are improper they de- 
 serve what anybody else gets. 
 
 Mr. MoRGAx. Do you think we should authorize the formation of 
 a monopoly, and then say, " Now, you have a monopoly, and if you 
 don't do certain things your monopoly can operate " ? 
 
 Mr. Sapiro. Yes ; without any hesitation. 
 
 Mr. Morgan. You believe in the formation of a monopoly ? 
 
 Mr. Sapiro. 1 believe in the formation of a monopoly of farmers 
 selling cooperatively farm products. 
 
 The Chairman. Can you give me any idea as to the limitations on 
 that, in numbers ? 
 
 Mr. Sapiro. The number is a nonimportant factor. It is the pro- 
 portion of acreage that is the important factor. 
 
 The Chairman. Suppose we should go before the House and say 
 we are authorizing a combination of all the industries in this coun- 
 try, do you suppose it would go through this House ? 
 
 Mr. Sapiro. I think it would if you could show that there wouldn't 
 be any of the abuse that, after all, every man has to fear. 
 
 The Chairman. There is a pretty strong feeling against monopolies 
 in other industries. You wouldn't be much more likelj' to get a law 
 provided you are willing to divide up into smaller grou23S, so there 
 might be competition between the small groups. 
 
 Mr. Sapiro. These smaller groups have been what has been worked 
 on the farmer from time immemorial. 
 
 The Chairman. Suppose we allowed a hundred thousand to incor- 
 porate. 
 
 Mr. Whaley. You mean a capital stock of $100,000? 
 
 The Chairman. No; individuals. 
 
 Mr. Sapiro. In California, when there was first talk of coopera- 
 tive associations, the speculative packers went down into the Santa 
 Clara district and said, " You fellows M-ant to form an association 
 of your own. You have the prize prunes of the world. You don't 
 want to tie up with the Napa, Sonoma County, and San Joaquin 
 County." They got the Santa Clara County men to form a separate 
 association and then they threw against them all the prunes they 
 could buy from the Napa, Sonoma County, and San Joaquin Counties. 
 Before that association was two years old every penny they owned 
 was lost. They were broke completely an3 had to sell their corporate 
 packing plant to Eosenberg Bros. They accomplished that by work- 
 ing one locality against another. We have had ample demonstration 
 that locals can not work, and can only work when they are federated. 
 If you put a limitation, either on the number or acreage that can 
 go into one association, what do you do? You make competition 
 among the locals. You will have wheat competing against wheat 
 prunes competing against prunes, instead of all the wheat or all the 
 prunes being together to get the buyers competing for it. You have 
 one element of production working against the other element and 
 neither succeeds. That is the invariable history. 
 
COLLECTIVE BAEGAINING EOE FARMERS. 55 
 
 Mr. Igoe. Do tlie buyers, as a rule, act in an organization? 
 
 Mr. Sapiro. You mean tlie speculative packers? It used to be 
 noticed that when a representative of the California Packing Cor- 
 poration was in one district nobodj? else was there, and the price 
 9ne fixed would be pretty usually the price of the other. California 
 is an extremely interesting study as to how the speculative packers 
 used to handle these fruit farmers, who are supposed to be~^above the 
 average of intelligence. It is well known that a large percentage 
 of the fruit farmers are business men, who, for reasons of health, 
 or other reasons, have come out to the West and engaged in that 
 business. If you will go into the history of how the speculative 
 packers handled- these men you will probably lose some of your 
 respect for their business ability. 
 
 Mr. Whamit. You referred, awhile ago, to a political unit as a 
 limitation. What did you mean by that? 
 
 Mr. Sapiro. I simply meant tliat in these associations in Cali- 
 fornia, only California growers are members. We never cross the 
 State line to get members. We never handle the product of any 
 other State but California, therefore, California was the political 
 unit under which we operate. 
 
 Mr. Whalet. Pursuing the inquiry the chairman made, would it 
 be advisable to limit it to State lines? 
 
 Mr. Sapiro. No ; then you would have Washington wheat against 
 Oregon wheat ; Idaho wheat against Montana wheat. 
 
 The Chairman. In other words, you do not want any competition 
 at all. 
 
 Mr. Sapiro. I think that it would be a monopoly not of the stock- 
 holders but the actual producers. 
 
 The Chairman. Do you think you could get that through the 
 House or Senate? 
 
 Mr. Sapiro.- Yes; because you have your automatic protection there. 
 Take wheat; the world production determines the price of wheat in 
 great part. You can't do it just by having a monopoly. 
 
 The Chairman. Haven't you been succe^ful in California, even 
 if you did not take in everybody in the United States ? 
 
 Mr. Sapiro. With our own organization? 
 
 The Chairman. With your own oroganization. 
 
 Mr. Sapiro. Yes. Somebody asked me why, and I simply told 
 him 
 
 The Chairman (interposing). This is the policy that has been 
 pursued all over the country. We try to (fcnit combination in all 
 lines so that there will be some competitionr You are asking us to 
 absolutely wipe out competition. I believe you ought to have the 
 right to collective bargaining ; there is no question about that. The 
 question is, Where are we going to end? How far can we go? 
 
 Mr. Sapiro. Certainly the commission does not think the condition 
 to-day is ideal for the farmer. Wliether or not you like it, you have 
 your prices of foodstuffs controlled by a little group of speculative 
 .packers. We say that it is absolutely inevitable that the price of 
 foodstuflfs shall be determined from a centralized viewpoint, and we 
 want to put the control. of that centralized viewpoint in the hands 
 of the man who raises the food. 
 
 Mr. Morgan. You don't believe, then, that supply and demand 
 applies to food products? 
 
56 COLLECTIVE BARGAINING FOR FARMERS. 
 
 Mr. Sapiro. Ultimately, yes. j • +v, 
 
 Mr. Morgan. I thought you said the speculators controlled it, rather 
 than the rule of supply and demand. 
 
 Mr. Sapiro. Within the law of supply and demand are all kinds of 
 variations. For example, your own laws on food hoarding show that. 
 Within the limit in which prices move speculative control runs riot, 
 and it is a dead issue to-day. Take your wheat situation. Certainly 
 the law of supply and demand basically controls prices, but does any 
 man on earth question that it has not been controlled by the prices 
 paid to the farmers? 
 
 Mr. Igoe. Suppose the wheat growers were organized and were 
 dealing with the millers. Where does the poor fellow come in? It 
 would help you in dealing with the millers and would help the wheat 
 farmer. 
 
 Mr. Sapiro. There is always the possibility, and no man can deny 
 it, that a group of men with enormous power in their hands may 
 abuse it. On the other hand, in the various suggestions that have 
 been made here, we stated that there was to be Government represen- 
 tation on it just for the purpose of taking care of the public interest. 
 
 Mr. Igoe. That is in California, 
 
 Mr. Sapiro. No ; I suggested that to you. 
 
 Mr. Morgan. Wouldn't there be a dispute as to whether the Gov- 
 ernment should have six votes or one vote ? [Laughter.] 
 
 Mr. Igoe. I would -venture to say that the farmer would be prop- 
 erly represented. 
 
 Mr. Sapiro. There is a certain amount of automatic control, because 
 the history of the cooperative movement has shown that their prices 
 move pretty evenly with the cost of production, plus a fair profit, and 
 they have not been anything like what has happened to wheat and 
 other things under the speculative system. Now, there are no other 
 general points I am going to initiate of my own accord, and unless 
 there are some questions the committee want to ask, I am through, ex- 
 cept to say that I came here primarily to speak for our western groups 
 and all the answers given to questions on cotton and wheat and other 
 things were answers given in response to questions by the committee 
 in order to advise them of conditions as they exist to-day. 
 
 Mr. Igoe. Have you put that proposed bill of yours in the record ? 
 
 Mr. Sapiro. Yes, sir. 
 
 Mr. Whalet. With reference to this cooperation you ask for ; you 
 start out with a general law prohibiting monopolies in restraint of 
 trade. Now. the labor^fcions are exempt from that ; the farmers, un- 
 incorporated, are exeinpt from it now. You are asking an extension 
 to include the incorporated farmers. 
 
 Mr. Sapiko. We ask for exemption for the incorporated farmer 
 acting collectively for marketing purposes, and that was meant to up- 
 hold the associations. We have found a weakness that we are trying 
 to overcome. 
 
 Mr. Whalet. That means, as far as the law itself is concerned, that 
 probably two-thirds of the country would be exempt from its terms. 
 It leaves practically one-third, the consuming portion of the public 
 and other classes engaged in industrial and mercantile pursuits still 
 under the law. Wouldn't it. be well to repeal the law and have all 
 persons exempt from it, and have all under Government regulation? 
 
 Mr. Sapieo. I should say this : That history in the United States 
 
COLLECTIVi; BARGAINING FOE FAKMEES. 57 
 
 would show that there is in the one-third all those who need that 
 regulation, and there has never been a real basis for a monopoly 
 or control or exemption, so far as the labor or farm organizations are 
 concerned. The tendency r(ms the other way. 
 
 Mr. Whaley. There seems to be a wide difference of opinion on 
 that subject. Wherever there is a selfish power, the tendency is to use 
 it in a selfish Avay. 
 
 Mr. Sapiro. I wouldn't say tendency ; I would say there is the 
 possibility. 
 
 Mr. "\Vhai,ey. I am simply looking at it from the broad viewpoint 
 of what the I'esults would be if the bars were let down. 
 
 Mr. Sapiro. They are Jet down now, but we are asking them to 
 make clear and distinct the exemption they want to grant. I am 
 sure if thej' had had the experience the westei'n associations have 
 had, they would have piit it in that way. 
 
 STATEMENT OF MR. A. T. SMYTHE, CHARLESTON, S. C, REPRE- 
 SENTING THE SOUTH CAROLINA PRODUCE ASSOCIATION. 
 
 Mr. Smythe. I am an attorney at law from Charleston, S. C, 
 and represent the South Carolina Produce Association, which has to 
 do mostly with the marketing of cabbages, potatoes, and cucumbers. 
 We have not there the element of collective credits to which Mr. 
 Sapiro has referred, for the reason that, with the exception of pota- 
 toes, our products are perishable and can not, therefore, form the 
 basis of a loan such as he has described in the matter of beans. 
 
 The purpose of the organization is, however, to accomplish collec- 
 tive marketing, such as has been described, and to save the farmer, 
 so far as may be, harmless from the activities of the speculative 
 broker, who, before the organization of this association, used to send 
 down into the territory and make an offer for a crop, just as Mr. 
 Sapiro has described. The offer would not be accompanied by any 
 counter offer or better offer, and the farmer found himself, in most 
 instances, faced with the necessity of accepting what the broker under- 
 took to give him. 
 
 This association has been in existence for about five years and has 
 succeeded in selling the products of the farmer to a far greater ad- 
 vantage to the farmer himself, without a resultant increase in the 
 price to the consumer, because the association has marketed the prod- 
 ucts scientifically and in the localities where, from day to day, the 
 market is the highest. There has been no effort to fix the prices, but 
 merely an effort to take advantage of the market as it exists over the 
 country from day to day, shipping the goods where, on that day, the 
 demand is the greatest. In that way it may well be argued that the 
 activities of the association have resulted in a lowering of the market, 
 because as soon as any locality is confronted with a dearth of this 
 particular commodity and a subsequent high market, it is the effort 
 of the association to ship to that point, with the result that the mar- 
 ket is lowered. 
 
 The Chairman. Do you ship to any distance? 
 
 Mr. Smythe. We ship all the way up into Canada. 
 
 Mr. Whaley. Have you any schedule of prices to the consumer 
 before your organization was formed and since its formation? 
 
 Mr. Smy'ihe. I haven't, but I have no doubt I could supply it. 
 
58 COLLECTIVE BARGAINING FOE FAEMERS. 
 
 Mr. Whauit. Kindly put it in the record ; I would like to see it. 
 
 Mr. Smtthe. The method of operation is that all the products are 
 pooled. That is to say, all the products ready for shipment on a 
 certain day are shipped and sold by the association, and the average 
 price realized on that day's shipment is distributed among the pro- 
 ducers in accord with the quantities they have delivered. 
 
 Mr. Igoe. How many members are there in your association ( 
 
 Mr. Smtthe. I do not know the meinbershi'p. It is based on the 
 acreage basis. Stock in the corporation is held according to the 
 number of acres. I think it is one share to ever^- 10 acres. 
 
 Mr. Morgan. Did he pay for that share in cash? 
 
 Mr. Smtthe. Yes, sir. He paid for it^ in cash, and the capital 
 stock having all been taken and not having been increased, others 
 ship through the association as shippers who are not stockholders^ 
 and share in the resultant benefits. 
 
 Mr. Igoe. Is there any discrimination in the prices between those 
 who are shareholders and those who are not? 
 
 Mr. Smtthe. None whatever. 
 
 Mr. Igoe. Are the receipts distributed among the shareholders in 
 proportion to what they supply, or does the association itself make a 
 profit? 
 
 Mr. SMrrHE. The association has heretofore declared cash divi- 
 dends, but has also distributed a proportion of its profit among the 
 shippers who are not stockholders, proportionate to the amount of 
 shipping they have done through the association, the idea being to 
 gi\'e an inducement to the shipper to use the association by distrib- 
 uting to him a proportion of its profits. 
 
 The CiiAiinrAx. Why don't you enlarge your capital stock? 
 
 Mr. SitTTHE. That could be done. It has not been done because 
 the other method has worked out. 
 
 Ml-. Whalet. Who fixes the price to your association ? 
 
 Mr. Smtthe. The management. There is no fixed price. It is an 
 effort to take advantage of the market as it exists. 
 
 Ml'. Whalet. It is done by your board of directors ? 
 
 Mr. Smtthe. Yes, sir; by an individual, from day to day. 
 
 Mr. Morgan. You have the same thing produced somewhere else — 
 j^ou have competition? 
 
 Mr. Smtthe. Yes, sir ; ours isn't the only association in the State. 
 We do not even control the State. Three of the most advantageous 
 activities in which the association is engaging and the most bene- 
 ficial results to the members are these — and I will interrupt myself 
 to say that the tendency of the association has been to greatly de- 
 crease the dividends paid to the stockholders and to keep the money 
 in a fund to benefit not only the stockholders but the producers in 
 the community, and that money is used to educate the producers as 
 to standard grading and packing, eliminating in this way a great 
 deal of loss that arose from potatoes and cabbages being poorly 
 packed and poorly graded, Avith the result that the purchaser would 
 not accept them. 
 
 Mr. Morgan. Who do you sell to? How does your association 
 make a profit? 
 
 Mr. Smtthe. We sell to brokers. We charge a commission. 
 
 Mr. Morgan. Your association charges so much commission? 
 
COLLECTIVE BAKGAISING FOR FABMEES. 59 
 
 Mr. Sjiyti-ie. For handling the individual's product. These profits 
 are being use — for instance, at a meeting held two weeks ago, they 
 appropriated a very large amount of money for the purpose of 
 building a community canjiery, which will of necessity eliminate a 
 large amount of waste, because if you have beans or cucumbers in 
 large quantities and the market is such that it is impossible to ship, 
 very often we are faced with the condition that the goods won't bring 
 the cost of carriage. It is the intention to can these and put them 
 on the market as canned goods. Furthermore, the association en- 
 gages in cooperative purchasing, in that it buys fertilizer on which 
 we are tremendously dependent down there, and seed, at advantage- 
 ous times and at advantageous prices, which it subsequently dis- 
 tributes to the individual desiring to use' them at prices very much 
 lefes than could be enjoyed individually at the time. 
 
 Mr. Igoe. Do the producers make contracts with the association, 
 or do the shareholders send in any amount? 
 
 Mr. Smythe. There is no legal obligation upon the shareholder 
 exclusively to patronize the association. There is a certain moral 
 obligation resting uijon him and a certain amount of community 
 unpopularity if he fails to do that. 
 
 Mr. Igoe. You pi'actically represent him in his dealings with the 
 brokers ? 
 
 Mr. Smythe. Absolutely. He does nothing except to notify the 
 management that he has a car of cabbage or potatoes on a certain 
 siding, and the association sells it for him to the best advantage 
 that day. 
 
 Mr. Morgan. Are you the attorney for this corporation ? 
 
 Mr. Smythe. Yes, sir. 
 
 Mr. Morgan. Who are the managers of this corporation? Are 
 they farmers or business men? 
 
 Mr. Smythe. Active farmers. 
 . JNIr. MoEGAx. Do they give their time exclusively to this associa- 
 tion? 
 
 Mr. Smythe. They do not. With the exception of one individual, 
 who occurs to me now, there is not a member of the board of directors 
 who doesn't opei'ate a. farm for his livelihood. 
 
 Mr. Yates. Does your organization favor this particular bill ? 
 
 i\Ir. Smythe. It does. It favors the amendments which have been 
 suggested by Mr. Sapiro. 
 
 Mr. Igoe. I was about to ask you whether in your association it is 
 necessary to have capital stock. 
 
 Mr. Sjiythe. The capital stock was originally subscribed to to give 
 the association a financial basis on which to start its operations. 
 
 Mr. Morgan. What is the capital stock? 
 
 Mr. Smythe. I think it is only a $100,000, but we feel that the ac- 
 tivities of the association, as I originally stated, have not resulted 
 in any increase in cost to the consumer, but have resulted in a great 
 elimination of loss for the reason that the farmers, being left to 
 themselves, frequently find themselves confronted with a situation 
 in which they can not ship their products and receive a price that 
 would pay the freightage on it. 
 
 Mr. Igoe. Has there been any threat of prosecution or any inves- 
 tigation by Federal or State authorities? 
 
 Mr. Smythe. None in the world. 
 
60 COLLECTIVE BARGAINING FOE FARMERS. 
 
 Mr. Morgan. You think you need this legislation, then? 
 
 Mr. Smtthe. Well, sir ; the legislation having been suggested and 
 the activity set in motion, we came up here because it redounds to 
 our advantage to have the doubt eliminated. Our district attorney 
 has not come into the matter, but there is no knowing at what mo- 
 ment the spirit will move him, and, the matter being open, it seemed 
 to us the time for it to be set at rest. 
 
 Mr. Morgan. You incorporated under the State laws? 
 
 Mr. Smythe. Yes, sii'. 
 
 Mr. Morgan. What would you think of legislation that would 
 authorize incorporation under national law? 
 
 Mr. Smythe. An organization of this character? 
 
 Mr. Morgan. Under national law. 
 
 Mr. Smtthe. No objection occurs to me to such legislation at this 
 moment. I do not want to go into any organization presentation, 
 because the gentlemen who have preceded me and who follow me 
 handle that better than I could. I merely wanted to speak for 
 the section from which I come. 
 
 Mr. Whaley'. Are there any similar organizations in your State? 
 
 Mr. Smti'he. There are two of them — the Buford and the Chel- 
 ton — and then they have the Eastern Shore of Virginia Association. 
 
 Mr. Whaley. Do they deal in the same products? 
 
 Mr. Smtthe. In the same products — cabbages anci potatoes. 
 
 Mr. John D. Miu^er. The clerk of the committee suggested that 
 I come in this morning, and I can not be here to-morrow morning. 
 
 Mr. W. C. Marsh. I also can not be here to-morrow morning, and 
 I would ask if I might not appear on Friday morning, if that would 
 be agreeable to you. I just want to explain this because I can not 
 be here to-morrow. 
 
 Mr. Morgan. Can we finish up this afternoon? 
 
 The Chairman. Suppose we take a recess and try to get some of 
 them back this afternoon. 
 
 Mr. Miller. Might I just make this suggestion before you ad- 
 journ? As I stated yesterday, I, with Dr. Atkinson, a representa- 
 tive of the State Grange — the National Grange — represent the mil- 
 lions of farmers from many localities, and so far we have been un- 
 able to present to the committee the arguments that we desire to 
 present in favor of this bill, this bill which has been drawn by co- 
 operation with the legal and the practical advisers of the men of the 
 large cooperative farmers' associations of the country, and unfortun- 
 ately yesterday the committee had to adjourn before we could reach 
 a real discussion of this bill, and I only arise to state that we would 
 appreciate it very much if the committee would give us an oppor- 
 tunity, when as many of the committee can be here as is convenient, 
 for us to present the reasons why we favor this bill, granting that 
 there are many similar organizations in different parts of the coun- 
 try that may desire a general law to be drawn to comply with the 
 particular requirements of their local association. 
 
 We have those in our locality, but the thought of Gov. Deneen 
 who represents one of the large organizations of Chicago, and Mr.' 
 Campbell, the president of the milk producers' association, and my 
 assistant and myself in going over this bill, and since the bill was 
 prepared, in conference with Mr. Sutherland, who represents the 
 Kaisin Growers' Association of California, and agrees with this bill 
 
OOLLECTIVE BAKGAINING FOR FARMERS. 61 
 
 that this bill has been prepared in an attempt to meet nation-wide 
 conditions as they are and provide a fair remedy without opening 
 the doors for entrance into these organizations of any so-called pro- 
 ducing organizations in which the packers or other middlemen are 
 interested, and, as I said, I would be very glad, with Dr. Atkeson, 
 to have an opportunity to present our views on this bill. 
 
 Mr. Yates. Will Gov. Deneen be here? 
 
 Mr. Miller. I am very much disappointed that Gov. Deneen can 
 not be here, because he is now engaged in court in defending a 
 farmers' organization in Chicago in a trial under the antitrust act 
 of the State. 
 
 Mr. Yates. You are in favor of this particular bill without the 
 amendments suggested? 
 
 Mr. Miller. Yes, sir. By the way, I have had no particular 
 opportunity to study the amendments suggested. It is possible that 
 there might be something in the amendments that it might be well 
 to incorporate; but what I am trying to explain to the committee 
 is that the bill as drawn is no one man's bill but a bill resulting 
 from a conference of several men. 
 
 Mr. Yates. Mr. Chairman, I do not think we can get an attend- 
 ance this afternoon. 
 
 Mr. Whalet. I think so. The chairman was about to ask how 
 many are here who desire to be heard yet. 
 
 The Chairman. I would like to know how many there are that 
 desire to be heard. 
 
 Mr. Marsh. I would like to be heard. 
 The Chairman. How long will it take? 
 
 Mr. Marsh. . I think about a half or three-quarters of an hour. 
 
 Mr. Whalet. How much time would Dr. Atkeson want? 
 
 Mr. Atkeson. If would depend upon how much time the com- 
 mittee will take up in asking questions. 
 
 Mr. Whaley. How much time would you take in your general 
 statement ? 
 
 Mr. Atkeson. I would like an opportunity to-morrow morning 
 rather than this afternoon. I have made an engagement I do not 
 like to break. Mr. Marsh wants to speak this afternoon, and if it 
 suits the committee just as well I would rather be heard to-morrow 
 morning. As to the question of time, 30 minutes will be enough if 
 you do not ask questions. 
 
 Mr. Miller. I would be very glad to have Dr. Atkeson's convenience 
 consulted. As to myself, it would be a convenience to me if I could 
 get done this afternoon. I have been awaiting this hearing and am 
 expected in New York, and my associates have informed me that I 
 am needed there. How much time I will take, I do not know. As 
 Dr. Atkeson states, it depends somewhat upon the discussion ; but I 
 have some material things that I want to present to you. Possibly it 
 might take me an hour. 
 
 Mr. Whaley. And you would like to appear this afternoon ? 
 
 Mr. Miller. I would like to. 
 
 Mr. Sapiro. From the remarks just made, I would like to have the 
 privilege of 10 minutes after these men are through. 
 
 Mr. Morgan. To close the argument? 
 
 Mr. Sapiro. No ; not close the argument, but to present any facts 
 that may be pertinent. 
 
62 COLLECTIVE BAEGAINING FOE FAKMEES. 
 
 Mr. Lyman. It seems to me only fair that the National Board of 
 Farm Organizations, which Mr. Miller represents, should have ttie 
 privilege of bringing members of its board, or the people who have 
 come to work with him, and it is possible that I should like to say 
 a few words, as secretary of the organization. 
 
 Mr. WiiALET. How much time do you want ? 
 
 Mr. Ltmax. It all depends on the developments. I suppose that 
 when section 6 of the Clayton amendment was before Congress some 
 years ago a good many days were taken in the consideration of the 
 claims of labor. 
 
 Mr. Miller. Mr. Hall is here, from Maine. The potato growers 
 associatioji. I would be very glad if he could have a little time. 
 
 Mr. Whaley. How hmch time does he want ? 
 
 Mr. Hall. Perhaps 10 iiiinutes. 
 
 Mr. Wiialey. We could finish all these things, in all probability, 
 this afternoon, with the exception of Dr. Atkinson. 
 
 Mr. Atkinson. I can be here, if the committee insists. 
 
 Mr. Millee. Then, Mr. Chairman, may I go on first, if you meet 
 this afternoon? 
 
 The Chairman. I think, so. We will meet, then, this afternoon 
 at 2 o'clock. 
 
 (Whereupon, at 12.50 o'clock p. m., tlie committee took a recess 
 to reconvene at 2 o'clock p. m.) 
 
 after recess. 
 
 The conmiittee met at 2.30 o'clock p. m., piu'suant to the taking 
 of recess. 
 
 STATEMENT OF MR. JOHN D. MILIEU, REPRESENTING THE 
 NATIONAL BOARD OF FARM ORGANIZATIONS, WASHINGTON, 
 D. C. — Resumed. 
 
 The Chairman. Proceed, Mr. Miller. 
 
 iSIr. Miller. Mr. Chairman, I appreciate the courtesy of the com- 
 mittee in granting us so much time as we are taking in this matter, 
 but we view it as the most important matter for agriculture that 
 will be presented to Congress. 
 
 There was some discussion this morning as to the phraseology of 
 the bill. Now, permit me to say that there is no pride of authorship 
 here anywhere. The principles and all of the principles that are 
 embodied in this bill are believed by the vast majority of the farmers 
 to be essential to their efficiently cooperating in marketing their 
 products. The verbiage in which Congress grants or preserves to 
 them that power is utterly innnaterial to us. Something was said 
 to us this morning as to the words " not intended for profit," which 
 appear in section 6, but do not appear in this bill. 
 ^ In the bill that is introduced into the Senate, a companion bill of 
 Senator Capper, which was introduced several weeks before Con- 
 gressman Hersman introduced this bill in the House I think I am 
 
 right in this— I know that the original typewritten draft of the bill 
 and I thmk the bill as introduced by Senator Capper, has in those 
 words, " not intended for profit.'' The reason that they were elimi- 
 nated from the present bill in the House wns because my associates 
 
COLLECTIVE BARGAINING EOE FARMERS. 63 
 
 and myself — who for several months have been giving considerable 
 'ittention to the formation of the bill by corresponding with people 
 all over the country and by conferences — the reason why we con- 
 sented to the elimination of those words and the insertion in lieu of 
 them the provision that now appears, namely, " and that pay annually 
 no greater dividends on stocks or membership capital investment than 
 the minimum legal rate of interest in the State where organized," 
 were inserted at the request of a California association, the raisin 
 growers' association. 
 
 The Chairman. Supposing there is no minimum ? 
 
 Mr. Miller. I take it that that word " minimum " might be 
 t-tricken out. The legal rate of interest would cover all cases. 
 
 The Chairman. In some States it would not be even that. 
 
 Mr. Steele. Apparently, it is your thought to deal only with State 
 incorporations. 
 
 Mr. Miller. With State incorporations or with voluntary asso- 
 ciations. I simply mention that in passing. 
 
 Mr. Steele. They would be local, not national? 
 
 Mr. Miller. We are not particular as to the verbiage of this bill, 
 only we do want to impress upon the committee, with all the em- 
 phasis at our command, that all of the essential things provided for 
 in this bill the farmers do want, but it may be expressed any waj' 
 that Congress may think best, if it can conclude that they should be 
 entitled to this pri^dlege. 
 
 Mr. Igoe. What was the thought back of this limitation as to the 
 amount of dividends ? 
 
 Mr. Miller. The thought was this. Congressman, that it seems that 
 in some farm organizations the farmers contribute to the capital in- 
 vested in unequal proportions. Some of the more able farmers may 
 contribute $1,000, and some tenant farmers may contribute only $5, 
 and therefore that there should be a dividend on stock in order that 
 the larger contributor to the capital might receive some return, and 
 they thought that the words " not intended for profit," would mean 
 that there could be no dividends paid. 
 
 Mr. Igoe. 'What I am trying to get at, Mr. Miller, is this : Are 
 you undertaking: to limit the amount of dividends that will be paid ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Igoe. What is the reason for that limitatign?. 
 
 Mr. Miller. In order that there may be no possible temptation for 
 the association to become, as an association, a profit making one, but 
 that the entire revenues of the association shall be enough and only 
 enough to pay the operating expenses, and that every cent of the 
 proceeds of the sales beyond that should go back to the producer in 
 the exact proportion he has contributed the commodity. 
 
 Mr. Igoe. To follow that up thoroughly, it would be necessary for 
 Congress, would it not, as suggested, perhaps, in railroad legislation, 
 to control the stock issues and the value that might be put in for 
 which stock would be returned ? 
 
 Mr. Miller. Congressman, would it be entirely satisfactory to you 
 if I touch upon that a little later in my argument? I think I will 
 save the time of the committee, because I want to touch upon that in 
 explanation of an organization the operation of which I want to ex- 
 plain to you. 
 
 Mr. Igoe. All right. 
 
64 
 
 COLLECTIVE BAKGAINING FOE FARMEBS. 
 
 Mr. Miller. Before going into that, a question was asked yester- 
 day, and was asked to-day, why if these privileges embodied in this 
 bill are given to farmers they should not be given to manufacturers. 
 I tried to explain to the committee yesterday that manufacturers 
 and other big interests now have a convenient workable method by 
 which they are collectively bargaining through the agency of the 
 corporation, and illustrated that by the shareholders of Swift & Co.^ 
 more than 30,000 of them. I did not complete that illustration. Let 
 me complete it here. Those 30,000 shareholders of Swift & Co. own- 
 ing these widely separated plants, the title of which, of course, is 
 vested in the corporation, but owned by the shareholders, are col- 
 lectively bargaining through the corporation that they own. Now, 
 let us assume that these 30,000 shareholders were divided up into 30 
 groups, and let us assume that the present corporation owns 30 plants^ 
 and each of those 30 groups owns only one of those plants. 
 
 In that case, if a representative from each one of these 30 groups 
 met together and fixed prices and i^rescribed terms and conditions of 
 sale, they would be operating in violation of the present antitrust 
 act, but by the expedient of having the title to those 30 plans and the 
 products vested in the corporation, they are doing exactly the same 
 thing ; that is, they are collectively bargaining, and doing it lawfully, 
 and not in violation of the antitrust act. Now, I am not saying it is. 
 wrong to permit them to do it. I am simply trying to imjjress upon 
 you that they are doing it. 
 
 But to come back to the question, why should not manufacturers 
 have this power, I would like to read into this record an answer to 
 that made by the manufacturers themselves. On September 8 and 9, 
 1919, there was a large meeting held in the city of Chicago under the 
 auspices of the Illinois Manufacturers' Association. It was called 
 " Our Country First " conference. The resolutions committee of that 
 conference consisted of 28 men. I have been informed by one of the 
 gentlemen who attended the conference that the entire conference waa 
 some 1,000 or 1,500, but I find on that resolutions committee one repre- 
 sentative of farm organizations and two editors of agricultural press. 
 All of the rest represented manufacturers or commercial interests, 
 principally manufacturers. It was a manufacturers' conference. I 
 am not going to read all of these names, but will give the list to the 
 stenographer, and would be glad to have it incorporated in the min- 
 utes, but will read to you a few of the names, some of whom have 
 nation-wide reputations as being big business men, men who are 
 doing big things in a big way. 
 
 Here is Frank W. Noxon, secretary of the committee, representing: 
 the Railway Business Association. 
 
 Next Carleton A. Chase, of the Syracuse Chilled Plow Co. 
 
 Alba B.- Johnson, president Bail way Business Men's Association^ 
 Philadelphia. • 
 
 Alexander Legge, of the International Harvester Co. 
 ' D. E. Felt, of the Illinois Manufacturers' Association. 
 
 E. B. Leigh, the Chicago Eailway Equipment Co. 
 
 Hon. E. S. McKelvie, governor of Nebraska. 
 
 H. H. Merrick, of the Chicago Association of Commerce. 
 
 Eichard H. Rice, president National Conference of State Manufac- 
 turers' Associations. 
 
COLLECTIVE BARGAINING FOE FABMEES. 65 
 
 J. Frank ZoUer, general counsel National Conference of State 
 Manufacturers' Associations. 
 
 And here is the resolution that they adopted, the resolution that 
 the committee drafted, reported favorably, and which was adopted 
 by the conference as a whole, in relation to .collective bargaining by 
 farmers. I will read it : 
 
 COLECTJIVE ACTION BY FAEMEBS. 
 
 The business of the Nation has grown from the individual through partnership 
 into the corporation. A corporation is but a form of cooperative enterprise 
 and cooperation in industry, therefore is much more marked than it is in agri- 
 culture. To destroy this element. of industry — these factors of growth — would 
 weaken the Nation itself. We believe the time has come when the millions of 
 farmers not only in their own interest but in the interest of consumers should 
 have the clearly expressed right by both State and Federal laws to buy, sell, and 
 bargain collectively concerning their own products, and we ask for such clari- 
 fications of existing statutes that this cooperation will be permitted without 
 fear of prosecution. Where the only offenses charged have been technical and 
 the purpose intimidation or political effect we deprecate criminal prosecutions 
 directed against farmers and farm organizations oyer the country. 
 
 There, Mr. Chairman, is a direct, plain declaration by the organ- 
 ized manufacturers of this country that they, through the agency of 
 the corporation, now are bargaining collectively; that the farmers 
 are not and should have the equal right. 
 
 Mr. Steele. In their resolutions do they say anything generally 
 with reference to antitrust laws? 
 
 Mr. Miller. I have read the entire resolution. It could refer only 
 to the antitrust law, I take it. 
 
 A question was asked by one of the members of the committee yes- 
 terday, if I had a copy of the amendment to the antitrust law of 
 Illinois. I find that I have not. I have, however, a copy of the 
 amendment to the New York State laws. In New York there were 
 two laws — one the penal code, the other the antitrust law. But the 
 provisions of the two were almost word for word alike. I have here 
 a copy of the amendment to the laws there, and.it is my understand- 
 ing that the Illinois amendment is very similar, with the exception 
 that the word " heretofore " was not incorporated in the bill in Illi- 
 nois as offered and passed. The significance of that you will see when 
 I read it. The amendment to the New York State law is as follows 
 [reading] : 
 
 Associations, corporate or otherwise, of farmers, gardeners, or dairymen, in- 
 cluding live-stock farmers and fruit growers, engaged In making collective sales 
 or marketing for its members or shareholders of farm, orchard, or dairy prod- 
 ucts produced by its members or shareholders are not conspiracies. Contracts, 
 agreements, arrangements, or combinations heretofore or hereafter made by 
 such associations or the members, officers, or directors thereof in making such 
 collective sales and marketing, and prescribing the terms and conditions thereof, 
 are not conspiracies, and they shall not be construed to be injurious to trade or 
 commerce. 
 
 You will note that that amendment does not expressly give the 
 power to process farm products, and I will confess that when that 
 amendment was prepared 
 
 Mr. Steele. How long has that New York act been m force ? 
 
 Mr. Miller. This amendment? 
 
 Mr. Steele. Yes. 
 152695—19 5 
 
66 COLLECTIVE BAKGAINING FOR FAKMERS. 
 
 Mr. Miller. The amendment was passed in the year 1918. It did 
 not occur to me, and- 1 am not sure yet, but what farm organiza- 
 tions, having the clear right to collectively market their products, 
 as. a necessary part of that grant would have the right to prepare 
 their products for market by so processing, packing, and so forth, 
 as might make that product fit to be delivered to the ultimate con- 
 sumer. 
 
 INIr. MoRGAX. Why can not those new words you have there an- 
 swer all the purposes here? 
 
 JNlr. MiLLEK. To answer that question, Mr. Morgan, would involve 
 a somewhat elaborate argument. 
 
 Mr. Morgan. All right. You need not go into that. 
 
 Mr. Miller. The general thought, however, is this: That amend- 
 ment was prepared to meet the New York statute as we found it, 
 and so as to clearly give the right under that statute. This amend- 
 ment as it is here presented is in a certain way to confonn to the 
 Fedeial law, and to negative clearly any thought of violation of law 
 in making those collective sales that might be incorporated in other 
 provisions besides the particular section amended. In other words, 
 that the essential provisions here might requii'e pretty nearly what 
 we have in this bill. In New York State there were two laws, as I 
 have stated, the penal law and the antitrust law. In both cases 
 there were bills prepared and offered to form organizations, and in 
 both cases there were bills introduced other than those prepared by 
 the farm organizations. It so happened that in the legislative shuffle, 
 vrhich you gentlemen know about, the amendment to the antitrust 
 law that passed was not the one prepared by the farm organization. 
 But the amendment to the penal code was exactly the one, and that 
 without any amendment, and such amendment would completely pro- 
 tect the farmer, so that one was just as good as two. But the amend- 
 ment to the antitrust law itself would hardly, in my judgment, have 
 met the situation. But I understand that in Illinois they followed 
 the amendment to the penal code. 
 
 In Pennsylvania there is no strong drastic antimonopoly or anti- 
 trust law, with which* I think some gentleman here will agree with 
 me. Our law in Pennsylvania as to monopoly is largely the com- 
 mon law. But at the last session of the legislature, in order to avoid 
 even the perils of the common law there, which are much less than 
 the pei-ils of the statutory prohibitions, the legislature of that State 
 enacted a law giving power to create farm organizations. There 
 the charters of corporations are signed by the governor, through the 
 office of the secretary of the Commonwealth. This law authorized 
 the creation of associations of farmers and in the act itself power is 
 expressly given to the farmers, to the farmers of that association 
 and to the association itself, to do everything that in this bill we are 
 asking Congress to give. 
 
 Mr. Morgan. Have you a copy of the Pennsylvania laAv? 
 
 Mr. Miller. No ; I have not it here, but I will be glad to get it. 
 
 Mr. Morgan. And put it in the record? 
 
 Mr. Miller. I will try to do so if I can do it before the record 
 is closed, and doubtless I can find it in the library and have it copied. 
 
 (The law referred to follows:) 
 
COLLECTIVE BARGAINING EOE FARMERS. 67 
 
 AN ACT To provide for the Incorporation and regulation of cooperative agricultural 
 associations not having a capital stock and not conducted for profit, and defining 
 agriculture so as to Include persons engaged in agriculture, dairying, live-stock rals-, 
 Ing, poultry raising, beekeeping, and l^ortlculture. 
 
 Section 1. Be it enacted, etc.. That in this act, unless the context otherwise 
 require, "association" means an association formed under this act; "member" 
 means a member of such an association ; words used import the singular or the 
 plural as the ease may demand. 
 
 Sec. 2. Cooperative agricultural associations instituted for the purposes of 
 mutual help and not having capital stock and not conducted for profit may be 
 formed under the provisions of this act by any number of persons, not less than 
 five, engaged in agriculture. For the purposes of this act all persons engaged 
 in agriculture, dairying, live-stock raising, poultry raising, beekeeping, and 
 horticulture shall be deemed to be engaged in "agriculture." 
 
 Sec. 3. An association may, as agent for its members or any of them, per- 
 form for them services connected with the production, preservation, drying, 
 canning, storing, handling, utilization, marketing, or sale, of agricultural 
 products produced by them ; and, for the agricultural purposes of such mem- 
 bers, may perform for them services connected with the purchase or hiring 
 for or use by them of supplies, including livestock, machinery, and equip- 
 ment, and the hiring of labor or any one or more of the kinds of service 
 specified In this section. 
 
 Sec. 4. ' The articles of association of an intended association must be sub- 
 scribed by five or more persons, three of whom must be citizens of this Com- 
 monwealth, and shall set forth : , 
 
 I. The name of the association, which shall include the word "cooperative." 
 
 II. The class of services to be performed hy the association, which services 
 shall be among one or more of those enumerated in section 3 of this act. 
 
 III. The place or places where its business is to be transacted, which shall 
 be within this Commonwealth. 
 
 IV. The term for which it is to exist. 
 
 V. The names and post-office addresses of the subscribers. 
 
 VI. The number of its directors, not less than five and the names and resi- 
 dences of those who are chosen for directors for the first year. 
 
 VII. ' Any other provisions, not inconsistent with law, which the associa- 
 tion may see fit to adopt, governing the regulations and conduct of its affairs. 
 
 Notice of the intention to apply for any such charter shall be inserted in 
 two newspapers of general circulation, printed in the county where the 
 principal place of business is situated, for three weeks, setting forth briefly 
 the character and purpose of said corporation and the kind of service to be 
 performed by it. 
 
 jThe articles of association shall be acknowledge by not less than five of the 
 subscribers thereto before any officer authorized to take acknowledgments 
 and administer oaths and affirmations in this Commonwealth, and they shall 
 also make and subscribe an oath or affirmation before said officer that the 
 statements contained therein are true. 
 
 Said articles of association, accornpanied with proof of publication of the 
 notice hereinbefore provided to be given, shall then be presented to the gov- 
 ernor of this Commonwealth, who shall examine the same and if he finds it 
 in proper form and within the purpose mentioned in this act, he shall indorse 
 his approval thereon, and direct letters patent to issue, in. form similar to that 
 issued to corporations of the second class in this Commonwealth, which letters 
 patent shall incorporate the subscribers and their associates and successors 
 into a body politic and corporate, in deed and in law, by the name chosen. 
 Said articles of association shall be recorded in the office of the secretary 
 of the Commonwealth in a book to be by him kept for the purpose. 
 
 The original articles of association, together with all indorsements shall, 
 together with the letters patent issued thereon, be recorded in the office of 
 the recording of deeds in and for the county where the principal place of 
 business is situate. From thenceforth the subscribers thereto, their associates, 
 and successors, shall be a body politic and corporate for the purposes and 
 upon the terms named in the said articles of association. Certified copies of 
 the records thereof shall be competent evidence- for all purposes in the courts 
 of this Commonwealth. 
 
 Sec. 5. Each association, so formed under the provisions of this act and 
 when so formed, by virtue of its existence as such, shall have the following 
 powers : 
 
68 COLLECTIVE BAKGAINING POR FARMERS. 
 
 1. To have succession for the period limited in its articles of associatiwi, 
 and, when no period is limited thereby, to exist perpetually, subject to the 
 power of the general assembly under the constitution of the Commonwealth, 
 and unless sooner dissolved by operation of law or under the provisions or 
 this act. 
 
 2. To maintain and defend judicial proceedings by the name specified in the 
 articles of association. 
 
 3. To adopt and use a common seal, and alter the same at pleasure. 
 
 4. To hold, purchase, and transfer such real and personal property as the 
 purposes of the corporation require. 
 
 5. To elect a board of directors, which shall have power to appoint a presi- 
 dent, vice president, secretary, treasurer, and other officers, agents, and em- 
 ployees which may be deemed necessary ; to prescribe their duties ; to require 
 bonds of them ; and to dismiss them and any of them In accordance with the 
 by-laws of said association. 
 
 6. To make by-laws, not inconsistent with the law, for the management of its 
 property, the regulation of Its affairs, and the conduct and management of the 
 association. 
 
 7. To perform for members the services described in the articles of associa- 
 tion. 
 
 8. To make contracts necessary in the conduct of its operation and the trans- 
 action of its afiCairs. 
 
 9. To borrow money necessary to the conduct of its operations, and to issue 
 notes, bonds, and other evidences of Indebtedness therefor, and to give security. 
 In form of mortgage or otherwise, for the payment thereof. 
 
 10. To cooperate with any other association, not conducted for profit, whether 
 formed under this act or otherwise, for the purpose of promoting the objects for 
 which It was incorporated or the obiects for which any other similar asso- 
 ciation was formed. Any such association may, upon resolution adopted by its 
 board of directors, enter into all necessary and proper contracts and agree- 
 ments, and make all necessary and proper stipulations, agreements, contracts, 
 and arrangements, with any other cooperative corporation, association, or asso- 
 ciations, formed under the provisions of this act or otherwise, for the coopera- 
 tive and more economical carrying on of Its business or any part or parts 
 thereof, or any two or more cooperative associations formed under the pro- 
 visions of this act or otherwise may, upon resolutions adopted by their .respective 
 boards of directors, for the purpose of more economically carrying on their 
 respective business, by agreement between them, unite in employing and using, 
 or several such associations may separately employ and use, the same methods, 
 means, and agencies, which agencies may be another such association or asso- 
 ciations for carrying on and conducting their respective business. No con- 
 tract or agreement authorized by this section shall be binding or effective until 
 a copy thereof Is filed with the Department of Agriculture, and, If the same 
 relates to cooperative marketing, shall be sanctioned by such department. 
 
 11. To foster membership in the association by advertising or by educational 
 or other lawful means. 
 
 12. To exercise such Incidental powers as may be necessary in the conduct of 
 its operations. 
 
 Sec. 6. Any association may admit as members, under terms and conditions 
 prescribed in its by-laws, persons engaged ih agriculture, dairying, or horti- 
 culture. Any member shall forfeit his membership upon proof being made 
 to the association that he has ceased to be engaged in agriculture, dairying, 
 or horticulture. For the purposes of this act a member, other than an indi- 
 vidual, shall be represented by an individual, association, officer, or partner 
 thereof duly authorized. 
 
 Sec. Y. Every association shall issue a certificate of membership for each 
 member. Such certificate of membership shall not be transferable, and no 
 person who may acquire the same, by operation of law or otherwise than may be 
 prescribed in this act and the articles of association and the by-laws of the 
 association, shall be entitled to become a member by virtue of such certificate 
 
 Sec. 8. Every member shall be entitled to one vote only, and no vote by 
 proxy shall be permitted. 
 
 Sec. 9. That the officers and members of such association, organized under 
 and accepting the provisions of this act, shall not be individually liable for the 
 debts of said association otherwise than in this act provided. 
 
 Sec. 10. Each member of said association shall be liable, jointly Individ 
 nally, and severally, for his per capita share for all work and labor done to 
 
COLLECTIVE BARGAINING EOE FARMERS. 69 
 
 carry on the operation of said association, wlilch liability existed at the time 
 he becomes a member, or which is created during his membership, but, if 
 any member's share of such liability for work and labor done shall prove to 
 be uncollectible, each remaining member shall be responsible, as an Individual 
 liability, for such unpaid share or part thereof, to an amount equal to such 
 remaining members' original liability or to such further amount as may be 
 prescribed in the articles of association. No member shall be liable to the 
 association for any work or labor done as aforesaid until all the property 
 of said association, if it be found to be in the county where the chief business 
 of the same is carried on, is first exhausted to satisfy said claim for work and 
 labor done as aforesaid. The proceedings to enforce any liability against the 
 individual member of said association to collect any sum or sums due for 
 work or labor done for said association, as hereinbefore provided, shall be in 
 accordance with, and such action shall be brought in the manner and form 
 designated by, the fifteenth section of the act, approved the twenty-ninth day 
 of April, one thousand eight hundred seventy -four (Pamphlet Laws, seventy- 
 three), entitled "An act to provide for the incorporation and regulation of 
 certain corporations," and the supplements thereto: Providing, however, That 
 in the enforcement of such liability, where in the corporation act of one 
 thousand eight hundred and seventy-four and the supplements thereto, the word 
 " stockholders " is u§ed, for the purposes of this act the same shall be taken 
 to mean "member " or " members " as the same may be used and defined in this 
 act. In all cases any member who voluntarily or otherwise contributes to the 
 debt or obligation of another member or members shall have an action, several 
 or joint, against such defaulting member or members for reimbursement 
 
 Any association may, in its article of association, limit the amount of indebt- 
 edness or obligations which may be incurred by or on behalf of this association, 
 and no member shall be liable for any debt or obligation in excess of the terms 
 of such limitations. 
 
 Sec. 11. The association, as agent for a nonmember, may buy farm supplies 
 for him and sell his agricultural, dairy, or horticultural products; and, as a 
 condition of its contract with such nonmember, may impose upon him any lia- 
 bility for the contracts, debts, and engagements of the association which does not 
 exceed the liability of a member ; but In no case shall the association charge a 
 nonmember for such services more than the actual cost thereof, including the 
 pro rata part of all overhead expenses. 
 
 Sec. 12. Within thirty days after the recording of the articles of association 
 and letters patent in the office of the recorder of deeds as prescribed in section 
 four of this act, a call signed by not less than a majority of the directors shall 
 be Issued for a meeting of the members. At such meeting or any adjourned 
 session or sessions thereof by-laws regulating and conducting the management 
 of the association shall be adopted. Such by-laws shall, within the limits of 
 this act, prescribe — 
 
 1. The time, place, and manner of calling and holding meetings. 
 
 2. The number and qualifications of members, th,e conditions under which 
 membership shall be granted and terminated. Rules governing the exercise of 
 the privileges of members and the issuance, transfer, and cancellation of mem- 
 bership certificates, and the manner of ascertaining the interests of members 
 in the assets, if any, of the association. 
 
 3. The number- of directors, the time and manner of their election and re- 
 moval and their powers and duties, the number — not less than a rnajority — 
 necessary to the exercise of their powers, and their compensation, if any. 
 
 4. The officers, their terms of office, the time and manner of their appointment 
 and removal, their powers, duties, and compensation, if any. 
 
 5. The manner of fixihg and collecting fees, dues, and other assessments or 
 charges for services to its members. 
 
 6. Any other provisions proper and necessary to carry out the purposes for 
 which the association was formed. 
 
 The by-laws of such association so created under the provision of this statjite 
 shall be deemed to be taken as the law, subordinate to this statute, the articles 
 of association of the same and letters patent issued thereon, the constitution 
 and laws of this Commonwealth, and the Constitution and laws of the United 
 States. 
 
 Sec. 13. The by-laws may require a member to sell all or any part of their 
 specifically enumerated agricultural, dairy, and horticultural products, and to 
 buy all or any part of their specifically enumerated supplies exclusively through 
 the association; but, In such case, shall specify a reasonable period in each 
 
70 COLLECTIVE BARGAINING FOE FAEMEES. 
 
 year during which any member, by giving notice prescribed in the by-laws, may 
 withdraw and be released from his obligation to employ the services ot the 
 association in respect to such products and supplies. The by-laws may "^' ^^ 
 liquidated damages, specific reasonable sums in amounts fairly relating to the 
 actual damages ordinarily suffered in like circumstances to be paid to the 
 association to reimburse it for any damages which it or the members may sus- 
 tain by the failure of any members to perform any obligation to the association 
 under the articles of association, the by-laws, or any contract with the associa- 
 tion, and such provision shall be valid and enforceable in the courts of this 
 State. 
 
 Sec. 14. The board of directors of each association shall consist of not less 
 than five members. At the first regular meeting of the association a quorum, 
 as specified by the by-laws, being present the members shall elect from among 
 themselves directors for the term of one yeai-. At the expiration of the terms 
 of directors so elected, their successors shall be elected in like manner for terms 
 of one year. Directors shall hold office until their successors have been elected 
 and qualified and until their successors shall enter upon the discharge of their 
 duties. Vacancies shall be filled for the unexpired terms at any regular meet- 
 ing or at any special meeting called for the purpose in the same manner as pro- 
 vided for the original election of directors. The board of directors shall man- 
 age the affairs of the association and shall perform such other duties as may 
 be specifically imposed upon the board by this act. ' 
 
 Sec. 15. Any menilier, director, or officer of the association may, for cause, 
 at any regular meeting or any special meeting called for the purpose at which 
 a majority of the members shall be present, be removed from oflice by vote of 
 not less than two-thirds of the members present. Reasonable notice of the time, 
 place, and object of any such meeting shall he given, in the manner prescribed 
 in the by-laws, to the members and other directors or officers against whom 
 charges are to be presented. Such directors, members, or officers shall, at the 
 same time, be informed of such charges, and at such meeting shall have an 
 opportunity to be heard in person or by counsel and by witnesses in regard 
 thereto. 
 
 Sec. 16. The officers of every association shall include a president, vice pre.sl- 
 dent, secretary, and treasurer, who shall he appointed annually by the board 
 of directors. The president and vice president shall be appointed from among 
 the directors. The secretary and treasurer may be nonmembers. The office 
 of secretary and treasurer may be combined and one individual appointed 
 thereto. Vacancies in said offices shall be filled for the unexpired term by the 
 board of directors in the manner provided for the original appointment of offi- 
 cers. Such officers shall hold their offices until their successors are appointed 
 and qualified and shall have entered upon the discharge of their duties. The 
 board of directors shall require the treasurer, and may requii-e such other 
 officers, agents, and employees charged by the association with responsibility 
 for the custody of funds or property, to give bond with sufficient .surety for the 
 faithful performance of their duties as such. The premium on such bond to 
 be paid by the association. 
 
 Sec. 17. An association may provide for the payment of expenses necessary 
 in the performance of its services to its members, by the creation of a working 
 fund or otherwise, through fees, dues, assessments, or charges for the services, 
 to be fixed and collected in such manner as may be prescribed in the by-laws. 
 Such dues, fees, as.sessments, or charges sh.iU he limited to the amounts neces- 
 sary to meet expenses already incurred or reasonably estimated as essential to 
 be incurred b.v the association in conducting its operations. Whenever any as- 
 sociation shall find that it has accumulated funds in excess of those necessary 
 to meet expenses already incurred and reasonably estimated as essential to be 
 incurred by it in conducting its operations, it shall return such "excess to or 
 deduct from future fees, dues, assessments, or charges of the members who 
 contributed to such excess in the proportion of their respective contributions 
 
 Sec. is. Every association shall, from time to time, appoint an auditing com- 
 mittee of three persons, who shall not be directors, officers, agents or employees 
 of the association, but who may or may not be members of said association 
 Said committee shall, once in every quarter of each fiscal vear of such'asso* 
 elation, examine its records and property, and within one 'month after siich 
 examination report in writing the results thereof to the associsition At" the 
 close of each fiscal year a complete audit of the operations of the associntion 
 shall be made, the written report of whicli shall include statements of servicp« 
 rendered by the association, the balance sheet, the receipts and disbursements 
 
COLliECTIVE BARGAINING FOR FARMERS. 71 
 
 and the assets and liabilities, the members admitted and withdrawn, the total 
 number of members, and other proper information, and shall be submitted to 
 the members at the next regular meeting. Within three months after tlip ex- 
 piration of the fiscal year for which made the secretary of said association 
 shall file one copy of said report of the audit with the secretary of agriculture 
 of this Commonwealth and one copy with the dean of the school of agriculture 
 of the Pennsylvania State College. No person shall, without consent of the 
 association, except in obedience to judicial process, make or permit any dis- 
 closure whereby any information contained in said report may be identified as 
 having been furnished by said association. Any person violating or falling to 
 comply with this section shall be guilty of a misdemeanor, and, upon convic- 
 tion thereof, shall be punished by a fine of not more than three hundred dollars 
 or imprisonment for nOt more than six months, or both, at the discretion of the 
 court. 
 
 Sec. 19. The articles of association may, pursuant to an afhrmative vote of 
 two-thirds of all the members, be amended at any regular meeting or at a spe- 
 cial meeting called for the purpose, due notice of the time, place, and object 
 of which regular or special meeting shall have been given as prescribed in the 
 by-laws. A copy of such amendment, signed and acknowledged by not less than 
 three of the directors, shall be presented to the governor of the State of Penn- 
 sylvania, who shall examine the same, and, if he finds it in proper form, he 
 shall indorse his approval thereon. Said amendment shall then be recorded in 
 the office of the secretary of tlie Conunonwealth in a book to be by him kept 
 for the purpose. The said amendment, together with the indorsements thereon, 
 shall then be recorded in the office for the recording of deeds in . the county 
 where the principal place of business is situate. 
 
 Sec. 2t.i. Any association may, at any regular meeting or iit any special meet- 
 ing called for the purpose, due notice of the time, place, and object of which 
 regular or special meeting shall have been given as prescribed in the by-laws, 
 by a vote of two-thirds of all its members, discontinue its operiitions and set- 
 tle its affairs. Whereupon, it shall designate a comn)ittee of three nicnilicrs, 
 who shall, on behalf of the association and within a time fixed mid designated 
 or any exteusiiiu thereof, liquidate its assets, pay its debts and expenses, and 
 divide any surplus nmong the members as may be entitled to under the article- 
 of association or by-laws. Upon final settlement by such committee, the asso- 
 ciation shall be deemed dissolved, and shall cense to exist under the act. The 
 committee shall make a report of the proceedings under this section, ndiich 
 shall be signed by its members, and duly acknowledged by them, which report 
 shall be filed and recorded with the secretary of the Commonwealth and with 
 the recorder. < if deeds of the proper county. The members of said rssociation 
 so discontinuing its affairs and operations mny, in the designation of s;\.id com- 
 mittee, provide that the members of said association shall receive a compen- 
 sation for their services as may be provided in said designation. Said com- 
 pensation to be fixed bv vote of not less than two-thirds of all the members. 
 
 Sec. 21. Hereafter, unless expressly authorized by law, no individual or part- 
 nership, corporation or association, formed in this State otherwise than under 
 the provisions of this act shall adopt and use the word "cooperative." or any 
 abbreviation or derivative thereof, as a part of the name or designation under 
 which such individual, partnership, corporation, or association shall do business 
 in the State. Any association shall be entitled to sue for and to obtain, In any 
 court of competent jurisdiction in this State, by bill in equity, injunction, and 
 other relief against the use pf the word " cooperative " by any individual, firm, 
 corporation, or association, who shall violate the provisions of this section. 
 
 Sec 22. If any clause, sentence, paragraph, or part of this act shall for any 
 reason be adjudged by any court of competent jurisdiction to be invalid, such 
 judgment shall not affect, impair, or invalidate the remainder thereof, but shall 
 be confined in its operation to the clause, sentence, paragraph, or part thereof 
 directly involved in the controversy ih which said judgment shall have been ren- 
 dered. / 
 
 Sec. 2.3. All acts or parts of acts inconsistent herewith are hereby repealed. 
 
 Sec. 24. The right to alter, amend, or repeal this act is hereby expressly re- 
 served. 
 
 Approved, the 12th day of .June, A. D. 1919. 
 
 Wm. C. Sproul. 
 
 The foregoing is a true and correct copy of Act of the General Assembly No. 
 
 238. 
 
 Cyrus E. Woods, 
 
 Secretary of the Commomcealth. 
 
72 COLLECTIVE BARGAINING FOE FABMBKS. 
 
 Mr. Steele. That amends the general corporation law of the 
 State, does it not? 
 
 Mr. Miller. Yes, sir. 
 
 Let me also call your attention to the fact that New York btate, 
 besides amending its penal code and antitrust law, adopted a, la,TY 
 at the same session thej amended the antitrust law authorizing 
 the creation of organizations of farmers, clearly granting to them 
 the express power to do these things. Now, the fact that these 
 three great States— New York, Pennsylvania, and Illinois— which 
 have within their borders the three greatest cities of the Union, 
 have granted these privileges, if they may be called privileges, not 
 rights, may be of some interest to you gentlemen as indica^iing the 
 trend of the public mind and of legislative thought, and I have 
 been informed that Wisconsin, and, I think, Minnesota have adopted 
 similar legislation, but I am not familiar with it. 
 
 Now, these laws as enacted in New York and Pennsylvania, au- 
 thorizing the creation of these associations with express power to 
 do these things, follow quite closely an act prepared by the Federal 
 Department of Agriculture, the Bureau of Markets, which they 
 recommend to the different States for adoption. 
 
 The Chairman. Have you a copy of that ? 
 
 Mr. Miller. I think I have it here. 
 
 The Chairman. Will you put that in the record ? 
 
 Mr. Miller. Yes, sir. 
 
 The Department of Agriculture has done some valuable work 
 along this line. This will be found in the Department of Agri- 
 culture Service and Eegulatory Announcements No. 20, headed, 
 " Suggestions for a State cooperative law designed to conform to 
 section 6 of the Clayton Act." This is a long act with many pro- 
 visions : 
 
 (The proposed act follows:) \ 
 
 [Service and regulatory announcements, No. 20.] 
 I 
 
 Suggestions toe a State Cooperative Law Designed to Conform to Section 6 
 
 OP the Clayton act. 
 
 In compliance Nyith requests from many officials and individuals, a bill for 
 the organization of nonstock agricultural and horticultural cooperative asso- 
 ciations, under State laws, has been dravcn in the United States Department 
 of Agriculture, in which have been embodied many suggestions for carrying 
 out, and an effort has been made to conform to, the requirements of section 6 
 of the Clayton amendment of the United States antitrust laws. 
 
 A copy of the draft and of the letter transmitting the same are appended. 
 
 United States Department of Agriculture, 
 Office of Markets and Rural Organization, 
 
 Washington, D. C. 
 Dear Sir: Previous acknowledgment has been made of the receipt of your 
 communication, in which you requested draft of a model act providing for 
 cooperative associations under State law, both with and without capital stock. 
 Many similar communications have been received and many interviews have 
 been held with persons concerned. 
 
 As a result, and with the object of rendering such assistance as it could, the 
 department has prepared a bill, copy enclosed, relating to nonstock agricultural 
 and horticultural associations, in which it has endeavored to embody the views 
 expressed by those interested. The organization of associations having capital 
 stock, or of associations which are neither agricultural nor horticultural, has 
 not been dealt with. 
 
COLLECTIVE BARGAINING FOE FARMEKS. 73 
 
 It is clear that the exemptions conferred upon specifically described agricul- 
 tural and horticultural organizations and their members by section 6 of the 
 J^iayton amendment of the United States antitrust laws open untried possibili- 
 ties tor strictly cooperative effort on the part of the farmers, if they be 
 utilized along sound economic lines with due regard for the rights of consumers, 
 and others. Effort has been made to draw a bill in such form that if it were 
 enacted by a State legislature, and an association organized thereunder were 
 to engage m interstate commerce, these possibilities might be tried out without 
 offending Federallaws; also to shape each provision so that it may be in 
 harmony with law. Nevertheless, those who contemplate using the material 
 should be cautioned of the necessity for care on their part also. The antitrust 
 laws are not committed to this department for administration. It has no 
 power to give an authoritative ruling as to their meaning. Indeed, the flnai 
 interpretation of these statutes rests with the courts. Furthermore, it is con- 
 ceivable that properly organized associations, coming wholly within the terms 
 of a statute expressly permitting their existence and operation, might conduct 
 themselves in an unlawful way. It is suggested, therefore, that those who 
 desire to make use of the bill being sent you, or to organize thereunder, should 
 act in reference to the matter upon the advice of competent counsel of their 
 own choice. 
 
 Section 6 of the Clayton law provides : 
 
 " That the labor of a human being is not a commodity or article of commerce. 
 Nothing contained in the antitrust laws shall be construed to forbid the 
 existence and operation of labor, agricultural, or horticultural organlzatWns, 
 instituted for the purposes of mutual help, and not having capital stock or con- 
 ducted for profit, or to forbid or restrain individual members of such organiza- 
 tions^'from lawfully carrying out the legitimate objects thereof; nor shall such 
 organizations, or the members thereof, be held or construed to be illegal com- 
 binations or conspiracies in restraint of trade under the antitrust laws." 
 
 It is plain that before a cooperative association can be brought within tne 
 obvious requirements of the section it must affirmatively appear that, first, it 
 is a " labor, agricultural, or horticultural " organization ; second, it is " insti- 
 tuted for the purposes of mutual help " ; third, it does Aot have " capital 
 stock " ; and, fourth, it is not " conducted for profit." Only a few of the States 
 now have laws providing for the creation of such associations. 
 
 Tou will notice that the scheme of the bill is that every association created 
 thereunder shall act exclusively as an agent for the member ; also if it act for 
 the nonmember. it must do so as agent and the service must be performed at 
 cost. It is sought by this application of the principle of agency to safeguard the 
 nonprofit feature of such an association. It is absolutely essential that this fea- 
 ture be adhered to both in the organization and in the conduct of the asso- 
 ciation. 
 
 In addition to what has been said above with respect to the- laws of the 
 
 United States, it is suggested that, in every case, local counsel be consulted as 
 
 to whether the provisions of the bill are in harmony with the constitution and 
 
 antitrust laws of any State in which it may be proposed to put it into effect. 
 
 Very truly yours, 
 
 Chakles J. Brand, Chief. 
 
 Februaky 2, 1917. 
 
 -AN ACT To provide for the formation of cooperative agricultural or horticultural 
 associations, instituted for the purposes of mutual help, and not having capital 
 stock or conducted for profit, and for other purposes. 
 
 [Enacting clause.] 
 
 Section 1. In this act, unless the context otherwise require, " association " 
 means an association formed under this act; "member" means a member of 
 an association ; " person " includes a corporation or partnership or two or more 
 persons having joint or common interest ; words used import tlie singular or 
 the plural, as the case may demand. 
 
 Sec. 2. Cooperative agricultural or horticultural associations instituted for 
 the purposes of mutual help, and not having capital stock or conducted for , 
 profit, may be formed, under the provisions of this act, by any number of per- 
 sons, not less than five, engaged in agriculture or horticulture. 
 
 Sec. 3. An association may, as agent for its members or any of them, per- 
 form for them services connected with the production, preservation, drying, 
 canning, storing, handling, utilizatiow, marketing, or sale of agricultural and 
 
74 COLLECTIVE BARGAINING FOR FARMERS. 
 
 horticultural products produced by them, and for the agricultural or horticul- 
 tur.il purposes of such members, may perform for them services connected with 
 the purchase or hiring for, or use' by, them, of supplies, including live stock, 
 machinery and equipment, and the hiring of labor, or any one or more of the 
 kinds of service specified in this section. 
 
 Sec. 4. The persons uniting to form an association shall enter into articles 
 of iissociation in writing, which shall state — 
 
 ((f) The name of the a,ssociation, which shall include the word "coopera- 
 tive," which name shall not be the same as that of any other, association or 
 corporation formed or doing business in this State or so similar to such name 
 as to be likely to be confused therewith ; ' 
 
 (6) The class of seiwices to be performed for its members by the association, 
 which services shall be among those mentioned in section three of this act; 
 
 (c) The place where its principal operations are to be carried on, Avhich . 
 shall be a place within this State ; 
 
 ((0 The term for which such association Is to exist; 
 
 (e) The date of the commencement of its fiscal or business year; 
 
 (f) The names and post-offlce addresses of the directors, not less than five, 
 designated to serve until their succesors are elected ; 
 
 {(J) Any other provisions, not inconsistent with law, which the association 
 may see fit to adopt, governing the regulation and the conduct of its affairs. 
 
 The articles of association shall bear the signatures and post-office addresses 
 of the iiersons uniting to form the association, and shall be acknowledged by 
 not less than five of such persons, before an officer duly authorized to administer 
 oaths in this State, which acknowledgment shall be authenticated by the seal 
 of such officer. The articles of association, so acknowledged and authenticated, 
 together with a true copy thereof, .shall be transmitted to [the proper State 
 officer], who shall, if in his opinion the provisions of law applicalile thereto 
 have been complied with, file and record the same. He shall is.sue his certificate 
 showing such filing, which, together with said copy of the urticles of ussucia- 
 tion, he shall transmit to the office [the proper county officer] in the county 
 in which the phxce described in subdivision (c) of this section is located in 
 which office said copy and certificate shall be filed and recorded. Such county 
 officer shall thereupon issue his certificate showing the fact and date of Jiling 
 of said true cop.v of the articles of association in his office and transnut the 
 sam.e to the association. 
 
 Sec. 5. The articles of association may. pursuant to an affirmative vote of 
 two-thirds of all the members, be amended at any regular meeting, or at any 
 .special meeting called for the purpoise. due notice o^ the time, place, and object 
 of v/hich regular or special meeting shall have been given as prescribed in the 
 bj'-laws. r'opies of such am«ndm(>nt, si.gned and acknowledged by not less than 
 three directors, shall be filed and recorded in the manner, and in the respective 
 offices. ]irescribed in section four for the ui'ticles of association. 
 
 Sec. (j. Upon the filing liy the [proper county officer] of a copy of the articles 
 of association, transmitted to him by the [proper State officer], as prescribed 
 in section four of this act, the association shall have power, within the limita- 
 tions of this act — 
 
 (a) To adopt and use a common .seal and to alter it at pleasure; 
 
 (h) To have succe.ssion for the term prescribed in its articles of association, 
 vmless sooner dissolved by operation of law or under the provisions of this act; 
 
 (r) To perform for members the services described in its articles of associa- 
 tion ; 
 
 (0) To make contracts necessary in the conduct of its operations ; 
 
 (e) To purchase, lease, or receive by gift, bequest, oi- devise and to hold per- 
 sonal and real property necessary in the conduct of its operations, and to dis- 
 pose of the same ; 
 
 U) To borrow money necessary in the conduct of its operations, to issue 
 notes and bonds therefor, and to give security, in the form of mortgage or 
 otherwise, for the repayment thereof; x 
 
 (,(/) To sue and lie sued by the name specified in its articles of association, 
 as fully as natural persons ; 
 
 (/I) To adopt, and alter or amend when necessary, by-laws, not inconsistent 
 wit^i law, regulating its conduct and management ; 
 
 (O To elect a board of directors, which shall have power to appoint a presi- 
 dent, vice president, secretary, treasurer, and other officers, and agents and 
 employees deemed necessary, to prescribe their duties not inconsistent with 
 
COLLECTIVE BAEGAINING FOR FAEMEES. 75- 
 
 the by-laws, to require bonds of them and fix the penalty thereof, and to dismiss 
 at pleasure any agent or employee ; 
 
 (i) To cooperate, through -membership or otherwise, with any other associa- 
 tion not conducted (or profit, whether formed under this act or otherwise, for 
 the purpose of promoting any enterprise, which may be lawfullv carried on, 
 relating to the respective authorized operations of such associations, and which 
 enterprise does not relate to or involve fixing wages, limiting production, de- 
 stroying products, or fixing the selling price, or delegating the control of the 
 products of the members of either association ; 
 
 (fc) To foster membership in the association by advertising or by educational 
 or other lawful means. 
 
 (I) To exercise such incidental powers as shall be necessary in the conduct 
 of its operations. 
 
 Sec. 7. Any association may admit as members, under terms and conditions 
 prescribed in its by-laws, persons engaged in agricultui'e or horticulture. Any 
 member shall forfeit his membership upon proof being made to the association 
 that he has ceased to be engaged in agriculture or horticulture. For the pur- 
 pose of this act a member, other than an individual, shall be represented by an 
 individual associate, officer, or partner thereof, duly authorized. 
 
 Sec. 8. Every association shall issue a certificate of membership to each 
 member. Such certificate of membership sh£)ll not be transferable, and no per- 
 son who may acquire same by operation of law, or otherwise than as may be 
 prescribed in this act and the articles of association and by-laws of the asocia- 
 tion, shall be entitled to become a member by virtue of such certificate. 
 
 Sec. 9. Bach member shall be entitled to one vote only, and no vote by proxy 
 shall be permitted. Except in case of the removal of a director or officer, as 
 provided in. section fifteen of this act, absent members may, under rules pre- 
 scribed in the by-laws, be permitted to vote on specific questions by ballots 
 transmitted to the secretary, or other proper ofiicer of the association, by regis- 
 tered mail, and such ballots to be counted only in the meeting at the time at 
 which such vote is taken. 
 
 Sec. 10. Each member shall be responsible, as his original liability, for his 
 per capita share of all contracts, debts, and engagements of the association 
 pxisting at the time he becomes a member and created during his membership ; 
 out if any member's share of such contracts, debts, and engagements shall prove 
 to be uncollectible, each remaining member shall be responsible, as his additional 
 liability, for such unpaid share or part thereof to an amount equal to such 
 remaining member's original liability or to such further amount as may be pre- 
 scribed in the articles of association. No member shall be liable to the associa- 
 tion for any contract, debt, or engagement arising out of any specific transaction 
 •between the association and any member or members thereof in which he does 
 not participate, unless and until the association shall have exhausted every legal 
 recourse and failed to enforce satisfaction from the member or members partici- 
 pating therein. In all cases any member who, voluntarily or otherwise, con- 
 tributes to the payment, of the debt or obligation of another member or other 
 members shall have an action, several or joint, as he may elect, against such 
 defaulting member or members for reimbursement. Any association may, in its 
 articles of association, limit the amount of indebtedness or obligation which may 
 be incurred by or on behalf of the association, and no member shall be liable for 
 any debt or obligation in excess of the terms of such limitations. 
 
 Sec. 11. The association, as agent for a nonmember, may buy farm supplies for 
 him and sell his agricultural or horticultural products, and as a condition of its 
 contract with such nonmember may impose upon him any liability for the con- 
 tracts, debts, and engagements of the association which does not exceed the 
 liability of a member, but in no case shall it charge a nonmember for such serv- 
 ice more than the actual cost thereof, including the pro rata part of all overhead 
 expenses. ' 
 
 Sec. 12. Within [forty] days after the filing of a copy of the articles of asso- 
 ciation in the [proper county office], as prescribed in section four of this act, a 
 call signed by not less than a majority of the directors shall be issued for a 
 rgeeting of the members. At such meeting, or any adjourned session or sessions 
 thereof, by-laws regulating the conduct and management of the association shall 
 be &.dopted. Such by-laws shall, within the limitations of this act, prescribe — 
 
 (a) The time, place, and manner of calling and holding meetitig. 
 
 ( 6 ) The number and qualifications of members, the conditions under which 
 membership shall be granted and terminated, rules governing the exercises of the 
 privileges of membership and the Issuance, transfer, and cancellation of mem- 
 
76 COLLECTIVE BARGAIJSriWG TOE FAKMEKS. 
 
 ■ bership certificates, and the manner of ascertaining the interests of members in 
 tlie assets, if any, in the possession of the association. 
 
 (c) The number of the directors, the time and manner of their election and 
 removal, their powers and duties, the number not less than a majority, necessary 
 to the exercise of their powers, and their compensation, if any. 
 
 id) The officers, their terms of office, the time and manner of their appoint- 
 ment and removal, their powers and duties, and their compensation, if any. 
 
 (e) The manner of fixing and collecting fees, dues, and other assessments or 
 charges for services to its members. 
 
 if) Any other provisions proper and necessary to carry out the purposes for 
 ■which the association was formed. 
 
 Sec. 13. The by-laws may require the members to sell all or any part of their 
 specifically enumerated agricultural and horticultural products and to buy all or 
 any part of their specifically enumerated farm supplies exclusively through thB 
 association, but in such case shall specify a reasonable period in each year during 
 which any member, by giving to the association the notice prescribed in the by- 
 laws, may withdraw and be released from his obligation to employ the services 
 of the association in respect to such products and supplies. The by-laws may fix 
 as liquidated damages, specific, reasonable sums, in amounts fairly related to the 
 actual damages ordinarily sufEered in like circumstances, to be paid to the asso- 
 ciation to reimburse it for any damage which it or the members may sustain by 
 the failure of any member to perform any obligation to the association under the 
 articles of association, the by-laws, or any contract with the association, and any 
 such provision shall be valid and enforceable in the courts of this State. 
 
 Sec. 14. The board of directors of every association shall consist of not less 
 than five members, who shall be divided, as nearly equally as practicable, into 
 three classes. At the first regular meeting of the association, a quorum as pre- 
 scribed by the by-laws being present, the members shall elect from among them- 
 selves directors of the first class for a term of one year, directors of the second 
 class for a term of two years, and directors of the third class for a term of three 
 years. At the expiration of the terms of the directors so elected their successors 
 shall be elected, in like manner, for terms of three years. Directors shall hold 
 office until their successors shall have been elected and qualified and shall enter 
 upon the discharge of their duties. Vacancies shall be filled for the unexpired 
 terms at any regular meeting, or at any special meeting called for the purpose, in 
 the manner provided for the original election of directors. The board of direc- 
 tors shall manage the afCairs of the association and shall perform the duties 
 specifically imposed upon the board by this act. 
 
 Sec. 15. Any director or officer of an association niay, for cause, at any regular 
 meeting or at any special meeting called for the purpose, at which a majority of 
 thp members shall be present; be removed from office by vote of not less than, 
 two-thirds of the members present. Reasonable notice of the time, place, and 
 object of any such meeting shall be given, in the manner prescribed in,^the by- 
 laws, to the members and to the director or officer against whom charges are to 
 be presented. Such director or officer shall, at the same time, be informed in 
 writing of such charges and at such meeting shall have an opportunity to be 
 heard in person, by counsel, and by witnesses in regard thereto. 
 
 Sec. 16. The officers of every association shall include a president, vice presi- 
 dent, secretary, and treasurer, who shall be appointed annually by the board of 
 tilrectors. The president and vice president shall be appointed from among the 
 directors. The secretary and treasurer may be nonmembers. The offices of 
 «ecretai'y and treasurer may be combined and one individual appointed thereto. 
 Vacancies shall be filled for the unexpired terms by the board of directors fc the 
 manner provided for the original appointment of officers. The board of directors 
 shall require the treasurer and all other officers, agents, and employees charged 
 by the association with responsibility for the custody of any of its funds or 
 property to give bond with sufficient security for the faithful performance of 
 their duties as such. 
 
 Sec. 17. An association may provide for the payment of expenses necessary In 
 the performance of its services to its members, by the creation of a workln<' 
 fund or otherwise, through fees, dues, assessments, or charges for the services to 
 be fixed and collected in such manner as may be prescribed in the by-laws Such 
 fees, dues, assessments, or charges shall be limited to the amounts necessary to 
 meet expenses already incurred, or reasonably estimated as essential to be 
 incurred, by the association in conducting its operations. V7h«never any asso- 
 ciation shall find that it has accumulated funds in excess of those necessary to 
 meet expenses already incurred, or reasonably estimated as essential to be 
 
COLLECTIVE BARGAINING FOR FARMERS. 77 
 
 a 
 
 Incurred, by it in conducting its operations, it shall return such excess to or 
 deduct it from future fees, dues, assessments, or charges of the members who. 
 contributed to such excess in the proportions of their respective contribution. 
 
 Sec. 18. Every association shall, from time to time, appoint a committee of 
 three members, vs?ho shall not be directors, officers, agents, or employees of the 
 association, which committee shall, at least once in each quarter of each fiscal 
 or business year of such association, make an examination of its records and 
 property, and shall, within one month after such examination, report in writing 
 the results thereof to the association. Immediately after the close of each 
 fiscal or business year of the association, a complete audit of its operations 
 shall be made for the fiscal or business year. A written report of the audit, 
 including statements of services rendered by the association, the balance sheet', 
 receipts and disbursements, assets and liabilities, members admitted and with- 
 drawn, total numbers of members, and other proper information, shall be sub- 
 mitted to the members at their next regular meeting. The association shall 
 file copies of the report of the audit with the [proper State official, such as the 
 secretary of state, and with the director- of extension of the State Agricultural 
 College or the commissioner of agriculture, or the dean of the State Agricul- 
 tural College], within three months after the close of the fiscal or business 
 year for which made. The [director of extension, etc.] shall, upon request, 
 furnish a copy of such report to the United States Department of Agriculture. 
 No person shall, without the consent of the association, except in obedience 
 to judicial process, make or permit any disclosure whererby any information 
 contained in said report may be identified as having been furnished by said 
 association. Any person violating or failing to comply with the provisions of 
 this section shall be deemed guilty of a misdemeanor, and, upon conviction 
 thereof, shall be punished by a fine of not more than [five hundred] dollars. 
 
 Sec. 19. Any association may, at any regular meeting or at any special 
 meeting called for the purpose, due notice of the time, place and object of 
 which regular or special meeting shall have been given as prescribed in the 
 by-laws, by vote of two-thirds of all of the members, discontinue its operations 
 and settle its affairs. Thereupon, it shall designate a committee of three mem- 
 bers, who shall, on behalf of the association and within a time fixed in their 
 designation, or any extension thereof, liquidate its assets, pay its debts and ex- 
 penses, and divide any surplus among the members as they .pay be entitled 
 under the articles of association or by-laws.' Upon final settlement by such 
 committee, the association shall be deemed dissolved, and shall cease to exist 
 under this act. The committee shall make a report of the proceedings had 
 under this section, which shall be signed by its members, shall be acknowledged 
 by them before an officer duly authorized to administer oaths in this State, and 
 shall be filed and recorded in compliance with the .provisions of section four 
 of this act with respect to articles of association. 
 
 Sec. 20. Every association shall, before any paper is filed and recorded as re- 
 quired by this act, pay the fees specified in this section for such filing and 
 recording : 
 
 To the [proper State officer] as follows : 
 
 Articles of association, mentioned in section four, . 
 
 Amendments to articles of association, mentioned in section five, . 
 
 Report of proceedings under section nineteen, . 
 
 To the [proper county officer in the county in Which filed and recorded] as- 
 
 follows: , . ... ^ 
 
 Articles of association, mentioned m section four, . 
 
 Amendments to articles of association, mentioned in section five, . 
 
 Report of proceedings under section nineteen, — . 
 
 Sec. 21 Hereafter, unless expressly authorized by law, no individual or 
 partnership, nor any corporation or association formed in this State oth'terwise 
 than as provided in this act, shall adopt and use the word " cooperative," or 
 any abbreviation or derivative thereof, as a pa,rt of the name or designation 
 under which such individual, partnership, corporation, or association shall do 
 business in this State; Any association shall be entitled to sue for, and to 
 obtain in any court of competent jurisdiction in this State, injunctive reUef 
 against the use of the word " cooperative'" by any Individual, firm, corporation, 
 or association who shall violate the provisions of this section. 
 
 Sec 22 Every person now doing, or hereafter commencing to do, business 
 In this State under the name or designation which Includes the word " co- 
 onerative " or any abbreviation or derivative thereof, shall, within [ninety] 
 days after the passage of this act, or before so commencing to do business, file 
 
78 COLLECTIVE BARGAINING FOR FARMERS. 
 
 with the [proper State officer], in such form as he may require, a statement 
 showing such name. Hereafter no person shall commence to do business in 
 this State under a name or designation which includes the word " cooperative, 
 or any abbreviation or derivative thereof, if such name or designation be the 
 same as that of any existing association, or so similar to such name as to De 
 likely to be confused therewith. Any person violating or failing to comply 
 with the provisions of this section shall be deemed guilty of a misdemeanor and, 
 upon conviction thereof, shall be punished by a fine of not more than [five 
 hundred] dollars. 
 
 Sec. 23. If any clause, sentence, paragraph, or part of this act shall, for any 
 reason, be adjudged by any court of competent jurisdiction to be invalid, such 
 judgment shall not affect, impair, or invalidate the remainder thereof, but 
 shall be confined in its operation to the clause, sentence, paragraph, or part 
 thereof directly involved in the controversy in which such judgment shall have 
 been rendered. 
 
 Sec. 24. [Here insert any necessary repeal clause applicable to prior legis- 
 lation.] 
 
 Sec. 25. The right to alter, amend, or repeal this act, is hereby expressly 
 reserved. 
 
 Two State a(;ts that I have mentioned — ^New York State quite 
 closely and Pennsylvania to some extent — ^have followed the general 
 thought and plan of this act. 
 
 Mr. Igoe. The principal difference I see here, Mr. Miller, in this 
 New York law and the sections of the Hereman bill is that in the 
 Hersman bill there is this provision : 
 
 Associations, corporate or otherwise, with or without capital stock, of farm- 
 ers * are not contracts, combinations, or conspiracies in restraint of 
 trade or commerce. * 
 
 Mr. Miller. Yes, sir; and that became necessary because that is 
 the exact language of the Clayton Act, which prohibits those things.. 
 Therefore, it became necessary to amend that act and to insert the 
 words you have mentioned in the exact language as contained in the 
 Hersman bill. 
 
 Mr. Igoe. There was no provision in the New York antitrust law 
 which rendered such language necessary in the- amendment? 
 
 Mr. Miller. That is it exactly, while there is in the Federal law. 
 In other words, in both cases we have tried to meet the statutes we 
 were amending. 
 
 May I briefly now, and as concisely as I can, take up general condi- 
 tions and show how we believe the enactment of a law similar to this, 
 which will give the farmers and their organizations liberty of action, 
 may promote the general good ? Mr. Chairman, the Great War in a 
 measure accelerated and in a measure disclosed movements that have 
 been going on for some time, by the effect of which the margin be- 
 tween this country's supply of food and the demand for it is yearly 
 growing more narrow. I very, very seldom make predictions. But I 
 will say here that I believe all students of this great economic ques- 
 tion are now convinced that unless present conditions are remedied, 
 present tendencies checked and reversed, in less than 10 years this 
 country will cease to be a self-supporting Nation. You gentlemen 
 know what that means if it is so. It means a reversal of the balance 
 of trade. It means an entire change of our traditional policy of the 
 control of the seas, because if we are to depend on food to be brought 
 in we jnust control, or at least see that no other nation controls, the 
 great water highways over which that food is brought here. And yet 
 there is tillable land enough in this country to support four times the 
 population of this country. If Cong^-ess could view it — and I am sure 
 
COLLECTIVE BARGAINING FOE FABMEES. 79 
 
 all Members of Congress that have had time to devote to the study of 
 the different angles and all the factors of this great problem do — ^if 
 they could view it as the farmers who are out on the fighting line 
 view it, I believe that there would be a unanimity of action on the 
 part of Congress in giving farmers the right to collectively market 
 their products, or collectively process and manufacture those products 
 in a form fit for the ultimate consumer, because it would be recog- 
 nized that in doing that the good of the people would be conserved 
 and promoted. 
 
 Some one has said, gentlemen, that the fate of our civilization rests 
 in the top 10 inches of our soil. Now, that may possibly be an ex- 
 aggeration, and yet not so much so. But farmers who see the fer- 
 tility of their land gradually growing less are calling the attention 
 of Congress to it, urging the need of fertilizers, and it is only the 
 farm organizations that can do these things. They see the necessity 
 of it, and yet when they get in Congress there are good men, men 
 who would not do anything unjust to the farmers and who believe 
 in protecting both producers and consumers, who will raise their 
 hands and say, '' Oh, these farmers want everything." Now, that 
 movement to maintain the fertility of our soil is a movement more in 
 the interest of consumers than of farmers. History shows that the 
 farmers, as a rule, get more gross money for a less crop. Why, gen- 
 tlemen, if the plant food in the top 10 inches, or as far down as it is 
 available in our soil, was extracted from it and put in a mountain 
 across this continent and was gradually being consumed by fire at 
 the same rate that it is now beii^g exhausted in the soil, Congress 
 would consider its first duty to stop that awful waste. But because 
 that process is invisible, Nero continues to fiddle. That process can 
 be indefinitely stayed by proper crop rotation if sufficient fertiliz- 
 ing material can be obtained at prices that will warrant its use and 
 if the price of farm products will justify its use, and farm organiza- 
 tions can do more than any other one agency to stay that waste, and 
 to see that there will be an adequate supply of food'for this country. 
 
 Now, if farm organizations making these collective sales do not 
 have the liberty under the law, the same liberty as was stated in the 
 letter of Mr. Barrett, which I read to you yesterday — he said he 
 thought that farmers should have the same liberty in this respect to 
 do collectively what they have the undoubted right to do individu- 
 ally. Now, unless they do have that right they are going to be 
 seriously handicapped. 
 
 I want to tell you for a few minutes about our milk organization. 
 The organizations of farmers that supply cities with milk have been 
 the most relentlessly attacked of any farm organizations. Milk is 
 so vital to child life, and so valuable a food for the adult, that any 
 increase in price or decrease in supply at once arouses public com- 
 ment and criticism. This public criticism is in the cities. There is 
 an old .Chinese proverb that the absent are always wrong. Farmers 
 are not in the city. They have no social, political, financial, or com- 
 mercial influence in the city. The dealers with whom they must deal 
 have all of those influences. Some questions that have been asked 
 here would seem to array consumers against these organizations of 
 farmers. It is not that at all. This conflict that is on and is on to a 
 finish is between the farmers and the middlemen. They have in the 
 
80 COLLECTIVE BARGAINING FOE FAKMBKS. 
 
 cities the ear of the great public, and I believe that the city people- 
 believe that the milk farmers supplying milk to the great cities — - 
 Mr. Igoe. Pardon me ; out in my city they do not know just who is; 
 to blame, and the distributors have not got the ear of the public. The 
 public have stuck their hands in their purses and have tried to find 
 out who is to blame. Of course the distributors in the city blame- 
 the farmers, but the public does not know who is to blame. 
 
 Mr. HusTED. You were speaking of the depletion of the soil, and 
 that the time would come when production would be inadequate. Do 
 you not think that that condition is due to the extravagance which re- 
 sults from the abundance of our resources? And do you not think 
 it will be corrected under the spur of necessity? For example, in 
 France the lands are as productive today as they were, probably 
 more so, than they were 50 years ago, and I understand that the 
 lands in England are more productive than they were 25 years ago. 
 Do you not think that our present condition with respect to our soil 
 is simply a part of the national extravagance, our resources are so- 
 abundant that we have been wasting? We have not. been so careful 
 to conserve our resources as other people have been who are com- 
 pelled by the pressure of necessity to look to those things carefully^ 
 
 The Chaieman. I have a theory on that proposition, if you wUl 
 pardon me. I have always felt that this was the situation, that when 
 you paid enough for the product you would get an increase in pro- 
 duction. Not many years ago Germany did not produce very much 
 more to the acre than we did. That was also true in France and in 
 England, when we were exploiting the Middle West raising wheat 
 at a price that actually did not pay for production. It almost ran 
 those people out of business. But gradually the price of wheat and 
 of a good many other agricultural products has risen and it has made 
 it possible for the Europeans to put in fertilizer at cultivation and 
 in that fashion largely increase production. If we can maintain a 
 reasonably price for agricultural products, we will very largely in- 
 crease production. If we do not, we will not. 
 
 Mr. HusTED. Notwithstanding the fact that the lands of France- 
 have been in uninterrupted cultivation for centuries, I am informed 
 reliably that they produce more to the acre to-day than they ever 
 did in the past. 
 
 The Chairman. They use a great deal of fertilizer, but as long as 
 this country depends upon the natural fertility of the soil, you can 
 produce crops apparently cheap. But when you have to put fertilizer 
 in the soil you have got to increase the price of the product or other- 
 wise you can not do business at all. 
 
 Mr. MiLLEK. Exactly. 
 
 The Chairman. You can increase it by the same methods that 
 they have. 
 
 Mr. HiTSTED. All I meant was that I have not any fear that our 
 soil will become so depleted of vegetable food that the time will ever 
 come that the land will not support our people. 
 
 Mr. Miller. I think I stated in my principal statement that by 
 proper rotation of crops and proper fertilizing this, process of soil 
 depletion can be indefinitely postponed, but to do it means an in- 
 creased expense. 
 
 Mr. HusTED. Do you not think that these things will be done 
 under the spur of necessity ? 
 
COLLECTIVE BARGAHiTING FOB FABMERS. 81 
 
 Mr. MiLLEH. I believe you are right, because natural economic 
 laws will do that. As the quantity of food falls the price will go. 
 up, and that increased price will permit the farmer to fertilize. 
 But is it wise to wait until we are forced to do that by necessity 
 rather than prepare for it in advance? 
 
 Mr. HtjSted. You think it would be wise to artificially inci-ease 
 the price of the necessities of life in order to provide funds by which 
 this increased fertilization can be effected? 
 
 Mr. Miller. No; I can not say that I would go to that extent, 
 but I do believe that it is the bounden duty of a great nation, as it 
 is the head of a family, to take wise provision for future needs. 
 
 Going back again, as I stated, I want to take up the question of 
 our milk organizations, because they have been the most relentlessly 
 attacked. I want briefly to explain to you the working out of the 
 Dairymen's League. It is an organization now of about 77,000 
 farmers, scattered through six States, over all, practically, of New 
 York State and the adjoining counties of five other States. 
 
 Mr. Yates. I wish somewhere in your discussion you would in- 
 dicate who is the middle man in this milk business. \ 
 
 Mr. Miller. Very well. This organization extends over the terri- 
 tory, the milk territory that is tributary to Greater New York. 
 My farm is located in northeastern Pennsylvania, but the milk 
 produced -there goes to New York. This organization is incor- 
 porated as a stock coiporation under the laws of New Jersey. That 
 incorporation took place about 10 years ago, and at that time, I take 
 it, it seemed to be the available way of doing it. 
 
 It was then a slow process of building up an organization. It 
 was incorporated by a few men selected for that purpose by the 
 Grange in Orange County, N. Y., and then they commenced the 
 work of organizing, and it took many years, step by step, to organize 
 it, and in the fall of 1916. the organization then commenced its 
 work — the work for which it was created — to make cooperative sales 
 of the milk of its producers. The control of that organization is 
 like this : That entire territory is divided up into 24 districts. The 
 directors are 24 in number. These districts are divided as nearly 
 as possible, without dividing up a county, so as to have uniform 
 representation. The farmers in each of these districts select their 
 representative for, the directorate. That is done each year, so that 
 it gives a democratic representation from the entire territory, each 
 director being so selected. , 
 
 The stock that has been issued is about $230,000. The authorized 
 capital stock under their charter amounts to $500,000. That $230,000 
 stock subscription is distributed among the 77,000 men, or an average 
 stock subscription of about $3. While it is a stock subscription in 
 law, as a fact and in the manner of their operation, it is more in 
 the nature of a certificate of membership. 
 
 Mr. Steele. Are all of those 77,000 dairymen? 
 
 Mr. Miller. Yes, sir. There may be a few that joined earlier 
 that have since ceased to be Jairymen, but no man can join unless 
 he is a dairyman at the time. 
 
 Mr. Morgan. That does not mean, does it, a farmer that has one 
 or two or three or four cows, but means a man in the dairy business ? 
 
 Mr. Miller. It means any farmer who is producing milk for sale. 
 
 152695—19 6 
 
82 COLLECTIVE BARGAINING FOB FABMEKS. 
 
 Mr. Morgan. Are many of them with a few cows or are they men 
 who have general dairies, as we understand it? 
 
 Mr. Miller. I think that not many have less than 4 or 5 cows, 
 and some run as high as 20 or 30. 
 
 The Chairman. Tliey average about 10 or 12 ? 
 
 Mr. Miller. The average is somewhere around 10 or 12, I should 
 say; yes. 
 
 The Chairman. Are they engaged in some other line of farming 
 than dairying? 
 
 Mr. Miller. Tlie farms are divided in that respect. There are 
 some that are engaged in diversified farming, and the milk is pro- 
 duced as one of the products of diversified farming; but in a,ll of 
 our territory the larger part of the milk that goes into the cities is 
 produced on the upland farms that are not adapted to diversified 
 farming, where dairying is their industry. So much is that the 
 case that experiments and investigations that have been made by 
 the college of agriculture of the State show that our dairymen in 
 that tei'ritory purchase from 97 to 98 per cent of the grain concen- 
 trates that they feed their cattle. In doing that it is economical, 
 because they can buy it much cheaper than they can raise it. 
 
 The method of determining prices is this: Whenever it becomes 
 necessary to prepare for a new contract with the dealers, the board 
 of directors is called together. But in addition to the board of 
 directors there is a county president for every county in the terri- 
 tory, and by a rule of the organization, these county presidents are 
 always notified, and the most of them usually attend the meeting 
 of the board of directors, and they are at liberty to take part in all 
 discussions, but without vote. The vote determining matters is by 
 the 24 directors. But you can see that the benefit of advice by these 
 extra men, about 30 in number, is of value. 
 
 Now these county presidents and directors bring up repoi'ts from 
 the farmers as to the cost of production and as to what price they 
 think they ought to receive. The prices suggested do not vary 
 greatly, but thej^ do somewhat, and the board of directors canvasses 
 these returns and they, through the experts employed by the organ- 
 ization, consider market conditions and then the board determines 
 the price that they go out and ask the dealers for the milk. Some- 
 times we receive that price. Sometimes we receive a lower price 
 that the dealers offer. More frequently the price is a compromise 
 between the two. 
 
 Mr. Steele. How often do they meet to fix the price ? 
 
 Mr. Miller. In the year 1918 we had eleven contracts. Before 
 the war, however, it had been the custom of these dealers for many 
 years to have contracts once every six months, and we hope to get 
 back to that, because with a farmer, while price is necessary, confi- 
 dence is almost as necessary, and with the six months' contract he 
 can better prepare for the future. 
 
 Mr. Morgan. Wliat is the total aniount of sales of any year? 
 
 Mr. Miller. Over $100,000,000. I have not the exact figure, but 
 that is it approximately. 
 
 Mr. Steele. With whom is your contract made? 
 
 Mr. Miller. The contract for the sale of milk? 
 
 Mr. Steele. Yes, sir. 
 
COLLECTIVE BARGAINING FOR FARMERS. 83 
 
 Mr. MiLLEE. That is made i;i two different ways. The larger part 
 of the milli is sold upon oral contract only. A smaller part is sold 
 upon written contracts. The reason for that is this: All of the large 
 dealers and many of the smaller ones — and by dealers I also mean 
 the manufacturers of milk— have formed an association called the 
 Milk Conference Board, and the negotiation of our organization in 
 making our collective sale is with that organization that is making 
 collective purchases, and the contracts are oral. 
 
 With a smaller number of our buyers, those that in our circles are 
 called independents, we contract directly with the dealer in writing. 
 The dealers that belong to the Milk Dealers' Conference Board, while 
 the conference board always states as a preliminary that their func- 
 tions are merely advisory and that they will recommend to their 
 constituents to pay the price finally agreed upon, I have never known 
 any of their constituent members to do otherwise. 
 
 Mr. Steele. Does that association then sell to the ultimate con- 
 sumer?- 
 
 Mr. Miller. Yes, sir; that is, the individual dealers forming this 
 association ; that is, for a large part of the milk. There are not many 
 middle men in the milk business in our territory. A large part of the 
 milk that we are selling is delivered at a country i-eceiving station, 
 at a plant owned by the dealer, and by that same dealer delivered to 
 the consumer in the city. A smaller part of it is sold by the dealer, 
 who buys it in the country, to the retailer who sells it in the city. 
 
 Mr. Yates. I understood you awhile ago to speak of the antag- 
 onism for the middle men. By the middle men you mean 
 
 Mr. Miller. The dealers. 
 
 Mr. Igoe. By dealer, in answer to Mr. Steele's question, you mean 
 the man who distributes it eventually to the householder or to the 
 hotel? 
 
 Mr. Miller. The man who buys it from us ; and as to a large part 
 of our product, that same buyer does distribute it to the consumer. 
 Not as to all. but as to a large part that is true. 
 
 Mr. Igoe. Your association does not distribute directly to the ulti- 
 mate consumer? 
 
 Mr. Miller. No, sir. 
 
 Mr. Igoe. May I ask you this : In fixing the prices, have you any 
 idea what percentage, if any, is added by these distributors in sales 
 to the ultimate consumer over the increase which he pays to your 
 association ; or, corresponding to that, what percentage of decrease 
 is made as compared with the decreased price he may pay to you? 
 Does it hold the same proportion? 
 
 Mr. Miller. Why, no, sir. The spread to the dealers has advanced 
 considerably since prewar days. 
 ' Mr. Igoe. You sell bv what unit? 
 
 Mr. Miller. By the 100 pounds ; 100 pounds is the unit. 
 ' Mr. Igoe. What I am trying to get at is this. Mr. Miller : From 
 your experience what do the. dealers do in regard to the price to the 
 ultimate consumer ? After the price is increased to them do they 
 simply add that increase to it or do they add a percentage on that 
 increase also ? . 
 
 ' Mr. Miller. In a majority of eases the. increase to the cbnsi^jmer 
 has been greater than the increase to the farmer. But I want to call 
 the attention of the committee to this, because, as I said yesterday, 
 
84 COLLECTIVE BARGAINING EOK FAKMEKS. 
 
 there is such a feeling of hostility that I do not want to be unjust to 
 these dealers. There has been no doubt a considerable increase in the 
 cost to the dealers since the opening of the war. At present the 
 farmers are receiving, I think, about 7i cents per quart. That milk 
 is distributed in the city in bottles to residents for 16 cents. That is 
 for grade B milk, which is the big bulk of our milk. For grade A 
 milk the farmer receives a premium of about 25 cents a hundred 
 pounds, or of 47 quarts. In other words, he receives a premium of 
 about half a cent a quart for special sanitary precaution, and that 
 grade A milk is sold to the city consumer for 2 cents more than 
 grade B. 
 
 Mr. Igoe. That is what I am trying to get at, Mr. Miller. You 
 know the distributors are always blaming the farmers for the in- 
 crease, and I was just wondering if the distributor was not adding on 
 more than the increased price and more than a fair return on the 
 additional investment that was required of him. 
 
 Mr. Miller. Whether or not it is a fair return I do not know. 
 
 Mr. Morgan. Does it cost the dealer more to distribute this milk 
 in the city than it costs to produce it? You said he pays 7^ cents for 
 it and sells it for 16 cents. Who pays the transportation ? 
 
 Mr. Miller. The dealer. Some of the farmers deliver their milk 
 a half a mile and some of them 8 miles to country receiving plants 
 owned by the dealers. From that time on it is his. 
 
 Mr. HusTED. Isn't the loss on the breakage of the bottles a very 
 large element in the cost of this distribution? 
 
 Mr. MiLLEE. I believe it is. 
 
 Mr. Htjsted. That is where a big part of the cost comes in. 
 
 Mr. Miller. I have been informed in some way that the actual 
 bottle loss and expense is about a cent a quart. 
 
 The Chairman. Almost as much as the freight. 
 
 Mr. Miller. There is something the consumers can correct in a 
 way. There is some inevitable breakage, but the loss on bottles is 
 something that the consumer could help out on. 
 
 Mr. HtrsTED. That is a large element of the loss, particularly at the 
 present time? > 
 
 Mr. Miller. I believe so. 
 
 The Chairman. How much is the freight charge per quart? 
 
 Mr. Miller. Of course our milk territory varies. Milk is trans- 
 ported within a zone of about 75 miles of the city up to 550 miles, so 
 that there is necessarily a variance; but the center of the milk area 
 is about 250 miles, on the average, and the average freight charge, 
 since the increase in freight, is, I think, for milk in 40-quart cans— the 
 gentleman says he has the exact figures. I will give them to you in 
 a moment. 
 
 Mr. Igoe. Is it possible for you, Mr. Miller, to put into the record 
 the retail price, the price to the ultimate consumer, as compared to 
 the price paid to the producer, showing the increase to the producer 
 as compared with the increased price to the ultimate consumer, and 
 the same where there is a decrease to the producer, showing the cor- 
 responding decrease to the consumer? 
 
 Mr. MiLLp. I think it would be possible to get those figures. It 
 would require some time for our statistical department to go into 
 that. 
 
COLLECTIVE BARGAIKING FOR FARMERS. 
 
 85 
 
 Mr. Igoe. I loiow the expense of distribution is very high, espe- 
 cially Ayhere the companies maintain each its own distributing system 
 and with the modern sanitary requirements and milk laws of the 
 different communities; but the overhead is fixed and their expenses 
 are fixed, and I wondered if it were possible to get the figures showing 
 what the consumer has paid in the way of an increase compared to 
 what the producer gets in the way of an increase. 
 
 Mr. Miller. We might be able to get that information from the 
 statistical department. It might take a little time. 
 
 Such prices for the years 1918 and 1919 are as follows: 
 
 1918 
 
 January 
 
 February. . 
 
 March 
 
 April 
 
 May 
 
 June 
 
 July 
 
 August 
 
 September. 
 
 October 
 
 November. 
 December- . 
 
 League 
 price, 3 
 per cent 
 milk at 
 150-mile 
 zone. 
 
 League 
 
 price per 
 
 quart, 3.6 
 
 per cent 
 
 milk. 
 
 $3.52 
 3.34 
 3.22 
 2.50 
 2.46 
 1.80 
 2.25 
 2.70 
 2.90 
 3.57 
 3.81 
 4.06 
 
 $0.08 
 .075 
 .073 
 .058 
 .057 
 .043 
 .052 
 .062 
 .066 
 .081 
 
 Price con- 
 sumers 
 paid, 
 grade B 
 milk. 
 
 $0.15 
 
 M 
 
 .14 
 .13 
 .13 
 .13 
 .14 
 .14 
 .134 
 
 .m 
 
 .17 
 
 1919 
 
 January 
 
 February. . 
 
 March 
 
 April 
 
 May 
 
 Junei 
 
 July 
 
 August 
 
 September. 
 
 October 
 
 Noveiiiber. 
 December. 
 
 League 
 price, 3 
 per cent 
 milk at 
 150-mile 
 zone. 
 
 price per 
 
 quart, 3.6 
 
 per cent 
 
 milk. 
 
 $4.01 
 3.54 
 3.31 
 
 12.80 
 3.08 
 2.89 
 3. 01 
 3.13 
 3.21 
 3.11 
 S.33 
 3.68 
 
 Price con- 
 sumers 
 
 paid, 
 grade B 
 
 miUC. 
 
 $0.09 
 .09 
 .075 
 .064 
 .07 
 .066 
 .069 
 .071 
 .073 
 .071 
 .075 
 
 $0.16 
 .16 
 .16 
 .16 
 .16 
 .15 
 .16 
 .16 
 ,16 
 .16, 
 .171 
 
 . .18 
 
 1 200-mile zone. 
 
 Mr. HusTED. I understood you to say, and I am interested, be- 
 cause I happen to live in a milk section- — - 
 
 Mr. Miller. I know that, Mr. Husted. 
 
 Mr. HtrsTED. I understood you to say that a certain percentage of 
 your product passed through the hands of three men before it 
 reached the store or the consumer. I was rather surprised at that 
 statement. 
 
 Mr. Miller. I think I must have made a misstatement. 1 did 
 not mean to say that. 
 
 Mr. Husted. Perhaps you didn't say that, but that is what I under^ 
 stood. I understood you to say that it passed through three hands, 
 a certain percentage— you didn't say what the percentage was — in 
 other words, the dealer, the milkman ; the dairyman, the dealer, and 
 .somebody else, before it reaches the ultimate consumer, as to -a certain 
 percentage of the milk. 
 
 Mr. Miller. I do not believe there is any very large quantity of 
 our milk that passes through more than these hands ; first, the dealer 
 who buys it from us ; second, the retailer to whom that dealer sells 
 it in the city. 
 
 Mr. Husted. And that dealer often sells it direct to the consumer ? 
 
 Mr. Miller. That same dealer may distribute eight-tenths of his 
 product direct to the consumer. 
 
 Mr. Husted. As a matter of fact, he does distribute a very large 
 proportion of. it, doesn't he? The large milk concerns, like Borden, 
 distribute it right diteCt to the consiimer. 
 
 Mr. Miller. So far as I know, the Borden Co. and the Sheffield 
 Farms Co. — ^those two are the largest companies. 
 
86 OOLLEGTIVB BARGAINING FOE FABMERS. 
 
 Mr. HrrsTED. And the Clover Farms. 
 
 Mr. MiLME. So far as I know, the milk they handle goes through 
 no hands but their own. There are some, however, as I have stated, 
 that sell to retailers, the dealers who buy from us sell to retailers. 
 
 Mr. Httsted. Retailers that peddle the milk from house to house? 
 
 Mr. Miller. In some instances to retailers who peddle, but in the 
 larger number of cases to retail storekeepers who keep it on sale. 
 Now may I, just for a few moments, touch upon one or two questions 
 briefly, and then I will close. May I call your attention to conditions 
 before this farm organization became active in selling milk, because 
 unless that organization has, under the law, the right to do what it 
 is doing, of course it can not live, and if it dies, the same causes will 
 again produce like results. 
 
 Before this organization took up the duty of selling the milk of 
 its members prices were fixed and announced without any confer- 
 ence with the farmers, without any reference to the cost of produc- 
 tion, and without any reference to supply and demand. 
 
 Mr. Yates. By whom? 
 
 Mr. Miller. By the dealers to whom he sold the milk. Governor. 
 I have in my hand what is called a contract. It is the instrument 
 that the individual farmer was required to sign before this one com- 
 pany would take his milk. Now, bear in mind that the individual 
 farmer who had adjusted his farms to the production of milt for 
 the city needs with adequate monthly production, making his annual 
 yearly cost more than if his herd furnished milk in the spring to be 
 manufactured into butter and cheese, that he could not, if the dealer 
 refused to take his milk, manufacture that milk to any advantage 
 whatever. That can be done now under our modern competitive 
 conditions, by having large manufacturing plants, where every food 
 element in the milk can be converted into its by-product. The old 
 method, by which butter and cheese were made in creameries, with 
 the whey going into the sewer and much of the skim milk wasted, 
 is utterly out of date, and no one who does that now can compete 
 with modern conditions. Therefore, this particular farmer, by virtue 
 of all these conditions was forced to take the price that the dealer 
 fixed or else give up dairying. On the 15th day of March and 
 September of each year, every farmer delivering milk at a given 
 milk-receiving station went to that station. On other mornings you 
 would see community lots going in, or you would see the hired man 
 or the boy or the girl. On that morning the farmer had to go. 
 He would go to the office of this milk-receiving station, and there the 
 farmers would be lined up in a line. He would have no knowledge 
 whatever of what the price for his milk was going to be for the 
 coming six months. When it came his turn he would go into the 
 office. The local superintendent, who had no power to change a lettei 
 in what was called the contract, presented this, having attached to 
 it a schedule showing the quantities of milk that the farmer agreed 
 to produce monthly. " Sign on the dotted line." If he did not sign, 
 he had no market. A page and a quarter, single space, closelji 
 written matter, and they called it a contract. It was a badge oi 
 servitude. 
 
 I have stood in that line, and I have seen some of these men witli 
 down-cast eyes, as if ashamed of the humiliation of it. I have seer 
 others with set jaws and flashing eyes, resentful about it. More thar 
 
COLLECTIVE BARGAINING FOR FARMERS. 87 
 
 once I have said to these men, " Men, some time this system is going 
 to be smashed, and I hope I may be one of the men that will help to 
 smash it." 
 
 Now, it is not so much everything that is in this contract, although 
 it gives to the milk dealer visitorial power to enter the bfJrns and 
 say he must do this and he must do that and that. It assumes that 
 the farmer has no intelligence and does not know how to produce his 
 own milk. Why, one of the greatest benefits that has come to our 
 farmers from the present movement, is the restoration to them of 
 their self-respect. 
 
 Mr.. Yates. Under your present system and arrangement, if my 
 asking questions will not disturb you, does the farmer sign any regu- 
 lation or agreement? 
 
 Mr. MniEE. He signs an agreement with the organization. 
 
 Mr. HusTED. I would also like to ask a question if I may. Of 
 course, during the war, the antitrust laws were practically suspended, 
 as to their operation. I wanted to inquire whether the farmers of the 
 country took any action during the war in aid of production that 
 would have been a violation of the antitrust laws if done in times 
 of peace, and if they did take such action, what effect it had upon 
 production, and what effect it had, iij your opinion, on prices. 
 
 Mr. Miller. In answer to your question. Congressman Husted, I 
 believe that there are many, many thousands of farmers that are 
 now eligible to the penitentiary for what they did during the war 
 at the request of the Government, and to assist the Government under 
 this very law that we are trying to get you gentlemen to amend. 
 There is no question about it. 
 
 Mr. HtJSTED. If you will follow that up by giving us an idea what 
 effect that had on production and upon the price of the product. 
 
 Mr. Miller. The immediate effect upon the price of the product 
 was that it had somewhat the effect of stabilizing the price, during 
 the war. Mr. Hoover sent a letter into our territory, addressed to 
 Dean Bailey, whom you know, assuring the producers that the policy 
 of the Food Administration would be that the farmers throughout 
 the war would receive the cost of production, plus a fair profit. 
 Now, by reason of conditions that Mr. Hoover could not control, the 
 farmers did not receive the cost of production plus a fair profit dur- 
 ing the war period. At our organization, at the first meeting of 
 the board of directors and county president, after this country en- 
 gaged in the war, we pledged to each other that we would go back 
 among our constituents and say that no matter what took place dur- 
 ing the war there must be no trouble. Mr. Hoover explained to us 
 that if the price of milk got too high in New York, or if the supply 
 became too low, it might result in riots, and that these riots would 
 be interpreted by Germany as dissatisfaction with the Government, 
 so that I do not believe it would have been possible to put the price 
 at any figure, during the war, that would have caused our farmers 
 to have any public trouble. They did, however, produce to their 
 maximum. Why, gentlemen, so many of our young men were taken 
 away into the war — and we were glad to have them go — but because 
 of that, thousands and thousands of refined women went out and did 
 a man's work on the farm in order to keep up the milk production 
 that helped make the world's supply of food. 
 
88 COLLECTIVE BARGAINING FOR FARMERS. 
 
 Mr. HiTSTED. Did the removal of this legislative restriction, in 
 your opinion, directly aid production? 
 
 Mr. Miller. Very much ; yes, sir. u ri 
 
 Mr. Steel:;:. Wliile you are answering questions, I would like to 
 get a little light. Your organization sells to what you call a ae&ler. 
 You sell it in bulk to them, in cans, I understood you to say. They 
 prepare it then, do they, for delivery to the ultimate consumer i 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Steele. And sell it in containers, glass or otherwise ? Is that 
 correct ? 
 
 Mr. Miller. Yes. sir. 
 
 Mr. Steele. Is this association of dealers you refer to considered 
 as middlemen? 
 
 Mr. Miller. It is an association of middlemen. 
 
 Mr. Steele. Now, I understood you to say a little while ago that 
 the contest here was with the middlemen and not with the consumers. 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Steele. What is the proposition with reference to dealing 
 with the middlemen in the future, if you get this legislation? 
 
 Mr. Miller. What we ought to do — it may be a matter of slow 
 growth — is to do what the farmers and consumers are to-day doing 
 in Siberia; to jointly control and regulate the distribution of our 
 product. That is an ambitious program, but not an impossible one. 
 
 Mr. Steele. Your thought is to eliminate this association and deal 
 direct with the consumers ? 
 
 Mr. Miller. There is a great deal involved in that. I do not think 
 that any great organization, any more than an individual, can afford 
 to be unjust. These milk dealers have invested millions of dollars in 
 property. I would rather say that if these organizations of prodlicefs 
 and consumers could meet, by their representatives, and adopt plans 
 by which the profits of the middlemen, if they are excessive, might be 
 kept within reasonable limits, I think that would be the better plan. 
 Somebody must do this distributing. Somebody must invest mil- 
 lions of dollars in money to do it. We are not objecting so much to 
 the fact that the middlemen are doing the distributing as we are 
 objecting to their tyrannical acts in dealing with us. 
 
 Mr. Morgan. What are these tyrannical acts ? 
 
 Mr. Miller. I commenced to tell you about the form of what they 
 called a contract before this organization came into existence. 
 
 Mr. Morgan. That is past now. What about the present? 
 
 Mr. Miller. About the present? Our relation at the present is 
 that of an armed truce. 
 
 Mr. Steele. Can you' give us any information, Mr. Miller, as to 
 what the profits of the dealer or middlemen are as compared to what 
 is given to the producer ? 
 
 Mr. Miller. I am unable to give you that up to date. The most 
 recent information I have as to that was the findings of the Federal 
 Milk Commission. These milk dealers and our organization, after 
 several conferences here in Washington with Mr. Hoover, or his 
 deputies, entered into an agreement with Mr. Hoover, that Mr. Hooter 
 should appoint a committee, a commission, to fix the prices during 
 the war that should be paid to the farmers and the prices that the 
 dealers should charge to the consumers, and we offered evidence as to 
 our cost of production. I had that in charge for our organization. 
 
COLLECTIVE BARGAINING FOE FARMERS. 89 
 
 \ 
 
 It took several days to do it. The dealers did the same as to their 
 cost of distribution, and the finding of the commission at that time 
 Avas that the then costs of the dealers in distributing bottle milk to 
 residences was 6.8 cents per quart. 
 
 Mr. Steele. Actual cost? 
 
 Mr. MiLLEK. Actual cost, without any profit. Now, it is only fair 
 to say for the dealers that their costs have increased. 
 
 Mr. Igoe. Do you know the date of that finding? 
 
 Mr. MiLLEE. It was in January, 1918. 
 
 Mr. HiTSTED. Was it not pretty well established that the profit of 
 the Borden Co., which is one of the laf-gest, if not the largest, distribu- 
 tors 6f milk, was only a fraction of a cent a quart ? 
 
 Mr. Miller. I think somewhere in the course of that hearing that 
 appeared, but the main effort of the commission was to reach the 
 question of costs rather than profits and base the prices on the costs. 
 But I think what you have stated did appear somewhere along the 
 line of that investigation. Now, there has been, as I started to say, 
 increase in costs to the dealers since that time. The drivers of milk 
 wagons have been on a strike once, and they had to raise their wages. 
 If the public could only sec this — ^liigh wages and cheap milk can not 
 go together. If it was not for wearying this commission, I believe I 
 could put upon the records a statements-it would not be anything 
 new to you gentlemen, but it might be new to some consumers — to 
 show that 80 to 90 per cent of the final cost of milk is wages. 
 
 Mr. HusTED. Notwithstanding the present price of milk, in pro- 
 portion to its food value isn't it about the cheapest food obtainable 
 to-day? 
 
 Mr. Miller. I don't think there is any question about that. It is 
 the cheapest form of animal-fat food on the market to-day. 
 
 Mr. HusTED. At its present price ? 
 
 Mr. MiLLEK. Yes, sir. 
 
 Mr. Igoe. Mr. Miller, does your association undertake at any time 
 to curtail production, or has it ever undertaken that ? 
 
 Mr. Miller. No, sir ; we couldn't do that if we tried. It would be 
 unworkable; and right here let me say that in our territoi-y it is un- 
 workable for us to fix the price, an unjust price for city milk, for 
 this reason : About 61 per cent of all the milk produced in that terri- 
 tory goes into manufacturing plants — ^butter, cheese, condensed milk, 
 etc. — and only about 49 per cent reaches the city. Now, if at any time 
 the price to the^ farmer is so much higher for city milk than the price 
 the manufacturers can pay us, so much of the milk now going into 
 the manufacturing plants would be diverted to the city that there 
 would be a surplus that would hammer the price down, and no power 
 on earth could prevent it. We want these manufacturers to stay 
 there. We want a market for our milk ; and if we do, we have to sell 
 our milk at a price that will permit them to compete not only with 
 nation-wide manufacturers, but with world-wide. 
 
 Mr. Igoe. Because that is a permanent establishment and a perma- 
 nent market for your product ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. HtrsTED. Don't you think tlie reason the public feels so much 
 aggrieved over the price of milk is that milk was really sold much too 
 chesiply in the past? It isn't but a few years ago that the farmers 
 
90 COLLECTIVE BARGAINING FOE FAKMEES. 
 
 got practically nothing for their milk. ■ The prices were too low, 
 And, because the farmer sold it so cheaply, the dealer was able to sell 
 it cheaply to the public. It has always seemed to me that was the one 
 serious trouble. In the past the farmers got practically nothing for 
 their milk, even if they produced it under the most favorable con- 
 ditions. 
 
 Mr. Steele. Is the milk sold to the consumer by the dealers you just 
 referred to the same quality of milk that the producer sells to the 
 dealer? 
 
 Mr. MiLi^ER. There has been some debate on that, but entering into 
 a discussion of the milk situation, particularly in Greater New York, 
 there are so many factors, not always divorced from politics, that it 
 is difficult to tell. I do believe, however, that the people of New York 
 City are receiving a high quality of milk. Now, I do not give the 
 dealers all the credit for that. They can not deliver any better quality 
 of milk than we deliver to them. 
 
 Mr. Steele. Are they delivering the same quality as you deliver ? 
 
 Mr. Miller. Whether they are doing that in all cases, as to butter 
 fat, I do not know. There have been charges made that some of them 
 are standardizing it by taking out some of the butter fat. The State 
 of New York passed a law a few years ago prohibiting that, and I 
 believe that the reputable dealers, and that means most of them, are 
 obeying that law, but there may be a few that are violating it. 
 
 Mr. Steele. In my section of the country we have no such method 
 of delivery as you mention, and there is always the suspicion in the 
 mind of the general public that the milkman crosses several streams 
 with his milk before he gets to town. 
 
 Mr. Miller. Now, as to this bill, gentlemen. I think I have wan- 
 dered from it somewhat, but repeating what I said in the beginning 
 as to the verbiage of the bill, if you find the farmers ought to have the 
 relief which they think they ought to have, the verbiage is not im- 
 portant to us. What we do ask is whatever form this remedi al legis- 
 lation takes that it will make clear the right of the farmer to do every- 
 thing that is asked for in this bill. Questions were asked yesterday, 
 doubting the wisdom of permitting these associations of farmers to 
 do all the things mentioned in this bill, processing, and so forth. Now, 
 that processing must be done hj somebody. It might better be done 
 by those who have the greatest interest in having the finished product 
 reach the consumer at the lowest price, and that is the farmers, and no 
 one else. It is to his interest to stimulate consumption, not to restrict 
 it. It is not so much to the interest of the middleman to stimulate 
 consumption, because if consumption drops they can still keep up 
 their profits by raising the profit per unit, but it is to our interest to 
 keep up consumption, and I submit to you that organized farmers 
 ought to have a clear right, under the law, not only to sell collectively 
 his raw products but he ought to have the right, collectively, to chum 
 his milk into butter, convert it into cheese or condensed milk. The 
 fruit associations ought to have the right, collectively, to grade their 
 fruits, to pack it, to can it, if they want to, because they are the ones 
 interested in having that product reach the consumer at the lowest 
 cost. 
 
 Mr. Morgan. I would like to ask some questions. This matter of 
 legislation would really result in creating a monopoly so far as the 
 
COLLECTIVE BARGAINIKG FOR FAKMEKS. 91 
 
 milk producer is concerned ; fundamentally that would be a monop- 
 oly in the supply of milk that goes to New York. 
 
 Mr. Miller. I believe it would, and because it is a monopoly, we 
 want this amendment that" this particular monopoly is not an of- 
 fensive one, which is what we believe. 
 
 Mr. Morgan. Your purpose is clear. That perhaps is true, but, 
 generally speaking, the law is supposed to be opposed to all monop- 
 olies in the country. 
 
 Mr. Miller. Well, Mr. Morgan, the farmers have a natural mo- 
 nopoly of what they produce anyhow. Either they must be per- 
 mitted to go to the extent in monopolizing that is involved in col- 
 lective selling or else they can not collectively sell at all. Just 
 before I close may I read into this record, and I do. this because 
 our milk association in New York has been relentlessly attacked as a 
 price-raising association. I would like to read into the record a 
 ooniparison of the prices paid the farmers in New York and the 
 nation-wide prices paid to farmers. If thait would be of any in- 
 terest to the committee, I will read it. 
 
 The Chairman. During what years? 
 
 Mr. Miller. This was July, 1918, to June, 1919. At the timte 
 I prepared this, June was the last report I had from the Govern- 
 ment records as to the nation-wide prices. The result of the 12 
 months was that the average nation-wide price paid farmers was 
 8.29 cents per quart ; the average price paid in New York was 7.4 
 cents per quart, or almost one cent a quart less than the average 
 nation-wide price. 
 
 Mr. Steele.- That would be a difference, according to the figures 
 you gave a little while ago, of over 2 cents a quart to the consumer. 
 I think the figures you gave a little while back indicated that a 
 half a cent a quart would mean 2 cents to the consumer. 
 
 Mr. Miller. Yes ; that would follow. I thank you, gentlemen. 
 
 STATEMENT OF MR. R. W. BALDERSTON, PHIIADEIPHIA, PA., 
 REPRESENTING THE INTERSTATE MILK PRODUCERS' ASSOCIA- 
 TION. 
 
 Mr. Balderston. I am secretary of the Interstate Milk Producers' 
 Association, with headquarters in Philadelphia. By the peculiar 
 geographical position of Philadelphia we have to do business in 
 four States, and when we organized 
 
 The Chairman (interposing). You are more likely to get into 
 trouble than anybody else. 
 
 Mr. Balderston. Yes. When we organized we had to go to Del- 
 aware to get our charter, because that seemed to be the only State 
 within those four that gave us an opportunity at all to put into 
 operation the cooperative proposition. 
 
 I think Mr. Miller has very clearly outlined the farmers' posi- 
 tion as it represents the eastern farmer, whose business is diversified 
 largely, but I want to answer just two or three questions which seem 
 to have come up to-day. I think Congressman Husted suggested 
 that the greater productive capacity of the soils of Europe was, 
 perhaps, not due to cooperation. If you gentlemen are acquainted 
 with conditions in Denmark, you know that it was due to the cooper- 
 ative associations of Denmark marketing their products abroad, 
 
92 COLLECTIVE BARGAINING FOR FARMERS. 
 
 which has brought Denmark its present agricultural supremaxjy. 
 The farmers can keep up their fertility all right, provided they have 
 adequate markets. „ 
 
 Abound Philadelphia, in our teiTitory, there was one feature that 
 was borne in upon us all when we first started to form our orgamza,' 
 tion, and that was this : The dealers had divided up the country ter- 
 ritory and we were faced with the same conditions Mr. Miller sug- 
 gests. It was so deeply rooted that when a neighbor moved from 
 the territory of one dealer a few miles into the territorv of another — 
 their territories were then clearly defined — he could not change 
 buyers. He had to drive, perhaps, 4 miles out of his way, because a 
 dealer claimed him as his vassal, and it was not until we had our 
 organization that a farmer could transfer from one dealer to another. 
 
 As Congressman Husted has said, the public has always looked 
 upon milk as a necessity of life and something the farmer ought to 
 give them regardless of the cost of production, at an automatic 
 fixed price. For years in Philadelphia it was 8 cents, and that in 
 spite of advancing production costs. Of that the dealer got about 
 4^ cents after it reached the city. Our prices are all quoted f. o. b. 
 the city. The farmer got 3| cents and paid the freight, which in the 
 Philadelphia territory, at that time, amounted to about a half a cent 
 a quart. 
 
 In Philadelphia we have the lowest retail market of any city in the 
 country, and the farmers are getting on a par with any other large 
 city in the country, as Mr. Miller outlined in his statement. 
 
 Through the cooperation of the producers organization and the 
 Food Administration and our public, which is brought in very closely 
 and made to understand the conditions, the dealers have put more 
 tonnage on the wagons, and the dealers in Philadelphia, although 
 they are firmly intrenched — five big ones controlling 85 per cent of 
 the business have the lowest spread of any in the country. They give 
 Dr. C. L. King, who was connected with the Food Administration, 
 and now is milk arbitrator of the State, monthly statements of their 
 cost and profits and from that he determines, for the benefit of the 
 public, what the average spread shall be as time goes on. 
 
 Mr. Yates. Is this milk arbitrator a Government official? 
 
 Mr. Baldeeston. Yes; he was appointed by the Government, and 
 he was a part of what was the Committee of National Defense, which 
 was a war-time commission we had in Pennsylvania, and he has since 
 been made a more permanent part of the State organization. At the 
 time when he was appointed first, the office was in the Food Adminis- 
 tration, but the results were so satisfactory it has since been made a 
 more or less permanent feature, and he has the same position in 
 Pittsburgh as in Philadelphia. 
 
 The country developed by these dealers was always along the lines 
 of least resistance. They would go into territory where the farmers 
 had no great opportunities for marketing. They would open it up ; 
 the railroad would give them the right to put in a siding. They 
 would put up a plant — and half the time on the railroad's property. 
 They always started at a place where they thought they could get 
 milk cheapest, and there was no possible way that these farmers could 
 get the benefits from competition which you men, and ourselves, and 
 everybody, has thought in the past competition brought to the Ameri- 
 can farmers. 
 
COLLECTIVE BARGAINING FOR FARMERS. 93 
 
 When the association came along these men joined it. Then it 
 was possible, if a dealer was not a good business man and could not 
 pay the average market price for milk, or if he was arbitrary and 
 would not pay it, it was perfectly possible to say to a competing 
 buyer, " Wont you come in and put a plant here and our members, 
 for whom we are acting as sales agent, will turn over their milk to 
 you at a figure which is on a par with the milk conditions in tfcat 
 territory." 
 
 The Chaikman. How large an organization have you got? 
 
 Mr. Balderston. We have 10,500 paid-up members. 
 
 The Chairman. How much stock have you got? 
 
 Mr. Balderston. Our average stock subscription per member is 
 about $2.50. 
 
 The Chairman. Some of you have more stock than others? 
 
 Mr. Balherston. The stock is on the basis of 25 cents for each 
 cow. That is when you join, if you should happen to have 8 cows, 
 j'ou get $2 worth of the capital stock. 
 
 The Chairman. If anybody drops out, does he retain the stock? 
 
 Mr. Balderston. If anybody goes out of business, he has the op- 
 portunity to sell his stock to the man who takes his farm, or he can 
 simply keep it as a badge of membership. 
 
 The Chairman. A souvenir? 
 
 Mr. Balderston. A souvenir. That is about all the value it has. 
 
 The Chairman. Can a'nyone but an actual bona fide dairyman 
 own that stock? 
 
 Mr. Balderston. The other people who have taken that stock at 
 all are those who have the ownership of a farm, or have a personal 
 interest in the business just the same as the tenant. We have a great 
 many absentee landlords in our community and they take a half in- 
 terest in the proposition with their tenant. 
 
 The Chairman. How about the votes? 
 
 Mr. Balderston. Our votes, because at that time none of the four 
 States had a method by which they could vote personally, was by 
 stock. We would much prefer, and it would be more democratic, 
 to have a personal vote. 
 
 The Chairman. You have an organization:^-board of directors? 
 
 Mr. Balderston. We have 18 directors, geographically distributed, 
 and they elect 5 members of an executive committee. 
 
 The Chairman. Have you any buildings? 
 
 Mr. BAiiDERSTON. We have no buildings. We have an oiRce. 
 
 The Chairman. Do you employ a man for the purpose of looking 
 after the thing, or do you not employ anyone ? 
 
 Mr. Balderston. I am employed as secretary. We have a vice 
 president who gives all his time to it. He has certain other duties. 
 There is an office force of three or four all the time, and we have 
 two field men whose duty it is to look after the tests of the milk — 
 the Babcock test at the dealers' plants, and to look after troubles of 
 that kind. They look up, weights. Often the spigot on a weigh tank 
 leaks and some of the milk will run out before the draft is made. 
 We look up lost cans. We look up claims against the railroad com- 
 panies and in every way represent these farmers' interests as to the 
 best of our ability. We also have a publicity department to explain 
 the importance of milk as a diet. 
 
 The Chairman. And advertise it? 
 
94 COLLECTIVE BAEGAINING FOE FARMERS. 
 
 Mr. Balderston. And also to educate tlie farmers along the lines 
 of improved production; to cooperate with all State and Federal 
 institutions in every way. 
 
 The Chairman. Do the farmers own their own milk cans ? 
 
 Mr. Baldeeston. That practice isn't universal. We advise them to. 
 
 The Chairman. Some companies own their own cans ? 
 
 Mr. Balderston. Some companies own their own, which is not 
 good practice, we think, from the farmer's point of view, because it 
 makes them more dependent. 
 
 The Chairman. In Philadelphia do you deal direct with the firm 
 that distributes it to the ultimate consumer? . 
 
 Mr. Baldeeston. Our Philadelphia concerns either distribute it 
 direct to the ultimate consumer or to stores, hotels, and restaurants. 
 The small dealers in Philadelphia get their milk from farmers who 
 live near and have it trucked in or send it in by trolleys or train. 
 
 The Chairman. Have you ever been threatened with prosecution 
 or investigation by State or Federal authorities ? 
 
 Mr- Balderston. We have had an agent of the United States 
 Department of Justice going all over our records, and we have been 
 endeavoring at all times to keep our operations in such shape that 
 they will not in any way interfere with the Clayton Act, but it has 
 been a very difficult proposition on account of the ambiguous verbi- 
 age of that act. Our farmers in Pennsylvania are a very conservative 
 lot. Most of them either have Quaker or Pennsylvania-Dutch blood 
 in them, and some of us have both, and these farmers are very much 
 averse to anything that will give them trouble in the courts. In fact, 
 some of the Mennonite people won't go to the courts to sue anybody, 
 and for that reason it has been doubly difficult for them to feel free 
 to organize under the Clayton Act, because they realized that this 
 threat was hanging over them all the time, and they were dubious 
 about taking a chance. 
 
 The Chairman. Especially the officers. 
 
 Mr. Baldeeston. Yes. Mr. Chairman, we have certain cooperative 
 associations in our territory that do own their own plants. They 
 have had to issue capital stock, because some of the farmers have 
 more money to put in than others. They are going to have more 
 trouble from the Clayton amendment than even our parent organiza- 
 tion, we feel, because they have had to do certain things that we, as 
 a selling organization, have not had to do. They own property, 
 and in many cases a big distributing plant, which takes in all the 
 milk from a small city, like Du Bois, Pa., or Dover, Del., and then 
 distributes it, after processing it and putting it in bottles. This, of 
 course, is more economical than where small dealers have to do it. 
 
 The Chairman- Is there anyone else that has to go away ? 
 _ Mr. MiLLEE. Mr. Hall and Mr. Lyman both have to go away. 
 
 STATEMENT OF MR. CHARLES A. LYMAN, SECRETARY OF THE 
 NATIONAL BOARD OF FARM ORGANIZATIONS. 
 
 Mr. Lyman. Mr. Chairman, in appearing in support of the Cap- 
 per- Hersman bill before this committee, I wish to say that I have 
 owned and operated a farm in Wisconsin for the last fifteen years, 
 and during most of that time I have been a member of farmers' co- 
 operative self-help organizations, including the American Societv of 
 
COLLECTIVE BARGAINING FOR FARMERS. 95 
 
 Equity and the Grange. At the present time I am secretary of the 
 National Board of Farm Organizations. 
 
 Mr. Miller, who has appeared here, has told you about this or- 
 ganization. I have given Mr. Morgan a copy of our constitution 
 and by-lavrs and a list of member organizations and board membere, 
 as requested by you yesterday. 
 
 The Chairman. If you have no objection, I would like to have 
 that put into the record. 
 
 Mr. Ltmax. I want to point out what Mr. Miller has emphasized 
 already that the bill which we have been discussing has been drawn 
 up very carefully after repeated conferences with leaders of agri- 
 cultural thought and the representatives of farm organizations 
 throughout the country. 
 
 There has been a slowing up of the development of agricultural 
 cooperation in this country as a result of the passage of section 6 
 of the Clayton Act, the reason being that many of the States had 
 cooperative laws providing for capital stock, and requiring the 
 building up of a surplus. In this connection, I would point out that 
 an unfortunate interpretation has been placed on the word " profits." 
 My own belief is that in a purely cooperative association of farmers 
 there are no profits. The word " savings " should be used rather than 
 "profits." A cooperative association works on a margin of safety 
 and at the end of six months or a j^ar I'eturns a patronage dividend 
 based on the amount of business that has been contributed to the 
 association by the individual members. 
 
 The Chairman. Don't some of these take in products from others 
 than members? 
 
 Mr. Ltman. Strictly speaking, they are not purely cooperative. 
 There are some of these organizations in the grain belt, and there 
 is an attempt by the leaders of these organizations to bring them in 
 under the cooperative basis, so that any farmer in the community can 
 share in the savings or benefits. 
 
 The Chairman. Wherever they took in the product of others than 
 members and made a profit on their products it would be, I presume, 
 a profit-making organization, would it not? 
 
 Mr. Ltman. State laws would not interpret it so, as I see it, in that 
 the profit that nonmembers may receive, this so-called profit, may be 
 paid in the form of one or more shares of stock. The Wisconsin law 
 enacted in 1911, with the helpful assistance of Sir Horace Plunkett, 
 of Ireland, who was in the State at that time, provides for the non- 
 members in this way, and the Wisconsin law has been followed 
 closely by a number of States. ~" 
 
 The Chairman. We have a very large number of farm organiza- 
 tions in my State. They are small, ordinary corporations. They are 
 cooperative in a fashion, but still they always take in more or less 
 of the products of persons who are not members. 
 
 Mr. Ltman. After the passage of the Clayton amendment, the 
 Bureau of Markets of the Department of Agriculture sent out model 
 nonstock nonprofit laws to the various States and a few States 
 have adopted this plan. There are perhaps 8 or 10 States which now 
 have the nonstock, nonprofit laAvs, some in addition to the regular 
 cooperative laws; but nine-tenths, I would say, of the farmers' co- 
 operative associations throughout the country have capital stock and 
 believe that this plan is best suited to the business in which they 
 are engaged. The representative of the California association who 
 
96 COLLECTIVE BAEGAINING EOR EARMEKS. 
 
 appeared before you to-day stated that the banks were consulted to 
 see whether the particular farm product in question could be handled 
 under the nonstock, nonprofit plan. In some cases this plan has 
 worked successfully, but, generally speaking, it is not so well suited 
 to the average farming community and requires trained advisers and 
 sympathetic treatment on the part of the bankers. I think we should 
 recognize that farmers require capital stock to conduct their business 
 operations just as much as do other business groups. 
 
 Mr. Chairman, I am convinced that agriculture as compared to 
 other basic indi:i,stries is in a declining condition. For this reason I 
 feel that agricultural cooperation through collective purchase and 
 sale is absolutely necessary to maintain the business of farming in a 
 flourishing condition. It is because there has been a slowing up in 
 the cooperative program and fear and apprehension on the part of 
 farmers in the marketing of their products that we are asking for 
 this amendment. This matter has been discussed by farm leaders for 
 several years. The bill in question was drawn up a good deal in its 
 present form after conferences with Dr. T. C. Atkeson and other 
 representatives of the National Grange. 
 
 To show you that this matter has been placed before the farmers 
 throughout the country, I will read a few statements from farm 
 papers, taking only a few out of a gi'eat many that we have in our 
 office. • 
 
 The Cappei'-Hersman bill is making frlenfls every clay because of tlie eneraie.'* 
 it has. (Pennsylvania Farmer, Oct. 28.) 
 
 The Pennsylvania Farmer on June 7, showing you how far back 
 this matter was before the public, said : 
 
 A bill is now before Congre.ss amenclins' tlie Clayton Act to make clear its 
 meaning. Every farmer should support the bill. 
 
 Successful Farming, of Iowa, August 19, said : 
 
 The remedy lies in an amendment to the antitrust laws. If farmers demijntt 
 it, the law is a-ssured. 
 
 New England Homestead, August 9 : 
 
 We approve of the bill In Congress and hope it will have the warm support of 
 farmers generally. 
 
 Farm Stock and Home, of Minnesota, in July, said : 
 
 Farm Stock and Home will work hard of the passage of this amendment. 
 
 Southern Ruralist, published at Atlanta, Ga., said in June : 
 
 This bill is intended to establish the fact by law that farmers combining for 
 mutual protection are not criminals. 
 
 Kansas Farmer, June 7, said : 
 
 It has been drawn up only after consultation with official representatives of 
 the National Grange, who have pledged their earnest support In securing its 
 enactment. Its enactment is vital to all farming organizations. 
 
 Orange Judd Farmer, in June, said : 
 The passage of such a bill is of vital importance. 
 
 New England Homestead, in June, said : 
 
 It is urgently needed by the great farmers' cooperative movement. 
 
COLLECTIVE BARGAINING EOR FARMERS. 
 The Farmer, published in St. Paul, July 5, said : 
 
 97 
 
 An amendment to the Sherman Act giving all farm organizations the right to 
 organize and engage in collective bargaining through their officials has been 
 introduced in the United States Senate" by Arthur Capper. Every farmer inter- 
 ested in collective bargaining will be helping their cause by informing their Rep- 
 resentative in Congress of the farmers' need of this measure. 
 
 I have read but a few extracts to show the committee that this mat- 
 ter has been thoroughly advertised and has been laid before the 
 farmers of this country, and that they feel a great need for clarify- 
 ing the present antitrust act, as is intended by the bill under dis- 
 cussion. 
 
 STATEMENT OF MR. JOSEPH E. HALL, OF CARIBOU, ME., REPRE- 
 SENTING THE AROOSTOOK FEDERATION OF FARMERS. 
 
 Mr. Hall. I am from Aroostook County, Me., the top of the United 
 States. Our chief, and perhaps only, industry up there is the produc- 
 tion of potatoes, and this law cost the farmers of our county about 
 $30,000, when they were simply trying to protect themselves. 
 
 The Chairman. You mean the Clayton law ? 
 
 Mr. Hall. Yes; the Sherman- Clayton law — this antitrust law — 
 and it arose in this way : When the potato industry first started up in 
 our county the buyers came up there and bought potatoes and shipped 
 them to Boston. There they would mix them with cheaper grades of 
 potatoes and put them on the market as Aroostook potatoes. 
 
 Later, when we commenced to ship with draft on bill of lading, 
 with privilege of examination, if the market happened to be declin- 
 ing, dishonest middle men would make complaints about the physical 
 condition of the potatoes and refuse to pay the draft and offer a 
 settlement far below contract price. I think from the smile on the 
 chairman's face that he is more or less familiar with how those things 
 have been handled by the middle men. 
 
 The Chairman. I have had some experience with them. 
 
 Mr. Hall. The farmers met with great losses by that means until 
 they commenced to go individually to Boston and, incognito, inquire 
 of some of these dealers if they had some potatoes to sell, where- 
 upon they would often be taken to the very cars they had shipped 
 and be told what fine stock they were. That condition .gave rise, a 
 number of years ago, to the organization of the potato shippers' as- 
 sociation. I am not familiar with the form of that organization. 
 I was neither a member of it nor of its counsel, but my general 
 understanding of the circumstances that arose is as follows : The lack 
 of protection in the big markets of the East led local shippers to 
 organize in self-defense. They employed two inspectors, onein New 
 York and one in Boston, and, whenever complaints came they were 
 referred to these inspectors, who would go and make such settlement 
 as they could. They found, among the middlemen, a certain class 
 who persistently and continuously adopted these fraudulent means 
 of making money at the expense of the farmer, and so they adopted 
 a system of notifying their members of such men and warning them 
 from dealing with them. One of these notifications fell into the 
 hands of one of the parties affected by it, and he entered civil suit 
 and also brought the matter to the attention of the authorities as a 
 152695—19 7 
 
98 COLLECTIVE BARGAINING FOE FABMKBS. 
 
 violation of the Shernian law, and the result was that it cost these 
 farmers about $30,000 to settle the two cases. No one who is familiar 
 with the circumstances under which the Sherman-Clayton laws were 
 enacted would for a moment contend that they were ever intended 
 to place a reward upon stealing and prevent honest men from pro- 
 tecting themselves a!gainst dishonest practices, and yet this is exactly 
 the way the so-called antitrust operated with us. 
 
 Some 8 or 10 years ago there was an organization of potato grow- 
 ers started, and by some manipulation on the part of the manager 
 who come up to Aroostook to handle its business it was plunged 
 into an indebtedness of about $10,000. Under a local manager the 
 association had worked out of that up to within a couple of thousand 
 dollars, when the Aroostook Federation of Farmers, which I repre- 
 sent, was organized. It took over the assets and paid the debts of 
 the old organization. It is a stock corporation, but with the quali- 
 fication that no person other than an actual farmer can be a stock- 
 holder and no stock can be transferred — and notice of this was 
 printed on the backs of the certificates of stock — without first sub- 
 mitting that stock to the board of directors of the corporation. 
 Then they organized, as subsidiaries, what they called locals, to 
 transact the business in the various localities where potatoes were 
 handled. In our State we could not efficiently accomplish our objects 
 in any form except as a corporation, and this fact, in the minds of 
 many lawyers, carries us outside the exemption as to farmers obvi- 
 ously intended in the Clayton Act. But, inasmuch as our contracts 
 with members do not obligate them to market their entire crop 
 through the organization, there is no element of monopoly or re- 
 straint of trade involved. 
 
 The Chairman. What number of farmers have you got in your 
 organization ? 
 
 Mr. Hall. When I left home there were about 4,000 actual mem- 
 bers, or members of farmers' unions who were affiliating with our 
 org'anization by contract. 
 
 Mr. Yates. iDid it work? Did it protect them? 
 
 Mr. Hall. It has protected them from some things, but it can 
 not give them full protection until the law permits them to exercise 
 some control over their own products without the danger of being 
 sued civilly and prosecuted criminally. And in this connection, 
 permit me to say that if farm food products now costs the consumers 
 too much money the fault lies with the system of distribution. The 
 farmers can do much to correct these evils if you will give them the 
 unhampered right to bargain and sell collectively, as the pending 
 bill proposes. 
 
 I was sent down here Mr. Chairman, on another errand. At the 
 present time, under the operation of the existing tariff laws, Cana- 
 dian potatoes are coming into our markets free of duty, and as their 
 cost of production is less than half the production cost in Aroostook 
 county the result is unfair to our farmers, and they sent me down 
 here to see if we couldn't have some relief. 
 
 The Chaiemak. You mean so far as the tariff on goods is con- 
 cerned ? 
 
 Mr. Hall. That is what I referred to. 
 
COIXECTrVE BAEGAINING FOB FARMERS. 99 
 
 The Chairman. This committee does not consider that. 
 
 Mr. Hall. I understand that, Mr. Chairman, and I mention it for 
 two reasons; first to show that my testimony has not been prepared 
 and therefore somewhat rambling, and second to show that we are 
 struggling with another difficulty besides the unjust limitations 
 placed upon our efforts by the ambiguities of the Sherman- Clayton 
 law. Not having had instructions from our organization relative 
 to the pending measure I wrote home for instructions and I wish to 
 read into the record the reply to my inquiry : 
 
 Akoostook Fedeeation of Fabmeks, Home Office, 
 I Carilou, Me., October 22, iW.9. 
 
 It is addressed to myself. 
 
 Dear Mk. Hau: : While you are In Washington can you not do something to 
 help the passage of the Capper-Hersman bill, allowing the farmers the same 
 right of collective bargaining which the labor unions have? To deny the farmers 
 the right to organize for collective buying and selling is not only an injustice 
 to us, but is also economically wrong. One of the greatest problems confronting 
 America to-day is the problem of the more economical production and distribu- 
 tion of food and supplies. To deny the farmer the right to organize for collective 
 buying and selling simply compels each individual farmer to do business alone. 
 It is only by cooperative efforts that the cost of production can be reduced and 
 the cost of distribution lessened. If Congress really wants to do something of 
 practical benefit to the farmer, something that will encourage production and 
 lessen the cost of distribution and give agriculture the encouragement it needs, 
 they should immediately pass the Capper-Hersman bill, or a similar measure, 
 which win give the farmer the same rights of collective bargaining that the 
 labor unions enjoy. 
 
 Every farmer in Aroostook County is in favor of the passage of this bill. 
 
 Aboostook Federation of Faemees, 
 By Geoege v. Bkown, 
 
 Seoretwry and General Mamager. 
 
 In our discussion at home we have contended that much of the 
 blame for the high cost of living rests with the consumers themselves. 
 They are beginning to realize this fact. They are organizing ind one 
 step is bound to lead to another, but they can never adequately pro- 
 tect themselves until they get into position to join hands with the 
 farmer across the gulf that now divides them. When they reach this 
 point they will have to enjoy the same exemption that the farmers 
 need now, because piecemeal cooperative purchasing is never going 
 to solve the consumers' problem. They will have to become quantita- 
 tive buyers before they can accomplish economy, and hence I com- 
 mend this feature to your consideration when you come to consider 
 {he kind of legislation you are going to recommend for the benefit 
 of the American people. 
 
 Mr. Ltman. May I have inserted in my opening remarks the 
 statement that I am a farmer? I notice a good many committees 
 lay stress on that when we come to speak for the farmers. I would 
 like to get in the record that I was raised on a farm and have farmed 
 all my life until I came down here. I hav6 had a farm since 1904. 
 
 Mr. Balderson. I would ask the same thing. I still operate a farm 
 
 of 160 acres. 
 
 The Chairman. We will try to meet to-morrow. 
 (Whereupon, at 4.40 o'clock p. m., the committee adjourned.) 
 
100 COLLECTIVE BARGAINING FOR FARMEES. 
 
 Committee on the Judiciary, 
 
 House of Kepeesentatives, 
 Washington, D. C, October 30, 1919. 
 The committee met at 11 o'clock a. m., Hon. A. J. Volstead (chair- 
 man) presiding. 
 
 STATEMENT OF MR. THOMAS C. ATKESON, WASHINGTON, D. C, 
 REPRESENTING THE NATIONAL GRANGE. 
 
 The Chairman. Well, Mr. Atkeson, if j^ou want to be heard thi^ 
 morning, we will be glad to hear you. 
 
 Mr. Atkeson. Mr. Chairman and gentlemen of the committee, it 
 has been my privilege to talk to a number of congressional commit- 
 tees, but never, I believe, this one. I represent the farm organiza- 
 tion known as the Patrons of Husbandry, more generally known as 
 the grange. This organization is 53 years old. It was founded in 
 this city by people mainly connected with the Agricultural Depart- 
 ment and its first head was William Saunders, who was famous as a 
 horticulturist and landscape gardener in this city. 
 
 During these 50 years this organization, as well as its members who 
 have come and gone, have had a good many experiences, and we think 
 it is sane and rational in all its economic relations, and somehow I 
 feel like putting in the record just a paragraph or two from its state- 
 ments made in 1874, and I am anticipating questions that some of you 
 might ask, because I have heard those questions asked of men who 
 assumed to represent farmers and farm organizations, questions 
 about the organizations they assume to represent. I do not know 
 what was in the minds of the committee when they asked these ques- 
 tions, but I think that the committee is entitled to know definitely the 
 character of the organization I am here to represent, and I want to 
 say that I do not claim to represent anybody else except this organi- 
 zation and the people in this country who may be in harmony with 
 its policies and teachings. We do not claim to represent everybody, 
 running all over the scales and classes of so-called farmer organiza- 
 tions and near-farmer organizations. 
 
 In 1874, at its session in St. Louis, this association promulgated this 
 declaration of its principles, profoundly impressed with the truth 
 that the national grange should definitely proclaim to the world its 
 general objects: 
 
 We hereby unanimously make this declaration of the purpose of the Patrons 
 of Husbandry. United by the strong and faithful tie of agriculture we mutually 
 resolve to labor for the good of our order, our country, and mankind. We 
 heartily indorse the models, in essentials, unity; in nonessentials, liberty; in 
 all things, charity. > 
 
 Specific objects: We shall endeavor to advance our cause by laboring to 
 accomplish the following objects: 
 
 This is why I am taking up the time of this committee to read this 
 paragraph. 
 
 To develop a better and higher mankind and womankind among ourselves; 
 to enhance the comforts of our homes and strengthen our attachments to our 
 homes ; to foster mutual understanding and cooperation ; to maintain inviolate 
 our laws and to emulate each other In laboring to hasten the good time that 
 Is coming; to reduce our expenses, both individual and corporate, to buy less 
 and produce more, in order to make our farms self-sustaining; to diversify 
 our crops and crop no more than we can cultivate ; to condense the weight of 
 all exports, selling less in the bushel and more on the hoof 
 
COLLECTIVE BAKGAINING POR FARMERS. 101 
 
 Mr. Yates. More what.? 
 
 Mr. Atkeson. More on the hoof. Instead of selling grains and 
 hay and things that are bulky, to put it in the shape of hogs and 
 cattle in order to reduce the cost of transportation. 
 
 Less in lint and more in warp and woof ; to systematize our worlc and calcu- 
 late intelligently on probability ; to discountenance the credit system, the mort- 
 gage system and fashion system and every other system tending to prodigality 
 and bankruptcy. 
 
 This was in 1874, and we are still tending to prodigality and bank- 
 ruptcy at the present time. 
 
 Mr. Steele. What was meant by the "Morgan " ? 
 
 Mr. Morgan. Mortgage system. 
 
 Mr. Steele. I thought he said " Morgan." 
 
 Mr. Atkeson. We discountenance the credit system, the mortgage 
 system, and the fashion system, and eveiy other system tending to 
 prodigality and bankruptcy. We are rapidly tending to prodigality 
 and bankruptcy just now in this country. 
 
 We propose meeting together, talking together, working together, buying 
 together. 
 
 The po'int I am trying to make is that we are a cooperative organi- 
 zation. 
 
 Buying together for our mutual protection and advancement as occasion 
 may require. We shall avoid litigation as much as possible by arbitration. 
 
 That Wouldn't be a lawyer's doctrine. 
 Mr. Steele. It would be a good lawyer's. 
 Mr. Atkeson (reading) : 
 
 We shall strive to secure entire harmony, good will, fellow brotherhood among 
 ourselves and make our order perpetual. We shall earnestly endeavor to sup- 
 press local, sectional and national prejudices, and all unhealthful rivalry and 
 selfishness. Faithful adherence to these principles will secure our mental, 
 moral, social and material advancement. For our business interests we desire 
 to bring producers and consumers, farmers and mantifacturers, into the most 
 direct and friendly relations possible, hence we must dispense with the services 
 of the middleman. Not that we are unfriendly to them, but we do not need 
 them, since they diminish our profits. We wage no aggressive warfare against 
 any other interests whatever. On the contrary, all our acts and all our efforts, 
 so far as business is concerned, are not only for the benefit of the producer 
 and the consumer, but also for every other interest that does not bring these 
 two parties into economic contact, hence we hold that transporation companies 
 of every kind are necessary to our success, that our interests are intimately 
 connected with their interests and that harmonious action is mutually advan- 
 tageous. 
 
 Keeping' in view the first sentence of our declaration of principles, we shall 
 therefore advocate that every State increase in every practical way every facil- 
 ity for transporting cheaply to the seaboard or between the home producers and 
 the consumers all the products of our country. We adopt it as our fixed pur- 
 pose to open up the channels and great arteries of transportation so that the 
 lifeblood of commerce may flow free. We are not enemies of- railroads, navi- 
 gable and irrigable canals, or anything that will advance any industrial or 
 laboring class. In our industrial order there is no communism. We are op- 
 posed to such spirit and management of corporations and enterprises that tend 
 to rob the people of their .iust profits. We are not enemies of capital, but we 
 oppose the tyranny of monopoly. We long to see the antagonism between 
 capital and labr removed by common sense and by enlightened statesmanship^ 
 worthy of the nineteenth century. 
 
 It is the twentieth century now. 
 
 We are opposed to excessive salaries, high rates of interest, and exorbitant 
 profits. They greatly increase our burdens and do not bear a proper relation 
 
102 COLIECTIVB BARGAINING FOR FARMERS. 
 
 to tlie profits of the producers. We desire only self-protection and the protec- 
 tion of every true interest in our land. 
 
 There is a little bit more of it. . . 
 
 Mr. Yates. I don't think you need apologize for it. This is all 
 very instructive to many of us. • i » 
 
 Mr. Atkeson. The fact that this document was drawn_up_in 1874, 
 and also the fact that it is annually printed in our organization pub- 
 lication—we stand right now on these general principles where we 
 stood at that time. There arq some phases of this thing tjiat are 
 worth while. 
 
 The subject of education : We shall advance the cause of education among 
 ourselves and our children by all just means within our power. We especially 
 advocate free agricultural and industrial colleges for the teaching of agricul- 
 ture, domestic science, and other courses of study. 
 
 At the time this was written the agricultural colleges of this coun- 
 try were agricultural colleges in name only. There was not an agri- 
 cultural college in the United States that had a dozen agricultural 
 students in it. 
 
 Mr. Yates. We had one iii Illinois as early as 1867. 
 
 Mr. Atkeson. You had a college, but no students. 
 
 Mr. Yates. "VVe had an agricultural college with students. 
 
 Mr. Atkeson. In 1897, Illinois University, at Urbana, had 13 agri- 
 cultural students. 
 
 Mr. Yates. You may know more about that than I do. 
 
 Mr. Atkeson. It was my good fortune to have been a member of 
 my agricultural faculty for 23 years, and 14 years of that time dean 
 of the college. The reason I refer to this is that this organization 
 got actively behind trying to make agricultural colleges do some of 
 the things that were supposed to be done by them, and they were a 
 little slow in beginning. This paragraph on education was written 
 in 1874. 
 
 Mr'. Steele. How many students were there at the Pennsylvania 
 college ? 
 
 Mr. Atkeson. Nine. All this is perhaps a little remote from what 
 I am going to come to directly, but it is a good foundation for the 
 position I am going to take. In 1897 I sent a circular letter to all 
 these colleges. My recollection is that at that time Illinois had 13 
 and Pennsylvania had nine. When I first began to investigate the 
 situation in my own State, in looking over the college catalogue of 
 1886, the only mention of an agricultural nature in that catalogue was 
 the bare statement that the professor of astronomy had announced 
 a course in agriculture that year, and that stumped me a little bit 
 until I remembered that probably the sign of the Zodiac and the 
 production of potatoes had something in common, and that they were 
 doing things on that theory. 
 
 Mr. Steele. May I ask you another question ? Do you know how 
 many students there are at the Pennsylvania college now? 
 
 Mr. Atkeson. I assume there are several thousand. 
 
 Mr. Steele. I saw in the paper the other day, I think, that they 
 had 3,000. ' ^ 
 
 The Chaieman. You mean taking the regular course or the short 
 course ? 
 
 Mr. Steele. They have a short course as well as the long course, 
 but it is mainly devoted to agriculture. 
 
COLLECTIVE BARGAINING FOR FARMERS. 103 
 
 The Chairman. They had a short course in Minnesota; but I 
 presume Mr. Atlieson is right ; not many took the full college course 
 at that time. 
 
 Mr. Atkeson. We went over this thing and took it up. If you 
 could go through the record I think you would agree with me that 
 we performed a splendid public service in the support and promotion 
 we gave to the development of agricultural colleges in this country. 
 This next paragraph will interest you gentlemen who more or less 
 confess to being guilty of being politicians : 
 
 We emphatically and sincerely assert the oft-repeated truth that the grange, 
 State, National, or subordinate, is not a political or partisan organization. No 
 grange. If true to its obligations, can discuss partisan questions, or call a 
 political convention, or discuss candidates. 
 
 Mr. Steele. May I ask whether that has been always adhered to ? 
 Mr. Atkeson. I think so — in our organization. I think that is 
 true. 
 
 That the principles we teach underlie all true politics, all true statesmanship, 
 and if properly carried out will tend to purify the whole political atmosphere 
 of our country and work the greatest good for the greatest number. We 
 must always bear in mind, that no one by becoming a Patron of Husbandry 
 gives up that inalienable right and duty that belongs to every American 
 citizen to take a proper interest in the politics of the country. On the con- 
 trary, it Is the right of every member to do everything in his power to influ- 
 ence for good the actions of any political power or party to which he belongs. 
 It is his duty to do what he" can to put down bribery, corruption, and trickery ; 
 to see that none but honest, faithful men, who will unflinchingly stand by their 
 interests, are nominated for positions of trust. It is our belief that the office 
 should seek the man, and not the man the office. 
 
 I wonder how many of you here would have to plead guilty under 
 that. 
 
 We acknowledge the broad principle that difference of opinion is no crime, 
 and hold that progress toward truth is made by difference of opinion, while 
 the fault lies in the bitterness of argument. 
 
 We desire equality, protection for the weak, and justly distributed bvirdens 
 and justly distributed power. These are American ideals, the very essence 
 of American independence, and to advocate to the contrary is foreign to the 
 essence and aims of the American Republic. We say also that sectionalism is 
 and, of right, should be dead and buried with the-past. 
 
 This organization had its conception in the mind of O. H. Kelly, 
 who was sent by the Department of Agriculture in 1866, one year 
 after the close of the great Civil War, into the Southern^ States to 
 see what could be done to restore the devastated agricultural condi- 
 tions of the South. While traveling through the South, being a 
 northern man — ^he was a Minnesota farmer. I have heard the old 
 man say many a time — he died three or four years ago — that he did 
 not find a friendly handclasp anywhere in thie South except among 
 his brother Free Masons. He was a thirty-third degi'ee Free Mason, 
 I understand, and that put into his head that there ought to be 
 an agricultural fraternity for the purpose of bridging oVer what 
 he called and other people called the " bloody chasm " between the 
 North and the South, and the very foundation of this organization, 
 if it had any one purpose above another, was to accomplish that 
 result and to restore the true, splendid, broad conception of Ameri- 
 can citizenship. 
 
 Mr. Morgan. Did the organization ever develop any strength to 
 speak of in. the South? 
 
104 _ COLUECTIVE BARGAINING FOB FAEMERS. 
 
 Mr. Atkeson. During its early years it was stronger in the South 
 than anywhere else, and its third master was a man by the name 
 of Jones, from Arkansas, and a little later a man from Mississippi, 
 and Mr. D. Wyatt Aiken, who was a Member of Congress from 
 South Carolina for many years, and his son was in the last Congress, 
 was an active member and chairman of the national executive com- 
 mittee and slated, as I understand— it was a little before my tim&— 
 for the head of the national organization if death had not overtaken 
 him too soon. 
 
 Mr. Morgan. I had the impression that the Grange organization 
 was largely confined to the North and that the Farmers' Union 
 flourished in the South. 
 
 Mr. Atkeson. The Farmers' Union has come in since, and be- 
 tween the two was the Farmers' Alliance. 
 
 Mr. Morgan. Are there a good big percentage of granges in the 
 Southern States? 
 
 Mr. Atkeson. In the Southern States they are weak, so far as 
 the Grange is concerned. We have State organizations in 33 States, 
 beginning with Maine and ending along the Pacific coast, and every 
 State north of the Mason-Dixon line, including Oklahoma, Ken- 
 tucky, West Virginia, Maryland, and Delaware, and everything clear 
 across the country. 
 
 We believe sectionalism is and, of right, should be dead and buried with 
 the past. 
 
 Close to the war that was a pretty broad statement. 
 
 Our work is for the present and the future. In our agricultural brother- 
 hood we shall recognize no North, tio South, no East, and no West. It is 
 reserved to every patron the right to affiliate, the right of a free man to 
 affiliate with any party that will carry out his principles. 
 
 Our being peculiarly a farmer's institution we can not admit all to our 
 ranlvs. Many are excluded by the nature of the organization, not because they 
 are professional men or artisans or laborers, but because they have not a 
 sufficient direct interest in tilling the soil or may have some interest in conflict 
 with our purposes, but we appeal to all good citizens for their cordial coopera- 
 tion and assistance in our efforts, that we may remove from our midst the last 
 vestige of tyranny and corruption. 
 
 Mr. Morgan. Is it true that a lawyer or Member of Congress could 
 not become a member of the Grange ? 
 
 Mr. Atkeson. There are quite a number that are. 
 
 Mr. Morgan. Do they have to be farmers to be members? 
 
 Mr. Atkeson. No; we make a good many exceptions. We didn't 
 draw the line very closely. We do, if we think he is liable to be in 
 opposition to our princiijles. I think there are as many as 12 or 15 
 Members of both Houses that are members of the Grange. 
 
 We seek fraternal harmony, equitable compromise, and earnest cooperation— 
 
 That word " cooperation " I want you to keep in mind, because 
 that is where I am coming to. 
 
 It shall l)e an abiding principle with us to relieve any of our oppressed and 
 suffering brethern by any means at our command. 
 
 Last, but not least, we proclaim it among our purposes to inculcate the 
 equality of women, as is admitted by admitting her to membership and position 
 in our order. 
 
 We got there a good while before Congress did. 
 
 We ask the assistance of our Divine Master to assist us in our work, and 
 hereby pledge ourselves to labor for the return, by our united efforts, to tlie 
 eternal justice, political wisdom, and purity of our forefathers. 
 
COLLECTIVE BARGAINING TOR FARMERS. 105 
 
 If that had been written yesterday or to-day, I should not have 
 taken the trouble to read it, but for these 53 years this organization 
 has -been able to live, while a multitude of organizations, farmers 
 organizations and near-faVmers organizations, and sensational or- 
 ganizations, haA'e come and gone. They, perhaps, have accomplished 
 some good. There has been a great need for their development — like 
 our Non-Partisan League friends in North Dakota. I have no doubt 
 they had some grievance. They may live forever and accomplish 
 something. Congressman Baer asked me once, before one of the 
 committees, how the Grange and the Non-Partisan League got along 
 together. I said we didn't get along, except that we lived in the same 
 country, " and if you people can succeed in the things you have 
 undertaken, all mankind ought to rise up and call you blessed ; and if 
 you fail, as far as I am concerned, I would rather you make the ex- 
 periment in North Dakota than in West Virginia." 
 
 Many of these organizations have had a narrow purpose, but some 
 of them have done something to attract public attention to this basic 
 industry that we know as farming. Now, I do not care to discuss 
 the bills pending and the suggested amendments that were offered 
 yesterday in any detail, but I want to confine my remarks to the 
 rather broader consideration of the general proposition. Our or- 
 ganization stands for the so-called Capper- Hersman bill. Mr. Barber 
 has introduced a bill, dealing more or less 
 
 Mr. Morgan (interposing). Eight here, let me interrupt you. 
 This is just for my information. In what way has the National 
 Grange indorsed this bill? 
 
 Mr. Atkeson. They have not indorsed this particular bill. I have 
 here their statement, I think. They have indorsed cooperative mar- 
 keting. We ne^'er use the term — our organization doesn't — of col- 
 lective bargaining. The psychology of collective bargaining is not 
 a happy expression just now. We have always used the term col- 
 lective marketing. 
 
 Mr. Morgan, Yes; that shows in what you read. But your or- 
 ganization has, as a matter of fact, in no way taken action on this 
 particular proposition? 
 
 Mr. Atkeson. They never have taken any action on it. 
 
 Mr. Morgan. So you just assume, as their legislative representa- 
 tive here, that your organization, if it were referred back, would 
 favor it? 
 
 Mr. Atkeson. That is right. 
 
 Mr. Classon. I notice in your declaration of principles that your 
 organization is opposed to monopoly. How do you reconcile that 
 with that broad statement that you favor the enactment of legisla- 
 tion under which, as I understand it, it is frankly admitted by the 
 representatives from the various localities that a monopoly would 
 be created? 
 
 Mr. Atkeson. Well, after 53 years of trying to do cooperative 
 business and cooperative marketing, if anyone will show where 
 there has been even a suggestion of monopoly it might be 'worth 
 while to argue that phase of the question. 
 
 Mr. Morgan. Suppose you take this milk organization we had 
 before us yesterday — the organization around New York. Would 
 you regard that as a practical monopoly where they are controlling 
 88 per cent of the supply of New York? Wasn't that what you said? 
 
106 ' COLLECTIVE BARGAINING FOE FAEMEES. 
 
 Mr. MiLuiR. I do not think I stated, Mr. Morgan. I think another 
 witness stated that as to California. As to New York, we have no 
 definite data as to that — as to the quantities of milk — but each" one 
 of the members that join inserts in his application for membership 
 the number of cows that he owns, and taking the census of the num- 
 ber of cows in the State and comparing that with the total number 
 owned by our members, we have about 60 per cent. 
 
 Mr. Morgan. That takes all of the cows of the State, but many 
 of these do not serve New York for local consumption. 
 
 Mr. Miller. For local consumption and manufacturing purposes ; 
 but probably as many of our members send milk to the manufac- 
 turers as goes to the city. I would say that our organization, with- 
 out any definite information, controls about 60 per cent of the milk 
 that goes into the city and into the manufacturers. 
 
 Mr. Morgan. But you would be capable of extending it to 80 or 
 90 per cent if you extended the organization. 
 
 Mr. Miller. If they cared to join. 
 
 Mr. Classon. It was admitted by the representative from Cali- 
 fornia that under this bill that monopolistic control would be se- 
 cured in the raisin industry and some other industries in California. 
 
 Mr. Sapiro. We admitted that 83 per cent of the raisin industry 
 to-day is in the California Associated Raisin Association, and that 
 certain of our agricultural industries, like walnuts and almonds and 
 lima beans, and there may be a couple of others of that kind. A 
 good deal over two-thirds of the American production is in coop- 
 erative associations in California, so that the question of monopoly 
 is a fair question for the Judiciary Committee to consider, and 
 many members of the growers in California are members of the 
 California Associated Raisin Association and the California "Wal- 
 nut Growers' Association and the California Prune and Apricot 
 Exchange, and others. 
 
 Mr. Atkeson. I feel like devoting a minute to a discussion of a 
 question which I anticipated. I knew somebody would ask it. 'Ever 
 since we have had an Agricultural Department it has tried to teach 
 the American farmer that it is good business to practice cooperation, 
 both in buying and selling, and it is absolutely economically sound 
 for the people. Now, when the question is raised about my friends, 
 the dairymen, and I am not a dairyman myself, we had some ex- 
 perience here in this city. A few months ago the dairymen, whom 
 I know are not getting rich in the dairy business, increased the price 
 of milk 2 cents a gallon, which is a half a cent a quart, and imme- 
 diately the distributing people increased it a cent a quart, and two 
 or three weeks ago, abdut the 1st of October, I believe, the producing 
 dairymen increased the price of milk 4 cents a gallon, or 1 cent a 
 quart, and immediately your distributing people increased it 2 cents 
 a quart. I had been buying milk for 16 cents a quart, then it was 
 advanced to 18 cents. The dairymen raised it 1 cent and the dis- 
 tributors raised it 2. That raise was not because the dairymen added ' 
 the cent. There wasn't the millionth part of a cent increase in the 
 cost of distributing that milk, but the dairymen knew what they were 
 up against. He was feeding the cow, and had the time and labor 
 and energy and all those things that brought about the necessity 
 of raising the price of that milk 1 cent a quart, hut no logic that I 
 have ever seen or heard of could justify these Washington dis- 
 
COLLECTIVE BARGAINING FOR FARMERS. 107 
 
 tributors in getting 2 cents a quart more just because the dairymen 
 got 1 cent. That goes on in every city in this country. 
 
 Now they are organized. We could buy frpm one distributor in 
 this city, if there are more than one — I buf from a man named 
 Oyster. They are organized. Now, then, Dairyman Smith and 
 Thompson and Jones, as individuals, do not stand any more chance 
 of dealing with an organization like that than a cat does in Hades 
 without claws. To prevent being put out of business altogether 
 they must cooperate together. If they get beyond a reasonable profit, 
 a reasonable maintenance of their business, then the laws of this 
 land ought to come in, but the laws of this land need to come in 
 somewhere else with a good deal more vigor than they have been 
 able to come in. , " 
 
 Congress appropriated $2,500,000 to the Judiciary Department to 
 find profiteers, and the chief profiteers in this coyntry to be found 
 are the men who absorb the salaries on that $2,500,000. But they 
 won't find many people who can be convicted of profiteering. Now, 
 there has never been a threat on the part of the farmers of this 
 country to strike, and there never will be. The men who are on the 
 farms are trying somehow to support themselves and their wives 
 and their children, and I want to say, without being personal, that 
 this past summer is the first summer that I have not, in my entire 
 life, engaged in practical agriculture on my own farm. In my 
 efforts to tell things to Congress that it seemed to me they ought to 
 know, I had to forego going to my farm this summer, and I got 
 very home sick last spring about the time the bluebirds began to 
 sing. My son and I are operating that farm in partnership, and he 
 has a wife that he thinks a good deal of, and five children from about 
 12 years of age down, and that wife and those children, from 2 years 
 up, are putting' in this summer, and other summers, as much as 16 
 to 18 hours a day in trying to make ends meet on that farm and 
 take reasonable care of themselves. 
 
 I have seen that young woman — a handsome, healthy young 
 woman she is, that daughter-in-law of mine — with an old, homemade 
 bonnet, and she makes her own clothes — I have seen her working in 
 the garden with an outfit that, made by herself, probably cost five 
 or six dollars. My wife went out the other day in this city to get 
 an outfit that she could wear over to Grand Rapids to the National 
 Grange meeting on the 12th of November, and I wrote a check for a 
 hundred and twenty-five dollars. I had another experience dealing 
 with that same economic situation in trying to buy a suit of clothes 
 for myself. The prices ran from sixty-five to a hundred and thirty- 
 five dollars. The shepherd who grew that wool, if it was all wool 
 and absolutely pure, by no stretch of the imagination, from present 
 prices of wool, got as much as $5 for the wool in that suit of clothes. 
 After it left the farmer $130 got into that $135 suit of clothes, and 
 if the farmer had gotten nothing for the wool it would not have 
 manifested itself in the price of that suit of clothes. 
 
 Five farmers, representing the States of Indiana, Illinois, Iowa, 
 Nebraska, and Ohio, were in this city at the Harrington Hotel some 
 time ago, and they checked up the prices that the farmer got for the 
 dinner that they ate, and allowing the five men 2 pounds of beef, 
 which is a fairly liberal allowance, and a fair estimate on the other 
 things — and they knew what the falrmer got for his things — ^th© 
 
108 COLLECTIVE BARGAINING FOR FARMERS. 
 
 dinner that those five men ate at the hotel the farmer got 82 cents 
 for it and they paid $11 for the bill. Ten dollars and ei^teen 
 cents had come into that 82 cents worth of food after it left the 
 farmer. 
 
 Mr. Steele. You stated a little while ago the number of hours the 
 farmers worked, 16 or 18. That agrees with the general informa- 
 tion I have; but I saw in the newspapers a short time ago that the 
 farmers' organizations in western Pennsylvania had concluded they 
 would work only eight hours a day. Would that be a feasible thing 
 on the farm ? 
 
 Mr. Atkeson. Whether it is feasible or not, that is one of the 
 things that we are up against and that calls for cooperation. The 
 farmers are going from farm to farm helping each other in their 
 cooperative efforts. Cooperation is the song I am trying to sing, 
 and it is a question whether the laws of this land will admit there is 
 an absolute necessity, if the farmer is to succeed in this country, for 
 some kind of legal, legitimate, fair cooperation, because it is impos- 
 sible for them to accomplish much separately. , 
 
 Mr. Classon. What would you pay was the condition of the farm- 
 ers generally in the country to-day? Would you say they were 
 prosperous ? • 
 
 Mr. Atkeson. I would say not. I have a letter here that came in 
 this morning that throws a little light on that subject. It is a letter 
 from Missouri, a member of the Missouri State Grange. It came in 
 this morning, and says : 
 
 Decrease in production will be next year as never before unless something 
 is done to assure the farmer a fair return for the labor and exnense of pro- 
 duction. 
 
 Mr. Morgan. How do you account for the large increase, amount- 
 ing to two or three hundred per cent in some instances, in the price 
 of land in the last year or two? If the farmers are not making 
 money, how do you account for the land — in the corn belt especially — 
 going up in price? 
 
 Mr. Atkeson. Not many farmers are buying land nowadays. 
 
 Mr. Morgan. You do know of the fact — and I guess it is a fact — 
 that the lands in Iowa and Illinois, and generally what is called the 
 " corn belt," have doubled in price ? You say the farmer is not buy- 
 ing it, and the man in the city who invests" his money just for the 
 income would not be liable to put his money into a farm for the 
 money it would bring, would he? 
 
 Mr. Atkeson. Illustration is sometimes better than explanation. 
 As a matter of fact, farm lands have gone up continually ever since 
 the settlement of the country. There have been variations, but the 
 tendency has been up, and will be as the population increases. Land 
 will continue to go up, but the most lamentable fact in this country 
 is that the land is not being bought by bona fide farmers. Take my 
 own farm, which is 20 miles from the Ohio Eiver, near that notorious 
 city of Nitro, that cost $20,000,000 to build and which has been sold 
 for $8,500,000, I understand. These lands have practically, without 
 exception, fallen into the hands of nonresident owners, and I have 
 hunted rabbits over all of them pretty nearly. When I was a boy 
 practically every farm was owned and occupied by the man who 
 farmed it. I think it is a perfectly safe proposition to say that now 
 
COLLECTIVE BARGAINING FOE FARMERS. 109 
 
 fully 80 per cent of these farms are owned by nonresident owners, 
 and that has developed a condition in that valley that makes it almost 
 undesirable for a self-respecting white man to live there. 
 
 The Chairman. Have prices for that land gone up during the 
 war? 
 
 Mr. Atkeson. They have gone up about a hundred per cent. The 
 man who sold land to the city of Nitro bought the farm adjacent to 
 mine on one side, on the other side he bought another farm, and he 
 lives in the city of Charleston. 
 
 Now, in the schoolhouse where I went to school and where my 
 children went to school and where my son is now sending his children 
 to school, he said he would have to move away. The class of people 
 who send their children to that school make it undesirable for a man 
 who has any aspirations in life for himself and wife to live there and 
 send their children to school there, and it was a splendid neighbor- 
 hood 40 or 50 years ago ; .desirable people, and all that sort of thing. 
 
 All that, however, is' a little foreign to the question. Now, then, 
 we are developing in this country an economic condition that is abso- 
 lutely serious and threatening to our very institutions. There can 
 be no doubt about it but that under present conditions this country 
 is going to go hungry, just as sure as twice two make four. That 
 must come unless there is some sort of a readjustment of economic 
 conditions. On that farm that I speak of I grow about twelve hun- 
 dred bushels of wheat. At the close of the harvest this year two men 
 who have been living on the farm for two or three years notified my 
 son that they were through. One of them had another job at $7 a 
 day and the other one had a job at $110 a month and his board. Of 
 course, these men left the farm. We can not grow $2 wheat with 
 $7 men. 
 
 It is not a question of what we want to do. We are undermanned 
 on the farms. There is not half as many men on the farms of 
 America as ought to be there to adequately and efficiently cultivate 
 them, but we can not go into the labor markets with the present 
 prices that farmers get for their produce and pay the prices we have 
 to pay to produce that produce. Now, anyone that is familiar with 
 the ordinary laws of business will only have to figure a little to know 
 that we are at a place where something is going to happen in this 
 country. I don't know what it is, but I do know that we can not go on. 
 Not because we don't want to, not because we do not feel a moral and 
 patriotic obligation to feed the world, but we can not grow $2 wheat 
 with $7 men. We can not grow less than $6 wheat with $7 men. 
 That means $35 a barrel for flour. 
 
 Mr. Igoe. Well, the farm laborer's price is largely regulated by 
 the price of labor in other places, is it not ? 
 
 Mr. Atkeson. It is absolutely so regulated. 
 
 Mr. Igoe. And the laborers in other places say they can not get 
 along on the wages they get because of the high prices. There we go 
 round a circle. 
 
 Mr. Atkeson. We have come to an eight-hour day in this country, 
 and we must go into the labor market and compete against other 
 employers of labor. I do not mean that the farm laborer will demand 
 the same pay or the same day, but I do mean that he will demand 
 and ought to demand compensation for the same number of hours. 
 
110 COLLECTIVE BARGAINING FOR FARMERS. 
 
 the same amount of skill and energy, all things considered. It rs 
 true a man can live more cheaply in the country and would be ^"/^^S 
 to take a lower day wage for his services. I estimate that at about 
 25 per cent difference. That is a mere arbitrary figure. In other 
 words, if a man working in Washington gets $8 a day a man m the 
 country ought to get $6. 
 
 Now, then, he is going to get it, and since we are not able to pay 
 it to him, he is leaving the country— the young men— and going to 
 the other jobs, and some of these days we will be confronted with 
 the condition where there are more people in the city wanting the 
 city jobs and not enough people in the country to produce food to 
 feed the people in the city jobs. The inevitable result will be that 
 the price of food in this country must go up, and the only man who 
 impresses me as being insane economically is the man who goes about 
 blabbing about the cost of living when he talks about things to eat. 
 The cheapest thing we buy in Washington, notwithstanding all the 
 profiteering charges that have been made— the cheapest thing we buy 
 in the city of Washington to-day is what we eat, relatively. We are 
 hearing a great deal about that. I bought a pair of shoes that I paid 
 $10.60 for. I have bought better ones for $3.50. The food we buy, 
 notwithstanding the profiteering charges that have been made, does 
 not 'cost to-day double what it cost in 1914 — an the prewar days. 
 Everything else that I buy has more than doubled except what I eat, 
 and we are not going to have anything tO eat some of these times 
 without we are willing to pay for it. 
 
 Now, then, anything that encourages the farmer to stay in the coun- 
 try, to be able to make a reasonable profit on their investment, their 
 labor, their skill, their education, is in the interest of the common 
 welfare. Every man in Washington and New York and everywhere 
 else is interested in getting enough to eat, and if any farmers in this 
 country are profiteering or if anybody thinks they are, I want to ex- 
 tend the hand of fellowship to all you people in Congress and every- 
 where else with the invitation that the water is fine, boys; come on 
 in. We will give you all the room you want. There is room on my 
 farm to take the places of those two men who left a few weeks ago. 
 
 Now, then, nothing will do so much to enable these isolated farm- 
 ers to make the country worth while, to make their occupation reason- 
 ably remunerative, with the long hours they work and the energies 
 of their families, as to allow him to cooperate. You may put in what- 
 ever restrictions you want against profiteering and monopoly, be- 
 cause we hate profiteering and monopolies, but there must be some 
 measure of cooperation or the individual farmer will be absolutely 
 helpless and subject to exploitation by everybody between him and 
 the consumer. 
 
 Now, we are interested in the consumer. We are trying to serve 
 the consumer, but if anybody can show that cooperative marketing 
 or dealing is detrimental to our best national interests, why, I say 
 that opinion should prevail, but it is essential to the welfare of 
 American agriculture, without which none of us can live, and without 
 prosperous agriculture our Nation is already at the beginning of the 
 end. All countries have had the same experience. 
 
 Now, I had a little experience with Mr. Wilson's Industrial Com- 
 mission. I sat through the sessions of that Industrial Commission 
 
COLLECTIVE BARGAINING FOE FARMERS. Ill 
 
 with a good deal of interest, as a member of the employers' group, 
 and all my life I have looked upon great capitalists as bogies of some 
 kind, and I found that some of the people there, like Mr. Eockefel- 
 ler and Mr. Gary, were just men, and these men, representing the 
 different interests, all recognized, as far as 1 could get any expression 
 from them, that agriculture was not a charitable organization, and 
 that it was fundamental to our welfare, and that somehow or other 
 it must be made reasonably profitable or it would not be sustained 
 and we would go hungry. In the midst of the other things that were 
 presented to the conference and all things presented had to be ap- 
 proved by one group or the other, I presented this little document 
 to the employers' group. They charged the laborers with disrupting 
 the conference because they would not do just what they wap.ted on 
 the question of collective bargaining, but this statement which I am 
 going to put in the record was approved by the employers' group in 
 that conference. It was unanimously approved, and I think that 
 that meant that both the other groups would have approved it if 
 the conference had not come to an untimely end. 
 
 Mr. Yates. How many men were in that group? 
 
 Mr. Atkesok. Seventeen. This resolution, or statement, was pre- 
 sented by me to the employers' group, and it was unanimously ap- 
 proved. 
 
 Mr. Classon. What group was that? I didn't understand. 
 
 Mr. Atkeson. The employers' group. It developed very soon 
 that that conference was for the purpose of settling such strife as 
 may exist between organized labor and employers of organized 
 labor, and we were in there in the .employers' group, but we were 
 neither organized labor or employers of organized labor; we were 
 laborers just the same. This is the statement I presented : 
 
 The labor income of the producing farmer is based on the price received for 
 his products. This represents to him the equivalent of the wages paid in what 
 has been termed in the call for this conference "industry." The farmer is 
 entitled to receive for his products the cost of efficient production plus such a 
 profit as will enable him to maintain a proper standard of living. In the present 
 development of trade and commerce it iias become necessary in many instances 
 for producers of farm products to form cooperative marketing organizations 
 in order to effect a money return from the sale of the products to the pro- 
 ducers thereof sufficient to justify the continuance of the industry. The 
 necessity which has led to this organized activity and the rights of farmers to 
 organize for this purpose Is recognized as sound and justifiable. 
 
 Now, it is not only sound and justifiable, but it is an absolute 
 necessity. "We are confronted everywhere by organized activity, and 
 we must be allowed to meet organized activity with organized activ- 
 ity or we are hopelessly out of date. You gentlemen who are law- 
 yers can prevent our exploiting the public if you care. 
 
 Mr. MoKGAN. Have you any suggestion to make as to how we can 
 restrict these organizations? 
 
 Mr. Atkeson. My own information is that it is not worth while 
 to get scared of a thing that has not developed anywhere. I mean 
 that the farmers have never been offensively or oppressively mo- 
 nopolistic in anything they have accomplished in their organizations. . 
 
 Mr. Morgan. Do you think, under this law, you would be in favor 
 of allowing the wheat growers of the United States to organize and 
 sell their own crop through central sales agencies ? 
 
112 COLLECTIVE BARGAINING FOR FARMERS. 
 
 Mr. Atkeson. Unquestionably. I would allow the producers of 
 every kind and character of farm produce to organize to sell co- 
 operatively as well as to buy cooperatively. 
 
 Mr. Morgan. They become a corporation, ihat corporation is 
 capable of indefinite expansion so that they could make it all in- 
 clusive. Do you think that would be sound public policy to do that 
 without restriction or limitation? , x t u u 
 
 Mr. Atkeson. I would limit it to the producers, but I wouldnt 
 put any further limitation on it, except a limitation on the exploita- 
 tion of the public. . , , , -^ x- „ -nr i j 
 
 Mr. Morgan. How would you limit that exploitation^ Would 
 you say that that organization should comprise only a percei^age of 
 the wheat producers, for instance, or would you say that a Federal 
 trade commission or some body would have the right to come m 
 and say, " You are charging too much for that wheat," and fix a 
 price for the wheat? What is a practical way to put a Imiitation 
 on it? If you have any suggestions, I would like to have them. 
 
 Mr. Atkeson. In the first place, your general proposition as a 
 hypothetical proposition isn't true. It reminds me of an instance of 
 a judge who was approached by the attorney of a man who was 
 charged with stealing a horse. The lawyer asked him, " Suppose 
 your honor were charged with the theft of this horse." The judge 
 interrupted him to state that that was not a supposable case. The 
 lawyer then said, " Well, suppose I was charged with stealing the 
 horse," and the judge said, " Yes; go on; that is a supposable case." 
 
 Mr. Morgan. Now, then, do you think we ought to pass this law 
 without restriction or limitation and leave it to the good sense, to the 
 good judgment, fairness, and patriotism of these organizations to do 
 the square thing? 
 
 Mr. Atkeson. So far as the statutes of the country prevent exploi- 
 tation of the people, yes. 
 
 The Chairman. Wouldn't that make it possible to wipe out all 
 competition? Assuming that you wiped out all restrictions, gave 
 the power to combine, and then allowed these corporations to issue 
 corporate stock as they may see fit. Could not such a corporation 
 purchase and hold produce off from the market indefinitely and re- 
 lease it only when it got its own price ? That is clearly what this bill 
 authorizes, is it not ? 
 
 Mr. Atkeson. In answer to that general question, I want to call 
 attention to a few fundamental facts. In the first place, there is no 
 human probability that all the wheat growers or all the live-stock 
 growers can ever be organized. ( 
 
 The Chairman. No ; but there are other lines of agriculture that 
 could be organized so as to practically take all engaged in it. 
 
 Mr. Atkeson. It is possible; but since it has never been done 
 
 The Chairman (interposing). There never has been any effort to 
 combine, because there has been no law permitting combinations of 
 that kind up to date. There has been no opportunity to do a thing of 
 that kind since the Sherman antitrust law was passed. Now they 
 want to legalize it. The object here is to give them the legal right 
 to combine. There are a good many of these farm organizations that 
 can not operate successfully without capital stock, especially where 
 they have perishable stuff to sell. Of course, where you have a prod- 
 
COLLECTIVE BARGAINING FOK FAEMEES. 113 
 
 uct that has something of a permanent character you may, by 
 making loans, be able to tide over so as to force a fair price. 
 
 Mr. Atkeson. Our conviction is that we are trying to do too many 
 impossible things by law. 
 
 The Chairman. We are trying to see if we can not allow you to do 
 what you ask. 
 
 Mr. Atkeson. The question of the right to cooperate has never 
 been disputed until recent years. We have been very successful in 
 our attempts at cooperation. 
 
 The Chairman. I think you are avoiding the question I am trying 
 to get at. I am perfectly willing that you have ample opportunity 
 to combine. I think you should have the same right to combine as 
 persons engaged in any other business; but the question is, ought we 
 to throw down all the restrictions when we give you this right; 
 should we not limit it so that you could not exploit the public 
 unreasonably ? 
 
 Mr. Atkeson. Don't the statutes now prevent it? 
 
 The Chairman. Those are the laws we are asked to repeal. That 
 is the proposition. 
 
 Mr. Igoe. This act pending before the committee enables these co- 
 operative associations to go out without any regard to existing laws, 
 providing it is not a monopoly or attempt to monopolize; they can 
 make any contract or agreement by such association, or by the mem- 
 bers, and so forth and so on, and they are relieved from all these 
 other restrictions in the law, or that might be against the common 
 law. 
 
 Mr. Atkeson. It is just as well to concede that it is possible to 
 monopolize a thing if it were possible to get all the people that pro-, 
 duce that thing to agree to fix the price, but it is not at all probable 
 from what we know of conditions. 
 
 The Chairman. Let me suggest one thing in connection with that. 
 As lawyers, or as legislators, we are familiar with this fact. It is 
 not necessary to combine all of an industry to control prices. 
 If a majority should gain control, that control would inure to the 
 benefit of the unorganized as well as the organized. The Steel Trust, 
 as we sometimes call it — ^the United States Steel Co., or corpora- 
 tion, as I suppose it would prefer to be called — ^no doubt practically 
 controls the price of the steel, because all the smaller concerns are 
 bound to follow that price. Now, if you. dominate the great bulk 
 of any line of agriculture, say, 60 per cent, it is my impression that 
 would fix the price for the rest provided you had the power to keep 
 that 60 per cent off the market until the man who has to have it pays 
 the sum you demand. 
 
 Mr. Atkeson. Nobody would dispute that, if it were likely to 
 follow. I would like to say just this one thing in defense of our 
 friends who are dairymen. It is hardly fair to these dairymen to 
 control the price of their product as long as you permit the dealers 
 in this and other cities to have a practical monopoly in the dis- 
 tribution. 
 
 The Chairman. I don't think the dairymen are much of a menace 
 myself. There are too many competing. 
 
 Mr. Atkeson. My contention is this; that there ought not to be 
 any question in the statutes of this country as to whether or not 
 
 152695—19 8 
 
X14 COLLECTIVE BARGAINING FOR FARMEES. 
 
 farmers engaged in any department of agriculture have the right to 
 cooperatively sell or purchase. 
 
 Mr. Igoe. Let us concede that. . . 
 
 Mr. Atkeson. Let me complete my thought. That carries with it 
 the right to cooperatively deal ; the right of the people in this city 
 to cooperatively purchase. A denial of the one denies the other, 
 and the only way to eliminate profiteering to any considerable extent 
 is to allow the producers of farm products in this country to co- 
 operatively get these products together, have them properly graded 
 and then deal with cooperative consumers in the city. 
 
 Mr. Igoe. Do you thini that such associations should be subject 
 to the general laws that we have against unfair methods of com- 
 petition ? 
 
 Mr. Atkeson. I think so. I think it ought to. We have no de- 
 fense whatever to make of profiteering or monopoly. We are funda- 
 mentally opposed to both. 
 
 Mr. Igoe. But monopolies do exist in California, _where they are 
 coming here to ask for this law to legalize practical monopolies 
 which are in existence, but which they are fearful may be in viola- 
 tion of the laws that stand to-day. They come here openly and say 
 that they know some of these things have monopolies now, and they 
 frankly say they want us to legalize the form of organization they 
 now use. 
 
 Mr. Atkeson. It is legalized in the State of California. 
 
 Mr. Igoe. Of course, if I may be permitted to suggest it, it might 
 be well to i^ermit these combinations, not only here, but in manufac- 
 turing, and then regulate the activities after they are formed. On 
 the one hand we are met with the demand that we open up things 
 and, on the other hand, people are complaining that by legislation 
 we are trying to do things that interfere with business, so that we 
 are at sea on the thing. At least, I am. 
 
 Mr. Atkeson. As I say, I want all doubt removed, and then we 
 will have to deal with economic conditions as they arise. We be- 
 lieve it is good, sound policy to permit the farmers of this country 
 to cooperatively market their produce as well as cooperatively pur- 
 chase what they have to purchase. 
 
 Mr. Igoe. I am willing to subscribe to that. 
 
 Mr. Steele. I would like to have, Mr. Atkeson, some suggestion 
 from you as to Avhether or not you have in mind any feasible limita- 
 tion upon that privilege that would prevent the abuse of it.. The 
 chairman has just referred to the United States Steel Corporation 
 case. In this case they did deny that they had the power to -fix prices 
 because they had less than 60 per cent of the production of the coun- 
 try. In many of these cases you would have more than 50 per cent. 
 For instance, in the South all the cotton growers would combine and 
 they would have the power, under this law, to gather within their 
 organization all the cotton growers of the South and they would have 
 the power, then, to fix the prices of that cotton, and where a selfish 
 power exists and a selfish motive exists they generally exercise it. 
 That is the general experience. Now, what is your thought as to any 
 limitation on that power, if any should be proposed by Congress 
 in its legislation ? 
 
 Mr. Atkeson. My conviction is that you do not need any more 
 than the laws that would apply to all other interests that exploit 
 the public. 
 
COLivECTIVE BARGAINING FOR FARMERS. 115 
 
 Mr. Morgan. Yes, Mr. Atkeson, but they are asking that we make 
 the farmers an exception; that these laws that apply to these other 
 organizations should not apply to the farm organizations. It ex- 
 cludes that. These laws would not then apply. That is the object 
 of this bill. 
 
 Mr. Atkeson. We now permit everybody else to organize except 
 the farmers under the laws that now exist. " I had a little experience 
 some years ago when I went into a barber shop in Morgantown. For 
 16 or 17 years that same old barber, in the same old shop, amid the 
 same surroundings used to trim my whiskers and cut my hair and 
 shave the back of my neck and charge me 35 cents. One May, I went 
 into that barber shop and when he got through the same operation 
 he charged me 50 cents. I paid the 50 cents, and a little while later 
 I was in the capital city of Charleston and a colored fellow down 
 there performed the same service and he charged me 50 cents. I 
 said, " When did you fellows get to charging 50 cents ? " and he 
 told me the day of the month and the year when they readjusted 
 their rates. I had that same service performed in pretty nearly 
 every State in the Union and it was 50 cents. They charge 80 cents 
 or a dollar here in Washington for that same service now. I do 
 not know what you call that, but we are all up against that same sort 
 of condition. They all can do it except the farmer. Now, the farmer 
 is the one isolated individual in the country. They do not get to- 
 gether very often. Country life is becoming less and less attractive 
 and city life is becoming more and more attractive, and these are 
 the things you gentlemen must wrestle with in dealing with the 
 present question. 
 
 Mr. Yates. You say, as I understand it, that this country is going 
 to go hungry unless the farmer can be kept on the farm? 
 
 Mr. Atkeson. That is right. 
 
 Mr. Yates. And the way to keep the farmer on the farm is for 
 him to obtain more for his produce, and you say frankly that will 
 increase the price of food? 
 
 Mr. Atkeson. To the farmer, but in my opinion it will decrease 
 it to the consumer. 
 
 Mr. Yates. I thought you said the cost of food must go up to 
 the consumer? 
 
 Mr. Atkeson. Under the present system the farmer must get 
 more or reduce the cost of production. 
 
 Mr. Yates. You want to eliminate the middleman, but in order 
 to eliminate the middleman you want cooperative marketing, co- 
 operative organizations of producers to deal with cooperative organ- 
 izations of consumers. That would eliminate the additional 1 cent 
 that the milkmen in Washington adds to the price of milk which 
 the dairyman has added 1 cent to, but in order to make that 
 operative you have to have cooperative organizations of consumers. 
 
 Mr. Atkeson. The price of food must go up if economic condi- 
 tions are such that the attempt to produce at the present price results 
 in no profit to the producers. 
 
 Mr. Yates. This particular bill exempts the farmer from prose- 
 cution for collective bargaining. 
 
 Mr. Atkeson. Which bill do you refer to? 
 
 Mr. Yates. The Hersman-Capper bill. 
 
 Mr. Atkeson. We favor that bill. 
 
116 COLLECTIVE BARGAINING POR EARMERS. 
 
 Mr. Yates. That is the one that contains the exemption, is it not? 
 
 Mr. Atkeson. We favor the Hersman bill. 
 
 Mr. Yates. That was your word, " collective bargaining i 
 
 Mr. Atkeson. Cooperative marketing. That means buying as well 
 as selling. Let me give you a few illustrations. 
 
 Mr. Yates. I want to get clown to the point. You favor this bill 
 and the exemption contained in it? 
 
 Mr. Atkeson. It may be necessary to safeguard it, if you can, to 
 prevent monopoly, but I am in favor of it. 
 
 Mr. Christopheeson. I am unable to grasp that. If you grant a 
 privilege and you can regulate it — ^you say here you want the right 
 to cooperate in buying and selling. I have heard these gentlemen 
 here suggest over and over again that they should have some kind of 
 regulation. I don't see how it is possible. It is inconsistent. They 
 favor unrestricted privilege and then propose to regulate it. 
 
 Mr. Atkeson. It is like giving a man something and then taking it 
 away from him. , 
 
 Mr. Ghristopheeson. It has a string to it. 
 
 Mr. Atkeson. It seems to me it might be regulated within certain 
 limits. 
 
 Mr. Christopheeson. That is the point. What are your sugges- 
 tions as to regulating it? 
 
 Mr. Atkeson. I am really not so much concerned about that, unless 
 somebody demonstrated that it needed regulation. 
 
 Mr. Cheistopherson. You suggested that there might be some 
 regulation, and I can not see how there could be. 
 
 Mr. Atkeson. That is a difficult problem. You gentlemen who are 
 lawyers should be able to find its solution. 
 
 Mr. Christopherson. You know that the man who creates nothing 
 goes along on the fruit of what somebody else has done. 
 
 Mr. Atkeson. Now, the illustration I was going to give you. To 
 show you the importance, if you don't realize its importance. We 
 had one little case in my State last year. They bought 10 carloads 
 of one kind of commercial fertilizer. A carload runs about 30 tons 
 or more, and these people told me that meant a saving of about $6 
 a ton on that fertilizer. That was accomplished through cooperative 
 buying. Now, assuming that there were 30 tons to the car, that was a 
 saving of $1,800 on one car. You can see what they saved on that fer- 
 tilizer by cooperative buying. They do the same thing in selling. 
 By better classification of the product, whatever it is, better grading, 
 and there are a multitude of factors that enter into the problem, they 
 can market their product more effectively. And if this be denied to 
 the farmers it is absolutely unfair. 
 
 Mr. Christopheeson. Do you think it is denied under the existing 
 laws? I think' they can do that now. Have they got sales agents 
 now? 
 
 Mr. Atkeson. If that is true, what is this all about ? 
 
 Mr. Christopheeson. They can not have a corporation and do it, 
 but they can have cooperation and do it. 
 
 Mr. Igoe. The main complaint is that they want to have corpora- 
 tions not only to do that selling, but they want to do everything, and 
 if it is necessary to make a market, engage as a corporation, and 
 furthermore to be permitted in the conduct of that cooperation to do 
 things that other concerns are not permitted to do. 
 
COLLECTIVE BAEGAINING FOR FABMEES. 117 
 
 Mr. Atkeson. The producers are at the beginning of all commerce 
 and food. 
 
 Mr. Igoe. I concede and admit that without production on the 
 farms we are gone. I do not think there is any question about 
 that, and I suppose that when the price gets too high, that the 
 producer won't be able to market it, and that the man in the city, 
 as prices go up, has got to get more money for his labor, and as 
 he gets more money for his labor, the man on the farm is going to 
 get more money for his labor. 
 
 Mr. Cheistopheeson. I understand that the only need we have for 
 this legislation, is where a State law requires you to do a certain 
 thing and the Federal law forbids it. 
 
 Mr. Atkeson. We want all doubt removed. 
 
 Mr. Cheistopheeson. I don't think the Federal laws ought to 
 conflict with you, unless you do comply with a peculiar State law, 
 like Illinois, on dairy products. 
 
 Mr. Steele. You referred a moment ago to the advantages of 
 this cooperative purchasing for farmers. Would you grant that 
 same privilege to merchants? 
 
 Mr. Atkeson. Yes sir. I don't see why we shouldn't. 
 
 Mr. Steele. That means a general exemption from the law. 
 
 Mr. Yates. I want to ask you a question that looms pretty big 
 in my mind. This is apart from the question of exemption. It is 
 the local question that is involved and refers to the help problem. 
 You referred to the work performed by your family. I am in the 
 same fix. My son-in-law is a traveling man; my daughter is one 
 of those fragile women who, it is true, might outlive us all, but 
 she and her husband have to get together and go down into the 
 cellar and do a couple of week's washing. My wife has gone to the 
 rescue, and she is feeding and washing babies. They are doing 
 tlieir own cooking, their own ironing. The colored girl has struck 
 for $16 a week and more. Now that is a help problem. What are 
 we going to do? You have that problem in the country and you 
 want relief from it. We have it here. I am asking about this to 
 get a little light on the subject, for myself. Is there any hope here? 
 When our men come back from the war activities, is there any hope 
 that after a convalescent period that the help problem will be aided 
 a little bit? Otherwise, if we help you people in the country out, 
 what are we going to do with the people in the city? My people 
 are in the same fix as yours. Is there any hope on that question? 
 
 Mr. Igoe. Is there any hope for the man who is a laboring man 
 and 'whose wife has always had to do the work around the house, 
 cooking and cleaning and washing? The man on the farm and his 
 wife have to work, but I never knew of a laboring man in this 
 country, and there are millions of them, whose wife didn't have to 
 do the washing and cooking and slave from 5 o'clock in the morning 
 until midnight almost. 
 
 Mr. Yates. I don't suppose there is a man on this committee whose 
 family is a stranger to work. 
 
 Mr. Cheisix)pheeson. Since you are all giving your experiences, 
 I would, like to say that I cooked myself for two weeks. Since you 
 are all giving your experiences, I would like that to go into the 
 record. 
 
118 COLLECTIVE BARGAINING FOE FARMERS. 
 
 Mr. Yates. I am serious about it. We have a help problem on the 
 farm ; there is also a help problem in the city, too. 
 
 Mr. Atkeson. There has been a great deal of talk about the re- 
 turning soldiers going back to the land. So far as the wage earners 
 on the farm are concerned, there does not seem to be any inducement 
 offered. 
 
 The Chairman. Mr. Atkeson, if possible, we would like to draw 
 this thing to a close. It is half past 12 now. 
 
 Mr. Atkeson. Just one word in conclusion. We have tried to' 
 deal with these larger farm problems rather than with the text of 
 the bill. I claim absolutely that the right to cooperative marketing 
 Is essential to the future welfare of everybody — the future welfare 
 of this great Nation of ours. I believe it is absolutely essential. 
 Now, if you gentlemen can guard against the exploitation of the 
 public and grant the privilege, a fair privilege — protect the public 
 against exploitation — I believe that as a matter of public welfare 
 that we ought to have this right, which I prefer much to call cooper- 
 ative marketing rather than collective bargaining, and I feel that 
 the members of this committee can grant this privilege if they can 
 find any reasonable legal way to do it, because we are really at a 
 serious parting of the ways in the industrial conditions of our 
 country. 
 
 The Chairman. We will be glad to do what we can. 
 
 Mr. Hersman. Mr. Volstead, I am going to ask the members of 
 the committee if they won't wait a few minutes. We have touched 
 upon a most important feature of this bill, and while the committee 
 is here I would like to have Mr. Sapiro go into the phase of the- 
 monopolistic feature of it in order that some restrictions that he 
 might suggest may be placed before you, and they may satisfy the 
 committee. 
 
 Mr. Sapiko. I wanted primarily to suggest that in a way this prob- 
 lem has been condensed in the paragraph that was submitted in your 
 record yesterday and a copy of which I gave to Mr. Igoe. There is 
 no attempt made to give these cooperative corporations any unlimited 
 right, except to insure the validity of the method of organization. 
 If after organization they do anything improper, they should be 
 punished or completely eliminated. I want to specify that first, so 
 that we shall not be held as supporting the language of that portion 
 of the Capper-Hersman Act, although we support every bit of the 
 act in principle, with that exception. 
 
 The Chairman. It would amount to the same thing, wouldn't it? 
 
 Mr. Sapiro. We believe it is necessary to have monopolies, even the 
 monopoly that Mr. Atkeson thinks it impossible to obtain — the cotton 
 men and wheat men. These things are not impossible, because in the 
 Scandinavian countries particularly they have absolutely national- 
 ized such organizations. In Denmark alone there is one association 
 that handles 18,000,000 dozen of eggs a year — the Danish Egg Export 
 Society. It practically includes 90 per cent of the egg producers of 
 Denmark who produce at all for export. They have national monop- 
 olies in Europe now, and eventually will have them in this country. 
 
 Mr. Morgan. With no Government restrictions? 
 
 Mr. Sapiro. No restrictions on prices.' The California associations 
 and all the western groups are not afraid of Government regulation. 
 The dairymen, for example, of California within the last two weeks 
 
COLLECTIVE BARGAINING FOB FARMBKS. 119 
 
 have gone on record as favoring an amendment to the constitution of 
 California whereby milk will be charged with a public use and held 
 subject to control as to rates as a public utility. 
 
 Mr. IcoE. As far as export is concerned, I think you have a law 
 that would include all the egg exporters i]i the United States. 
 
 Mr. Sapiuo. Under the Webb Act? 
 
 Mr. Steel. Under the Munn decision, wouldn't that milk be 
 charged with a public use, anyhow ? 
 
 Mr. Sapieo. It hasn't been. If that could be done in the city of 
 San Francisco, and exclusive licenses granted to distribute in anyx^ne 
 district, they calculate they could save 25 to 30 per cent of the cost 
 of the milk to the consumer. We have 10 or 12 different deliveries 
 rnade in a single block. They could not give a monopoly of distribu- 
 tion unless they did it under a licensing plan, fixing the price at 
 which the milk would (be sold to the consumer. They could not do 
 that unless they made it, in some way, a public utility. Under the 
 California law^s, we concluded that it could not be done under existing 
 conditions ; but if a constitutional amendment were passed stating 
 that certain necessities of life, specifying milk, were charged with a 
 public use, then you could regulate the price and regulate distribution, 
 under license and save a great deal of money to the consumer and 
 grauatee to the producer the cost of production,~considering normal 
 and abnormal risks, storms, etc., and a reasonable profit. The milk 
 assiciations of California went on open record, practically unani- 
 mously, as favoring such a method. 
 
 Now, as to the other associations of California, they have often con- 
 sidered the problem as to what would happen were they to try to take 
 advantage of the monopolies and make a price absolutely unreason- 
 able or unwarranted or make combinations with the distributors, who 
 would then hold up the retailers and the public. As to these Califor- 
 nia associations, they would not object to regulation. If they do any- 
 thing wrong in that way, they should be punished. I know that some 
 of these associations — I have not consulted with all of them — ^at least 
 five out of the nine I represent, have considered this point at their 
 directors' meetings, and they would not object to any proper control 
 by a Federal commission. 
 
 Mr. Morgan. As to price? — i 
 
 Mr. Sapieo. As to practices and as to price ; a maximum price that I 
 would give them the cost of production, considering normal and I 
 abnormal risks, plus a reasonable profit, provided, however, that 
 that maximum price be the maximum price for the speculators in 
 foodstuffs ; and, further, that there be some law which will protect 
 the association from the onslaughts made on their contracts by 
 these speculators in foodstuffs. Because if they alone were to be 
 regulated in price, and the speculators had a free field, they would 
 get every one of our members and break up every cooperative asso- 
 ciation in the land. With these provisos, I believe that the majority 
 of the associations in California and the Northwest would be per- 
 fectly willing to have any regulatory feature added to any of these 
 
 acts. 
 
 ' They consider a monopoly or a tendency toward monopoly as essen- 
 tial. We have a great many of the grange members in the prune 
 growers' and raisin growers' and these other associations. There- 
 tofore they had been compelled to sell on a market fixed by the specu- 
 
120 COLLECTIVE BARGAINING FOR FARMERS. 
 
 lators. We say that the only protection to the farmer is, not merely 
 to act collectively and sell on the market but to have a voice in mak- 
 ing that market ; to have such control of the market that he does not 
 have to sell on a market made by speculators in Chicago. He be- 
 comes one of the factors that make that market. On that basic 
 theory we stand, that the growers have the right to create a monop- 
 oly. Our particular request is that you legalize our form, because 
 it is absolutely necessary to have a capital stock form of organiza- 
 tion in some instances. We frequently can not get along with a 
 nonstock, nonprofit form of organization and satisfy our financing 
 demands. 
 
 ' Mr. Igoe. You would permit rival cooperative associations to com- 
 bine together? 
 
 Mr. Sapieo. Yes. That would be essential if you are going to 
 permit monopoly. 
 
 Mr. Cheistopherson. When you reduce that theory to the i^lti- 
 mate, you get a socialistic government, in which the state does 
 everything. 
 
 Mr. Sapieo. No; in North Dakota they undertook to solve the 
 .farmers' problems by a straight political method — ^I don't say 
 whether it is proper or improper. In the Northwest and in Cali- 
 fornia they are trying to accomplish the thing for the farmer with- 
 out changing a single existing political or economic institution. 
 
 Mr. Cheistopheeson. You overturn the whole economic institu- 
 tion. 
 
 Mr. Sapieo. We simply ask that it apply to corporations as well 
 as any noncapital stock cooperative farmers' organizations. 
 
 Mr. Cheistopheeson. You advocate no conflict in buying, no con- 
 flict in selling? 
 
 Mr. Sapieo. I do not. I never mentioned anything about that. 
 
 Mr. Cheistopheeson. I beg your pardon. You were talking about 
 the distribution of milk. 
 
 Mr. Sapieo. I said if you made that a public utility. Our State 
 wouldn't do the business. It would have to be done by licensing; 
 the same as the street car companies. That is certainly not having 
 the State do the thing. It is allowing private capital to operate, but 
 with safety to the public. 
 
 The Chaieman. Is there anyone who wants to be heard this after- 
 noon. If not, we adjourn until Friday morning at 10.30. 
 
 (Whereupon, at 12.35 o'clock p. m., the committee adjourned.) 
 
 \ Committee on the Judiciary, 
 
 House of Representatives, 
 Washington, D. C, October h. 1919. 
 The committee met at 10.50 o'clock a. m., Hon. A. J. Volstead 
 (chairman) presiding. 
 
 STATEMENT OF HON, DICK T. MORGAN, A REPRESENTATIVE FROM 
 OKLAHOMA AND A MEMBER OF THE JUDICIARY COMMITTEE. 
 
 Mr. Morgan. Mr. Chairman, I ask the consent of the committee to 
 place in the record of these hearings a statement which I made in 
 the House of Representatives when the Clayton antitrust bill, which 
 
COLLECTIVE BARGAINING FOB FARMERS. 121 
 
 the bill now pending seeks to amend, was being considered by the 
 House of. Representatives. 
 
 The Chairman. How long is it ? 
 
 Mr. Morgan. About a column or a column and a half. 
 
 The Chairman. If there is no objection, it may be inserted as a. 
 part of the recoral. 
 
 Mr. Igoe. Did you have a solution then? 
 
 Mr. Morgan. The Committee on the Judiciary of the Sixty-third 
 Congress had before it for consideration H. E. 15657, known as the 
 Clayton antitrust bill. It was reported favorably to the House. 
 This bill finally became a law and it is this act which the bill now 
 before this committee proposes to amend. The whole question in- 
 volved in this hearing before our committee was discussed before the 
 House at that time. This was more than five years ago. As a mem- 
 ber of the Judiciary Committee at that time, and as a Member of 
 the House, I discussed the various subjects that we have now under 
 consideration. I would like to have the remarks which I made on 
 the question at that time made a part of these hearings. I do not 
 feel bound absolutely by anything I said five years ago, but in the 
 main the views I expressed then are the views I entertain at this 
 time. 
 
 The Chairman. I criticized it, but I do not care to have any 
 particular record made of it at this tin^e. There is no objection, and 
 it may be inserted in the record. / 
 
 (The Congressional Record of June 1, 1914, pp. 9577 and 9578, 63d 
 Cong., 2d sess, contains the following:) 
 
 Mr. Morgan of Oklahoma. Mr. Chairman, I should not impose further re- 
 marks on the House if I did not really believe that there is great merit in the 
 amendment proposed by the gentleman from Minnesota. The lirst paragraph 
 of section 7 of the bill as, reported by the committee and as amended by the 
 amendment offered by the gentleman from North Carolina is as follows : 
 
 "Sec. 7. That nothing contained in the antitrust laws shall be construed to 
 forbid the existence and operation of fraternal, labor, consumers', agricultural, 
 or horticultural organizations, orders, or associations, instituted for the pur- 
 poses of mutual help, and not having capital stock or conducted for profit, or 
 to forbid or restrain individual members of such organizations, orders, or as- 
 sociations from carrying out the legitimate objects -thereof, nor shall such 
 organizations or orders or associations, nor the members thereof, be held or 
 construed to be illegal combinations or conspiracies in restraint of trade under 
 the antitrust laws." 
 
 Now, I have prepared what I think would be a proper substitute for the first 
 paragraph of section 7, as quoted above. It is as follows : 
 
 " Sec. 7. That nothing contained in the antitrust laws shall be construed to 
 prevent the existence or operation of labor organizations ; or to forbid such 
 labor organizations or persons belonging thereto from entering into any con- 
 tract, agreement, or arrangement with a view to lessening the hours of labor; 
 or of Increasing their wages; or of bettering their conditions; or to forbid the 
 existence and opetation of consumers' organizations ; or to forbid such organ- 
 izations or members thereof from entering into any contract, agreement, or 
 arrangement with a view to lessening the cost to them of goods, wares, and 
 mercdaandise, or of any agricultural or horticultural product, or to forbid the 
 existence or operation of any farmers' organization or any agricultural or 
 horticultural organization ; or to forbid such organizations or the members 
 thereof from entering into any contract, agreement, or arrangement with a 
 view to reducing the cost to them of tools. Implements, machinery, fertilizers, 
 or of any other supplies needed by persons engaged in agriculture or horticul- 
 ture; or with a view to collective bargaining in the sale of their products or 
 to obtain better credit or lower interest ; nor shall such organizations or orders 
 or associations, nor the members thereof, be held or construed to be illegal 
 combinations or conspiracies in restraint of trade under the antitrust laws." 
 
122 COLLECTIVE BARGAINING FOB FABMEBS. 
 
 Mv objection to section 7 as it lias been amended is that under It only 
 farmers' organizations without capital stock ard not conductecl _ for protit 
 would be legal under this section. In other words, it exempts from anti-trust 
 laws only farmers' organizations organized for mijtiial help along social, liter- 
 ary, and educational lines. There has been no attempt to dissolve such farmers 
 organizations, so that the provisions of section 7 really give the farmers 
 nothing. While we are considering this question we should in plain language 
 give the farmers the right to organize, even with capltar stock or for profit, 
 so long as their organizations are along legitimate lines, to aid them in mar- 
 keting their products as cheaply as possible and in purchasing their supphes 
 as cheaply as possible. 
 
 Now, the amendment offered by the gentleman from Minnesota [Mr. Nelson] 
 is broad enough to give the farmers what they need and should have. I think 
 it was Sir Horace Plunkett, who made a thorough study of American agricul- 
 ture, and who has devoted his life largely in an effort to improve agricultural 
 conditions in Ireland, who said that improvement in agriculture must come 
 through better farming, better business, and better living, and that the first 
 of these was better business in farming. Improvement in farming — the making 
 of the farm what it should be in this country — must come through better trans- 
 portation facilities, better educational advantages, and better organization 
 among our farmers. 
 
 As a member of the .ludiciary Committee, I filed a minority report to this 
 bill, in which I said : 
 
 " The law not only should not prohibit but should encourage farmers to or- 
 ganize with a view to purcliasing implements, machinery, and other farm sup- 
 plies at less cost and with the view to collective bargaining in the sale of their 
 products and in the purchase of supplies. In Frai:ce, Germany, and other 
 European countries farmers' organizations are authorized by law. The line 
 along which tliese organizations can act is definitely defined. Governmental 
 aid, direction, and assistance is given. Such organizations are encouraged to 
 engage in a wide field of purely business transactions. These organizations 
 have contributed immensely to the expansion of the agricultural interests of 
 these countries. It would be exceedingly unfortunate at this time, when we 
 are about to enter upon the important task of providing our farmers with 
 better credit facilities, to enact a law which may be construed to make all 
 farmers' organizations unlawful except such as are organized for mutual bene- 
 fit of members along literary, insurance, and social Jines. 
 
 " Practically every other business is highly organized but the business of 
 farming. There nre about 6,.500,000 farmers. Something like 12,000,000 per- 
 sons over 10 years of age toil on the farm. The farmers are at a great dis- 
 advantage. Labor is organized. Business is organized. Concentration, com- 
 bination, cooperation everywhere except among the farmers. With the most 
 intelligent farmers of the world, in business cooperation our farmers are far 
 behind the less intelligent farmers of other countries. To aid our farmers in 
 the line of greater cooperation has now become a natio: al dut.v, and it would be 
 hardly short of a public calamity to enact a statute which on its face restricts 
 and limits to a narrow sphere the purposes for which agricultural associations 
 may be formed." 
 
 I know the .gentlemen constituting the leadership on this committee have no 
 desi)-e to neglect tlie farmer. I know the gentleman from Maryland [Mr. 
 Lewis], who is the champion in the interest of labor, has no desire to do an 
 in.1ustice to the farmer, and yet, as I have studied this question, I believe that 
 the National Government ought not only to permit farmers to organize but that 
 the National Government should make appropriation to encourage the farmers 
 to organize. 
 
 The United States is doing more and has done more along the line of educa- 
 tion for the farming interests than any nation on earth, but along the lines of 
 teaching our farmers to organize for better business we are a quarte^of a 
 century behind the great European Governments. There is no question about 
 that. 
 
 Mr. Webb. Will the gentleman yield? 
 
 Mr. Morgan of Oklahoma. Certainly. 
 
 Mr. Webb. Wherein do the farmers get more in the Nelson amendment than 
 we have given them in the amendment .lust adopted? 
 
 Mr. Morgan of Oklahoma. I think there is some question of whether there 
 can be a farmers' organization to aid the farmers in marketing the crops more 
 •cheaply, or in purchasing their supplies at a less price than the committee 
 
COLLECTIVE BAEGAINING FOE FARMEKS. 123 
 
 amendment which has been adopted. To carry on this kind of an organization 
 M may be necessary to have capital stocli, and it may be necessary that these 
 oiganizations shall be for the purpose of profit. As long as we do not permit 
 tne tarmer to organize trusts to elevate prices of cotton, wheat, or some other 
 staple product, we are doing the country no injury. 
 
 \\ e passed the tariff act, but we all know that under that act the farmer is 
 Jargely placed m competition with the farmers of the world, however ignorant 
 tnej may be, or however cheap the labor they employ may be, or however 
 <:neapiy they may be able to produce farm products. We passed the currency 
 act, but you postponed the bill 1 1 give our farmers cheaper interest. What 
 iia^e you done for the farmer? Now, when you are passing a third-grade bill 
 you are about to place therein a section which, in my judgment, does not do 
 the tarmers of this country justice. I believe that it is in th? interest not only 
 •of the farmer but in the interest of the great consuming masses of the country 
 that we should encourage the farmers to organize to market their crops and in 
 Buying supplies. 
 
 Gentlemen who pose here as champions for labor are indirectly pleading 
 against labor when they oppose the organization of farmers. We want the 
 farmers to organize so that the products of the farm can come more directly 
 to consumers with less cost and with a fewer number of middle men. [Ap- 
 plause.] 
 
 STATEMENT OF MR. BENJAMIN C. MARSH, SECRETARY AND DI- 
 RECTOR OF LEGISLATION, FARMERS' NATIONAL COUNCIL. 
 
 The Chairman. How much time do you require, Mr. Marsh? 
 
 Mr. Marsh. I should say probably a half or three-quarters of an 
 hour, Mr. Chairman. 
 
 The Chairman. Is there anyone else that wants to be heard this 
 morning ? 
 
 Mr. Neelt. Mr. Chairman, before he proceeds, it is with the un- 
 derstanding that interruption can be made so as to take up the other 
 matter. 
 
 The Chairman. We have another matter to take up, and we are 
 ^oing to try and be over in the House at 12 o'clock, so that we will 
 ask you to husband your time as much as possible. 
 
 Mr. Marsh. My name is Benjamin C. Marsh, secretary and direc- 
 tor of legislation of the Farmers' National Council, of which Mr. 
 ■George P. Hampton is managing director, with headquarters here 
 in the Bliss Building. 
 
 The Chairman. What organizations do you represent? 
 
 Mr. Marsh. I was going to state that for the record. The Farm- 
 ers' National Council is a special union of a number of National 
 and State farmer organizations, which met here in January this 
 year, and adopted, after a preliminary meeting in November, a 
 program for economic reconstruction in America. 
 . The Chairman. How many members were present at that con- 
 gress ? 
 
 Mr. Marsh. Forty or 45 member delegates, representing farm or- 
 ganizations with a total membership of about three-quarters of a 
 million. 
 
 The Chairman. Can you give us the names of the organizations 
 they represented? 
 
 Mr. Marsh. Yes; I will just read a statement prepared by Mr. 
 Hampton. It was attended by representatives of the American So- 
 ciety of Equity, the National Gleaner Federation, the National Non- 
 partisan League, several State Granges, State farmers' unions, the 
 stock growers', wheat growers', and dairymen's associations. 
 
124 COLLECTIVE BARGAINING FOR FARMERS, 
 
 I want to say this, Mr. Chairman, that I am not here this morn- 
 ing to speak with any finality on this proposed legislation, but it 
 I may put it in this way, to have a conference with you as to what 
 the effect thereof will be. 
 
 The Chairman. Have any of the organizations that you represent 
 passed upon this particular legislation? 
 
 Mr. Maesh. Upon the principle of cooperation? 
 
 The Chairman. This particular legislation. 
 
 Mr. Marsh. Yes; they have very specifically declared we must 
 change our system of marketing. 
 
 The Chairman. Upon this particular bill has there been any ex- 
 pression ? 
 
 Mr. Marsh. No ; this bill was not introduced at the time this con- 
 ference was held. 
 
 The Chairman. Do you know if any of the organizations for 
 which you speak have taken any action on this particular bill ? 
 
 Mr. Marsh. I think not. Kepresentatives have been here from 
 time to time, and we have discussed the general principles of this 
 bill. It is this point I would like to take up regarding this pro- 
 posed legislation, and I would also state that we go a good deal 
 further on cooperation than the proposed legislation in itself, since 
 the conference adopted unanimously a resolution in favor of Gov- 
 ernment ownership and operation of the railroads and merchant 
 marine, realizing that transportation is vitally bound up with the 
 success of cooperative organizations. 
 
 Mr. CuRRiE. Was this action taken by the national meeting to 
 which you referred? 
 
 Mr. Marsh. Yes; by the Farmers' National Reconstruction Con- 
 ference. 
 
 Mr. CtJRRiE. And at that time there were various great problems 
 relating to the reconstruction discussed? 
 
 Mr. Marsh. Yes. Immediately following the signing of the armi- 
 stice representatives of most of these organizations came here and 
 spent about a week working out a tentative reconstruction program, 
 which was then submitted to the farm organizations of the country. 
 
 The Chairman. Will you give us the names of these delegates 
 and the organizations they represent? Can you put that in the 
 record ? 
 
 Mr. Marsh. I will have to send them to you. 
 
 Mr. CuRRiE. Then at tliis meeting, which you say lasted about a 
 week, tills conference arrived at its conclusions with reference to 
 these various problems? 
 
 Mr. Marsh. This tentative program was then sent to farm leaders 
 and the farm press of the country, discussed and amended, in some 
 respects, and by some organizations adopted, the American Society 
 of Equity, for instance ; then the delegates came back and the recon- 
 struction program adopted in Januaiy was different in several re- 
 spects from the tentative program, because we had the benefit of the 
 criticism of the farm leaders of the country. 
 
 Mr. CuRRiE. It just occurred to me, on the railroad problem alone, 
 if you reached a conclusion in a week, and also took up various other 
 great problems, you had done a great deal more than our distin- 
 guished committee in the House, which has been holding hearings 
 since July 8 and just now are reaching their conclusions. 
 
COLLECTIVE BARGAINING POR FARMERS. 125 
 
 Mr. Marsh. I might say that the conchision as to Government 
 ownership and democratic operation of the railroads was not arrived 
 at in a weeli's consideration, but was the result of the suffering which 
 the farmers had undergone under private ownership and operation 
 of the railways, not for service, but to enrich a relatively few stock- 
 holders; similarly was that their experience with the merchant 
 marine. 
 
 We approach the question of legislation regarding cooperation 
 with a good deal of diffidence. We want cooperation. We want 
 cooperation legalized, and our two main points or suggestions are 
 these : First, that farmer organizations conducted for mutual benefit 
 should be subject to some sort of supervision, but should not be 
 subject to the provisions of any antitrust law; and, second, that we 
 need a very careful definition of what a cooperative organization 
 is. Those are our two main propositions. 
 ' Mr. Morgan. Why do you believe that definition is necessary? 
 
 Mr. Marsh. I was going to take that up later, but will do so now. 
 Because frequently as we study and analyze Mr. Hersman's bill — 
 and you will understand our statements are not in the way of criti- 
 cism but simply to try to get at what we are sure Senator Hersman 
 and Senator Oapper equally want to get at — it would seem to us 
 that there is danger in several provisions of this bill. The packers 
 or elevator men might decide that they are, or could be considered 
 to be, a cooperative organization, and thereby get a complete im- 
 munity bath from the intention of the Sherman and other antitrust 
 laws. It says, if I may just read this section, "members of agri- 
 cultural organizations, orchardists, dairymen, etc." You gentlemen 
 know that the packers and every other big organization in this 
 country are capable of being " all things to all men," if they may 
 thereby increase their profits, and we are unable to see any provision 
 in this bill which would prevent that, and we have discussed it with 
 those who have had a great deal of experience in supervising big 
 aggregations of capital. There is nothing in this bill which would 
 preclude the packers or any of these farmers' competitors from 
 buying a farm, going into the dairy business a little bit, and calling 
 themselves a cooperative organization of farmers or any one of the 
 classes covered by this bill. 
 
 Now, that may not be a valid objection, but we do not see any- 
 thing in the bill which would preclude that being done, and we are 
 mighty sure that these men, these captains of industry, will not fail 
 to avail themselves of every possible opportunity to get for them- 
 selves the advantages and opportunities — I think " opportunities " 
 is a better term, rather than " advantages " — which it is the inten- 
 tion of the introducer of this bill, and the intention of the farmers, 
 should go orily to farmers' cooperative societies. 
 
 Mr. Neeley. How would you prevent that? 
 
 Mr. Marsh. May I just refer to a bill, and this is a tentative 
 suggestion and may not be feasible, but suggest that one way of 
 reaching it would be this: To limit the amount of stock that any 
 one individual can hold ; to carefully restrict the voting to one vote 
 for one share or any number of shares of stock, and to see to it that 
 no one or two individuals could amass and get into their own owner- 
 ship a majority of the stock of such corporation, and therefore de- 
 cide and manipulate the policy of the entire association. 
 
126 COLLECTIVE BARGAINING POR FARMERS. 
 
 Now, Senator Capper has introduced a bill which he requested, he 
 informed me, Mr. Jackson H. Ralston, counsel for the American 
 Federation of Labor, to draft for the incorporation of cooperative 
 associations in the District of Columbia, which I will file with the 
 committed. 
 
 The Chairman. Wliat is its number? 
 
 Mr. Maesh. Senate bill No. 3066, introduced September 23. Mr. 
 Ealston made a very careful study, as Senator Capper has made, of 
 course, of cooperation. This bill is chiefly regarding cooperative 
 organizations of consumers, and tries to safeguard against the dan- 
 gers to which I referred as seemingly existing, although inadvert- 
 ently, in the Hersman bill. The provisions should clearly apply 
 only to a bona fide organization of individuals who are not trying to 
 carry on a business proposition for a business end solely for them- 
 selves but for the general welfare of their members. Mr. Ealstou 
 felt, and I am sure Senator Capper agrees, that some such provision 
 should go into a bill providing for the incorporation of a cooperative 
 association of consumers. 
 
 The Chairman. This bill doesn't propose any incorporation at all. 
 
 Mr. Marsh. No ; but the same principles ought to apply, it would 
 seem, because the packers do not care, or any other business indus- 
 try — I cite them because they are one of the greatest menaces to the 
 farmer to-day — they do not care what the organization is if they can 
 get control and do so under the law. 
 
 Now, the first bill put in by Senator Capper had this provision, 
 which I know has been discussed before you, and I shall try not to 
 repeat any statements that have been made here. It said it should 
 apply only to organizations " not conducted for profit." I have been 
 listening to some of the discussions here, and there seems to have 
 been an effort to differentiate between what you might call a holding 
 company to look after the business end of these cooperative organi- 
 zations and the individuals and persons who are members of them. 
 It seems to us that is really a subterfuge. The intention of the in- 
 troducer of this bill and those who want to get real cooperation, 
 as we understand it to be, is to provide that these individuals may 
 simply have an organization under which thej' can compete with 
 the vast aggregations of capital existing in this country and under 
 which they can either make direct connections, as producers, with 
 the consumers in the cities, or the miners' cooperative associations, or 
 the railway brotherhoods. I mention these two branches of labor 
 because they have made great progress in cooperative associations of 
 consumers. They would thus eliminate all speculative associations 
 of middlemen. We can not understand why this phrase, "not con- 
 ducted for profit," is put in there. We want these, cooperative or- 
 ganizations to be conducted for profit, but as we construe the Hers- 
 man bill we are in doubt, very much so, as in line 2, page 2, as to the 
 construction that would "be put upon the provision reading " organi- 
 zations instituted for the purpose of mutual help, and that pay an- 
 nually no greater dividends on stocks or membership capitar invest- 
 ment than the minimum legal rate of interest in the State where 
 organized." Now, I do not know what the minimum rate of interest 
 is in a State, unless it might be that there are two rates of interest,, 
 one under specified conditions where it would be the minimum, and 
 a larger rate under more hazardous conditions. 
 
COLLECTIVE BARGAINING FOE FAEMEES. 127 
 
 Mr. Neeley. That is fixed by statute. 
 
 The Chairman. I do not think any State fixes a minimum. 
 
 Mr. Neeley. They fix what they call the regular rate of interest. 
 In my State it is 7 per cent. You can go into contract at 8 per cent. 
 If m writing, you can get 8 per cent. 
 
 Mr. Ctjeeie. The legal rate in Michigan is 5 per cent, but you can 
 have a maximum rate not to exceed 7 per cent. 
 
 Mr. Morgan. The legal rate applies when there is no specific con- 
 tract. 
 
 Mr. Cureie. But there is also a maximum rate over which you can 
 not contract. Where no specific rate is mentioned then the legal 
 rate applies. In Michigan it is 5 per cent, but if you wanted to 
 contract you could provide for a payment of not exceeding 7 per 
 cent, but in the absence of contract the legal rate will apply. 
 
 The Chairman. The rate is fixed as damages for refusing to pay 
 either on civil contracts or on damages resulting from a tort. That 
 is sometimes called the legal rate, but I think it is more properly 
 what you would call a damage rate. 
 
 Mr. Marsh. Is that the maximum or minimum. 
 
 The Chairman. It is neither, because the minimum may be next 
 to nothing. 
 
 Mr. Morgan. I do not think there is Vany thing like a minimum rate 
 in law. 
 
 Mr. Marsh. That is the point we raise. Suppose a group of men 
 did not have much capital, but wanted to organize a cooperative 
 organization. The business seems, perhaps, a little risky, they have 
 to issue some stock to get started. We feel that the restriction to 
 the minimum legal rate in cases of individuals and farmers wanting 
 to organize a cooperative association — men who have very little cash 
 of their own and have to issue considerable stock — that the restric- 
 tion that the dividend on that stock shall be only the minimum per- 
 mitted in the State might seriously militate against that stock in 
 order to start their undertaking or cooperative enterprise. Of 
 course you gentlemen lurow that the big business enterprises are 
 desperately opposed to all cooperative associations of farmers. 
 
 Mr. Morgan. Why do you make that statement? What do you 
 base that on ? In European countries they have never been opposed 
 to them; they have encouraged them. Do you base that simply on 
 opinion or something they have done to discourage you ? 
 
 Mr. Marsh. Things they have done, and the reports which come, 
 to us from men who are in this cooperative work. For instance, as 
 I started to say, and which is by way of illustration 
 
 Mr. HusTED (interposing). You say big business is opposed to 
 cooperative undertakings by farmers. What class of big business 
 do you refer to ? 
 
 Mr. Marsh. Specifically, the Minneapolis Chamber of Commerce ; 
 and I am going to ask permission to read into the record a letter 
 which I have not with me, by Mr. R. L. Harmon, of one of the 
 largest cooperative organizations of the northwest, the Equity Co- 
 operative Exchange, stating how they had three grand legal fights 
 when they started their cooperative associations, with the Minne- 
 apolis Chamber of Commerce. 
 
 The Chairman. What organization do you have reference to? 
 
128 COLLECTIVE BARGAINING FOR FARMERS. 
 
 Mr. Marsh. The Equity Cooperative Exchange. Mr. J. M. An- 
 derson is president of it, and they have had a great deal o± contTO- 
 versy with the Minneapolis Chamber of Commerce. Mr. C. H. 
 Gustaf son, the president of the Nebraska Farmers' Union, has given 
 us similar information — and I am sorry he is not here. He is chair- 
 man of the committee on packing plants and allied industries of the 
 Farmers' National Council. He has reported to several committees 
 here the opposition which they have met from the gram exchanges 
 and from the live-stock exchanges— the live-stock exchanges, of 
 course, being controlled by the packers — in their efforts to get in on 
 these exchanges, and while their cooperative work started only three 
 or four years ago, in spite of the opposition, which they hope to 
 overcome in the near future, they have grown so that they are now 
 doing about a hundred million dollars worth of cooperative buying 
 and selling for the farmers of Nebraska. 
 
 The Chairman. I understand that the bulk of the wheat in my 
 section is handled by cooperative elevators owned by the farmers. 
 
 Mr. Marsh. They have had great progress, but they have had an 
 awful fight. 
 
 The President. We have State laws that give them a pretty good 
 chance to cooperate. 
 
 Mr. Marsh. Precisely, but they had to fight to get those laws. I 
 think the filing of this letter with the committee would be of value. 
 
 Equity Cooperative Exchange, 
 St. Paul, Minn., October 18, 1919. 
 Farmers' National Council, 
 
 Bliss Building, Washington, D. C. 
 (Attention Mr. Geo. P. Hampton.) 
 
 Gentlemen : We have just received a request from Mr. Fred E. Osborne, 
 who has been in Washington, D. C, to supply you with the salient facts 
 leading up to the organization of the Nonpartisan League in North Dakota, 
 and beg leave to submit them briefly in this letter : 
 
 For many years, beginning about 1905, and growing more insistent from 
 year to year, there had been a demand for freedom from the tyranny of 
 the grain trade as manipulated through the Minneapolis Chamber of Commerce 
 by the control of terminal elevators and larg.e lines of country elevators 
 throughout the spring-wheat belt, including Minnesota and the Dakotas (par- 
 ticularly North Dakota), where they were able to absorb the grain crop under 
 rules and at prices which they absolutely dictated. 
 
 The agitation for better conditions finally led in 1908 to a more or less 
 loose organization of farmers for the purpose of attempting the marketing 
 of their grain, and by 1911 the sentiment in North Dakota had become so pro- 
 nounced and widespread that a number of the farmers gathered at Fargo from 
 both sides of the Red River and organized and incorporated the Equity Co- 
 operative Exchange. 
 
 The exchange is a thoroughly cooperative organization, paying interest on 
 the actual money invested in its stock and aiming to pay back all net profits 
 to the patrons of the company over and above what are required for opera- 
 tion and safeguarding of future development. 
 
 This organization was started, by genuine farmers who worked their own 
 farms and had but scant business experience. After struggling along with 
 very small capital and under great difficulties at Fargo and Moorhead (Moor- 
 head being just across the river in Minnesota from Fargo), they finally decided 
 that they should establish their marketing organization at the natural grain 
 market — Minneapolis — and proceeded to secure offices and establish them- 
 selves there in the Corn Exchange Building. 
 
 They thought that all that was necessary for them to obtain marketing 
 liberty was to establish their firm at the natural market and announce that 
 they were ready to handle grain. They had no idea but that they would be 
 able to sell every bushel consigned to them without any difficulty. They found, 
 however, that the big mills In Minneapolis would not buy a bushel of their 
 
COLLECTIVE BARGAINING FOR FARMERS. 129 
 
 graiu. Instead of being able to find buyers they found the market definitely 
 organized against them; that hey were tattacked In the big dally papers as 
 fools and grafters who were trying to get the farmers' money for themselves ; 
 that traveling solicitors were sent out through the country to denounce them 
 and their methods and to ridicule the efforts of the farmer, and, In short, to 
 make It impossible for them to handle any grain. 
 
 The effort to defeat this marketing venture of the farmers, finally took the 
 form of a demand that the Equity Cooperative Exchange be declared insolvent. 
 Two stockholders of the corporation, who by virtue of that fact were entitled 
 to look at the records, turned traitor and were secured by the Minneapolis 
 Chamber of Commerce to demand and procure excerpts from the records of 
 the company, which they did, and with which they attempted to discredit the 
 company among the farmers of the Northwest. 
 
 On^ the basis of the distortion which they thus made, they demanded that 
 the State of North Dakota, where the company was Incorporated, declare It 
 insolvent and that its charter be revoked. This brought on a lawsuit — one of 
 the most famous in tlie history of North Dakota. 
 
 The State of North Dakota joined with the chamber of commerce to destroy 
 the farmers' organization, "and the trial lasted several days. This trial took place 
 in Fargo, in 1914. About 300 witnesses were examined, every one of whom — It was 
 brought out during the course of the trial — were employees of the Minneapolis 
 Chamber of Conmierce firms. Some of these persons appeared personally and 
 others submitted depositions. Hundreds of farmers attended this trial and 
 the wheat-growing population of the State of North Dakota was stirred to a 
 pitch of indignation and fury by the bald injustice of the whole attempt. The 
 thing sought in the trial, however, was granted, namely, the right of the 
 Minneapolis Chamber of Commerce to examine the books of the Equity Cooper- 
 ative Exchange, although the exchange did not belong to the Minneapolis 
 Chamber of Commerce and was organized in a foreign State. 
 
 It has been said that the decision of the district judge in Fargo — turning 
 over the books of our business organization to rivals— is one of the most re- 
 markable decisions in the history of the English-speaking jurisprudence and 
 the only decision of that kind to be found in the records. 
 
 They spent many months examining our books, but were unable to find evi- 
 dence on which a valid demand for cancellation could be made, and the com- 
 pany was not officially destroyed. 
 
 Following this persecution a public meeting was held in Fargo by the stock- 
 holders of the Equity Cooperative Exchange for the purpose of presenting the 
 facts and overcoming the prosecution that had been attempted. The farmers 
 had the hall rented and paid for and were proceeding in an orderly way to 
 discuss their business, when several representatives of the chamber of com- 
 merce firms through the connivance of the local business interests and the 
 police department, rushed into the hall and ordered the farmers to leave and 
 turn the hall over to the chamber of commerce representatives, who also wished 
 to hold a meeting in behalf of their organization, and a riot ensued in which 
 farmers were clubbed by the police, and had it not been for Mr. J. M. Anderson, 
 president of the Equity Cooperative Exchange, springing to the platform and 
 demanding silence, there is no telling what would have resulted. 
 
 Mr. Anderson succeeded in pacifying the mob and In Inducing them to leave 
 the hall in orderly fashion. While he was doing this others procured a lodge 
 hall elsewhere in town, and the entire audience finally left the auditorium and 
 went to the newly secured hall, where tlie Equity meeting proceeded. 
 
 Judicial persecution of the farmers through the decision of the Fargo courts 
 and this mobbing of them by the police and business men of Fargo Inflamed the 
 North Dakota farmers to a pitch of Indignation they never reached before. 
 They began to voice the demand for a new administration in North Dakota that 
 would not be in league with the chamber of commerce, but there was nothing 
 they could do but vote for Democratic or Republican candidates. 
 
 Also, In connection with the demand for better grain-marketing conditions, 
 there had been throughout the preceding five or six years a growing demand for 
 State-owned terminal elevators. This demand had been bandied about from 
 one session of the legislature to the other, and I will not trouble you with the 
 details, but the net result was that after the constitution had been twice 
 amended, permitting the State to enter into these industries by building within 
 or without its borders the necessary elevators, they had not yet procured such 
 elevators. 
 
 1.52695—19 9 
 
130 COLLECTIVE BAKGAINING FOE EAKMERS. 
 
 A tax levy that had been provided In the previous session of the legislature 
 had accumulated a fund of about $40,000 to be used for the construction of_ a 
 terminal elevator at the time the ]915 session of the legislature convened. 
 
 As had been the case at several previous sessions, the organized farmers 
 through the North Dakota State Union of the American Society of Equity, 
 appeared at the legislature to support their demand for a State-owned terminal 
 elevator, but they were met with sneers and rebuffs on the part of the legislators. 
 
 To make matters worse, the legislature abolished the one-eighth of a mill tax 
 levy, which had been used to accumulate the fund for the building of the ter- 
 minal elevator and substituted in its place a direct appropriation, which the 
 sponsors of the bill said would yield as much money for the terminal elevator as 
 the mill would yield. 
 
 The bill as first amended provided for a biennial levy of $40,000, I believe, but 
 through jockeying carried on by the committees this appropriation was cut to 
 $2,000 instead of $40,000, thereby wholly destroying its usefulness, as anyone 
 can see. At the rate of $1,000 a year that this bill would yield it would be about 
 300 years before they got their terminal elevator. 
 
 The farmers were indignant at the way things were going and in a con- 
 versation with some of them who were insistent, that the real intent of the 
 constitutional amendment should be put Into effect and a terminal elevator 
 to be constructed, the speaker of the house, Mr. Treadwell Twichell, is re- 
 ported to have declared that the farmers should go home and " slop their 
 hogs " and leave the lawmaking to the members of the legislature. This inso- 
 lent remark and the insolent treatment which they had received, together with 
 the recent persecution in the lavi'sult at Fargo by the attorney general of North 
 Dakota, coupled with the mobbing of the farmers when they tried to hold a . 
 public meeting In Fargo, and the well-known fact that the Minneapolis Cham- 
 ber of Commerce had financed the whole proposition, resulted In an indignation 
 meeting at the annual convention of the Equltir Society in Bismarck, at which 
 time the first suggestion of the Nonpartisan League was made. 
 
 The argument was that the farmers electing Democrats and Republicans to 
 the legislature for about 8 or 10 years had been unable to get their terminal 
 elevator, and if the courts were against them, and If their State administration 
 was serving the commercial interests of an outside State, the only thing the 
 farmers could do to save themselves was to organize for the political over- 
 throw of the clique in their own State that had been fighting them and the 
 economic overthrow of the vast and powerful Interests outside their State who 
 were in league with their own political organizations. 
 
 Mr. A. C. Townley was present at this meeting, although he was not a mem- 
 ber of the Equity Society, I think. Mr. A. E. Bowen, who has since become 
 a promlnnt organizer and lecturer for the Nonpartisan League, delivered the 
 address in which for the first time was voiced the demand for a Nonpartisan 
 League. This was the beginning of that movment, and the biggest feature In 
 It for sometime was the demand for terminal elevators and flour mills, but as 
 the farmers began to see their political power increasing they began to demand 
 some other things which they considered fully as essential, and thus has 
 come about the Nonpartisan League program concerning which I am sure you 
 are well informed. 
 
 I hope that the facts herewith recited will be of some interest to you, and I 
 trust that they will be, else Mr. Osborne would not have requested me to send 
 them to you. 
 
 Xours, very truly. 
 
 Equity Coopekative Exchange, 
 R. L. Haemon, Publicity Manager. 
 
 The Chairman. No doubt the men engaged in the grain business 
 fight these elevators and the packers fight any combination of farm- 
 ers who are competing with them. 
 
 Mr. Marsh. There is opposition all the way down the line, be- 
 cause cooperative associations of producers and consumers ultimately 
 mean the elimination of the speculative and unnecessary middle- 
 man — ^I don't mean all the middlemen, because there are essential 
 middlemen — ^and naturally these superfluous middlemen who get 
 such an enormous proportion of the prices which the ultimate con- 
 sumer pays and usually as much as the farmers and sometimes much 
 more, don't want to see their business ended. 
 
COLLECTIVE BARGAINING FOB FAKMEKS. 131 
 
 Mr. HusTED. May I ask one question? Do you hold the opinion 
 that the distributor as an independent agency can be eliminated? 
 Do you believe that the organizations of the farmers can distribute 
 their products as economically, so that the public will get them even- 
 tually as cheaply as if these very efficient distributing agencies and 
 organizations were maintained? 
 
 Mr. Mabsii. Unquestionably; and more so, I hold, for this reason: 
 We have had in this country, if I may answer that a little bit at 
 length ; we have the principle Mr. Croly describes in his book, The 
 Spirit of American Life. He says our national motto has been " in- 
 dividual aggrandizement and collective irresponsibility." That is 
 just the reverse of the spirit of the cooperative organization. We 
 know that the whole paclring-plant system is the most tremendously 
 wasteful system imaginable. About 79 per cent of the cattle are 
 raised west of the Mississippi Eiver and slaughtered east of it; and 
 out of a total slaughter of something like 15,000,000 head of live stock 
 6,000,000 head make a double route — a long, long trip of sometimes 
 a thousand miles — ^to be slaughtered, and much of the finished prod- 
 ucts back a thousand miles. 
 
 Mr. Husi-ED. I had always supposed that about as high a degree 
 of efficiency, industrially, as had been achieved anywhere had been 
 achieved in the packing houses, where the animal goes in and noth- 
 ing comes out but the brass tips on the ends of his horns and the nails 
 in his shoes. 
 
 Mr. Marsh. Of course, there is some internal efficiency. That is 
 conceded, but the point is this. If the chairman is willing I will an- 
 swer these questions, but I can not get through with the proposal 
 I wanted to make if I do answer them in detail. May I leave it to 
 the chairman to decide ? 
 
 The Chairman. Can't you make it brief and, if there is nothing 
 special to prevent it, we can let you go on and finish your statement. 
 
 Mr. Marsh. With your permission I will just dictate and send 
 to the Congressman about a half dozen illustrations of the wasteful- 
 ness of the packers and the railroads. 
 
 To get back to the point where we were before these questions came 
 up ; since there is this widespread opposition on the part of the well- 
 intrenched and organized and rich business corporations of America 
 to the organization of cooperative groups of farmers, we feel that 
 any restriction, such as this of minimum legal rate, might make it 
 very difficult for the poor farmer whose credit is his character — and 
 that is impeccable — to get the money needed to start a cooperative 
 organization, and there should be some change in that provision. 
 Also it would seem an injustice to limit the rate to the State where 
 organized, if in one State the rate is very high and the other very 
 low. It would be much better, it seems to us, to have a uniform rate. 
 Put it at 8 per cent, if necessary, as the maximum. 
 
 Then, as I said before, we do not want any limit upon the amount 
 which can be distributed as profits from the sales or purchases of 
 the farmers themselves. There has been a good deal of discussion 
 here, which I followed -with great interest, as to whether the tendency 
 of such legislation would be to create a monopoly of farmers, wheat 
 growers, or raisin gi'owers, or citrus growers, or what not. We 
 believe it is absolutely impossible, humanly speaking, for millions 
 of farmers to get together and create a monopoly. Now, I hesitate. 
 
132 COLLECTIVE BARGAINING EOK EAEMEKS. 
 
 in the face of the legal ability of this committee, to make the fol- 
 lowing statement: You passed the Sherman antitrust law with the 
 design and purpose of curbing the Standard Oil Co. It never feazed 
 the Standard Oil Co., but it has interfered with the legitimate busi- 
 ness of scores of organizations, and in view of that and similar laws 
 we are not criticizing you, but you will admit these facts — ^we are a 
 little bit skeptical as to what can be done with regard to laws to 
 protect the farmer in cooperative work. Under the Sherman anti- 
 trust law the Standard Oil Co. was dissolved. Immediately on dis- 
 solution it got stronger and it has been paying higher and higher 
 dividends ever since, but under these same laws members of these 
 little groups of cooperative farm organizations may be haled into 
 court and punished. 
 
 Now, it is an open question in our mind whether you can^ reach 
 this situation solely through legislation on cooperative organizations. 
 May we call to your attention, in considering legislation on coopera- 
 tive organizations, two bills, one introduced by Kepresentative Steele 
 and one by Senator KeUogg? They take an entirely different view- ■ 
 point toward the control of cooperative organizations and large cor- 
 porations of business from that of antitrust legislation. Both bills 
 are almost directly in the line of the recommendations made by Mr. 
 Herbert Knox Smith in 1904 or 1905, when he was still Commissioner 
 of Corporations before the Federal Trade Commission was organ- 
 ized. Now, these bills provide a very different procedure for prose- 
 cution. Mr. Steele's bill provides that whenever an organization is 
 about to incorporate, it shall make application to the Federal Trade 
 Commission for a license to transact interstate commerce. It is to set 
 forth its proposed rules of practice and procedure, and is to conform 
 to the rules of practice and procedure the commission prescribes, and 
 any complaint against such corporation, by competitor or otherwise, 
 will be investigated by the Federal Trade Commission. The bill 
 provides that the commission shall make diligent inquiry into the 
 facts set forth, and if satisfied that such interstate commerce does 
 not constitute an unreasonable monopoly or detriment to the public — 
 in the first place, after a preliminary investigation by the commission, 
 a license is granted, and after the license is granted the Federal Trade 
 Commission maintains constant supervision. 
 
 Mr. Igoe. Do you think such a bill would meet the situation of the 
 farmers in these cooperative associations with capital stock? 
 
 Mr. Marsh. Not solely such a provision, but we think such a pro- 
 vision would be a very great help to these organizations, plus the 
 other suggestions I made, and this one, that there may be some local 
 representative of the Government upon the board of directors of such 
 cooperative corporation. 
 
 Mr. Igoe. You think it would be better to have some Government 
 agency to pass upon the acts of these combinations rather than to 
 prevent the combinations themselves? 
 
 Mr. Marsh. Well, we have not prevented the combination of big 
 capital. 
 
 Mr. Igoe. I am just asking your views now. 
 
 Mr. Marsh. I was going to answer, if I may — ^taking it up from 
 that angle ; the farmers are helpless unless they can make combina- 
 tions. 
 
COLLECTIVE BARGAINING FOR FARMERS. 133 
 
 Mr. Igoe. I asked if you thought it would be better to have some 
 Viovernment agency to supervise the activities of these corporations 
 rather than to prevent the combination coming into existence. We 
 are doing that noM^ We have laws that prevent certain combina- 
 tions, but in the Steele bill we go a step further and would permit 
 them to come in and secure licenses and then, in a way, regulate them 
 afterwards. There is no prosecution, then, for the things which the 
 Federal Trade Commission has sanctioned. 
 
 Sir. Marsh. That could be safeguarded in this way : That the Fed- 
 eral Trade Commission or any other Government authority — com- 
 mission is suggested in this bill — if they find out that the combina- 
 tipn, whether it is the farmers or the Steel Trust, or what not, is 
 violating the principles for which it was organized and is conduct- 
 ing its business unfairly, the commission could at once cancel or re- 
 voke its license. 
 
 Mr. Igoe. My own thought is that something along the line of the 
 Steele bill Avould be much more beneficial to the country and business 
 generally than the present system, whereby you prosecute some one 
 and after about 15 years you determine they violated the law by 
 combination, but in the meantime the people who have been swal- 
 lowed up and put out of business are gone no one knows where. 
 
 Mr. Maesh. I am inclined to think that is the better plan, pro- 
 vided, of course, that you do not restrict the powers of the courts, if 
 they do not comply with the Trade Commission's requirements or 
 instructions, to prosecute for violation of laws. 
 
 The Chairman. Take the Steele bill, that gives a corporation the 
 right to go on until it is found that there is something wrong. What 
 happens then? The license is revoked, but the revocation does not 
 stop the illegal practices. The license simply gives immunity from 
 the bad acts they might do until you cancel the license. 
 
 Mr. Igoe. I am not saying the Steele bill is the perfect system. 
 
 The Chairman. You are commending it here, and I am, calling 
 attention to what it accomplishes. It permits an investigation as to 
 what practices they are engaged in and what they expect to engage 
 in and then it provides that they may be licensed to go on and carry 
 on such a corporation and pursue such practice. It may not be easy 
 to determine the illegal character of the act that is licensed, and 
 all it accomplishes is to give them an immunity bath until you 
 cancel the license. 
 
 Mr. Marsh. All you accomplished with the Standard Oil Co., 
 under the most drastic laws you had, was to increase their profits. 
 
 Mr. CuRRiE. Do you think, by taking that one example, that you 
 can safely assert that the antitrust laws of the Nation are not serv- 
 ing- a useful purpose 
 
 Mr. Marsh. I think they are serving a useful purpose to the big 
 combinations of capital. 
 
 Mr. CuRRrE. I mean for the small. 
 
 Mr. Marsh. I don't think they are, for the smaller organizations, 
 
 at all. 
 
 Mr. CuRRiE. Then your organization would recommend to the 
 committee on the Judiciary that the antitrust laws be repealed? 
 
 Mr. Marsh. When you get a better method ; something along this 
 line. 
 
134 , COLLECTIVE BAEGAINING FOR FAEMEKS. 
 
 Now we are asking two- things for the farmers, and we do not aslc 
 from a selfish point of view. We are asking, first, that they be- 
 exempted from the present operation, of the antitrust laws and be 
 allowed to make any profit they can on their sales, and we very 
 distinctly feel, under these circumstances, when the farmers can be 
 charged with wanting to build up a monopoly themselves and ta 
 make extortionate profits, that there should be some governmental 
 supervision over them. If I understood Congressman Morgan's 
 suggestion, it was something along that line — such provision as to 
 supervision. This question is complicated, and we are not speaking 
 with finality on it. We are simply pointing out what seemed to us 
 some of the provisions that should be incorporated in this bill. Some 
 *olks said it should be rushed right through because of the patent 
 injustice of arresting a few faimers on charges of violating the law, 
 but in view of the fact of the study which your committee, for weeks 
 and weeks, gave to the antitrust bills, we feel thaj: pretty carefiil 
 consideraion should be given to this measure, and see whether it is 
 really going to effect what we want to have done, which is this : We 
 want farmers, small groups of them, to be able to get capital stock 
 and to organize their associations and practically, ultimately, exclude 
 the big distributing agencies of to-day which are collecting too large 
 a toll both from the producer and the consumer. 
 
 I could go into a little more detail, but I have taken slightly more 
 than the half hour you asked me to take. We should like to see 
 this bill as amended before it is in its final form. 
 
 Mr. Igoe. Were you present when this gentleman from California 
 suggested an amendment? 
 
 Mr. Marsh. I heard it read, but I did not read it personally after- 
 wards. I could not get the full intent of it. 
 
 Mr. Igoe. The idea was to give exemption so far as the farmers 
 in these cooperative associations were concerned, but after that, in 
 their dealings with the public, they should be subject to all the ex- 
 isting laws that are applicable to corporations of other kinds now, 
 whereas the Hersman bill exempts them in all of their dealings, 
 arrangements of any kind that they might make in regard to manu- 
 facture, distribution, or sale of their products, and allows them to go 
 in any direction they please, free from any interference by law, and 
 free from any questions or suggestions that might be made as to the 
 method of conducting their business and absolutely validating all 
 agreements of whatever kind they may make. 
 
 Mr. Marsh. Well, we would have them free, but recognize when 
 we request such freedom — ^because it requires initiative to take the 
 risks — ^that you may need to have some supervisory body. Do not 
 make them subject to drastic antitrust laws, which were not intended 
 to hit farmers who are intending to benefit the general public. 
 
 Mr. Igoe. As I understood you a few moments ago, you would ap- 
 ply the same rules to all businesses. That is your view ? 
 
 "Mr. Marsh. Our view is that that is the thing we have got ulti- 
 mately to come to, some such method as that. I think the best way to 
 start it is with farmers' cooperative organizations. It would not be 
 the last \^-Drd, any more than the Sherman law was the last word, 
 but it would be a way to start instead of jumping down on a man 
 ibecause he sometimes inadvertently violates the law. I do not think 
 anybody would accuse the farmers of being profiteers. 
 
COLLECTIVE BARGAINING FOK FAEMEKS. 135 
 
 I might say this in conclusion, that we are in a whole-world danger 
 of a shortage of food. During the war a lot of farmers have not 
 broken exen. Before the war the farmers were running behind by the 
 million. They do not ask a Government subsidy or a cost-plus or a 
 guaranty from the Government, or anything of that sort. They are 
 finding out the cost of production, and they are asking Congress to 
 enact legislation that will permit them to put the same business 
 ability and work into the distribution of their products as they put 
 into the production of it. That, it seems to me, in a word states the 
 case, and we hope you will be able to work out such a bill as we 
 suggest. 
 
 Mr. Igoe. Do you think the farmers might, at any time, in the event 
 of a great drought, for instance, as to wheat, ask the Government, as 
 they did when wheat was in danger of going to a very high price, 
 when it is in danger under the opposite circumstances, ask the Gov- 
 ernment to step in? 
 
 Mr. Marsh. I think not. I think the farmers — ^that is, the group 
 for which we speak, and we do not attempt to speak for all — ^are get- 
 ting at the factors which hit the farmers so hard. I refer to the 
 vicious Cummins bill for the return of the railroads. That bill hits 
 «very farmer, and they are furious about it. That bill instructs the 
 Interstate Commerce Commission to fix rates which will yield at 
 least 6 per cent on the present overcapitalization of the railroads. 
 That means increased rates on the farmers' products. The farmers 
 know they can't get back that increase in freight rates from sale of 
 their products. 
 
 Mr. Igoe. I think it has been stated on good authority that every 
 dollar increase in freight rates gets to the consumer at at least $5. 
 
 Mr. Marsh. At least three or four; so that I think you need not fear 
 that the farmers' will come around and ask for a guaranty. They 
 won't do it, but they do want to have the predatory interests and the 
 unnecessary middlemen gotten out of the way, and this method is 
 most effective. 
 
 If there are no other questions, I will submit the points which Con- 
 gressman Tlusted raised as to the packers and the railroads, and may 
 I ask, Mr. Chairman, to have read into the record a statement by 
 Mr. George P. Hampton advocating collective bargaining for labor, 
 for the same reason that we advocate collective bargaining for farm- 
 ers, and pointing out why a corporation should agree to collective 
 bargaining for labor and equally for farmers : 
 
 A corporation is a special privilege gi-anted by Government through which 
 capitalists secure immunity from the unlimited individual responsibility and 
 liability of individual and partnership operation and secure the right of col- 
 lective bargaining and the right to be represented by representatives of their 
 own choosing, and the power to mobilize not only their own capital but the 
 investment capital of great masses of the people who can have no effective 
 \voice in the management of the business incorporated. 
 \Corporations like the Steel Trust, the Standard Oil, railroads, etc., exist only 
 fT^rough the special privilege power conferred upon them by the corporation 
 ].tws. Having been granted the special privilege of collective bargaining and 
 tlie-right to be represented by representatives of their own choosing, and the 
 right TO mobilize all their powers in the hands of a few, and in the case of 
 the United States Steel Corporation a single individual, it is, in spirit at least, 
 a violation of their agreement with the people, through their Government, to 
 arrogate these privileges to themselves and refuse to recognize that labor 
 has, or should have, equal rights with them to collective bargaining, to be 
 
136 
 
 COLLECTIVE BARGAINING FOE FARMERS. 
 
 represented by representatives of their own choosing, and to mobilize all their 
 powers in the hands of a few or even of an individual. 
 
 The public interest demands that any corporation which, through its delegated 
 spolresman, refuses to conduct business with labor on the above basis of equality 
 of right, should have its corporation chjirter revolted and be compelled to 
 conduct all its affairs without the special privileges conferred upon it by the 
 corporation laws and under the unlimited liability of a partnership. 
 
 Public welfare demands that the corporation laws. Federal and State, should 
 be at once amended to malie it mandatory upon corporations to recognize the 
 right of labor, farmers, or any other group of individuals to deal with thein 
 collectively through representatives of their own choosing under penalty of 
 having their corporation charter revoked. 
 
 (Whereupon the committee adjourned at 11.30 o'clock a. m.) 
 
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