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 IGH COST OF LIVING 
 
 HEARINGS 
 
 EBFOEE THE 
 
 OMMITTEE ON AGRICULTURE 
 
 HOUSE OF REPRESENTATIVES 
 
 SIXTY-SIXTH CONGRESS 
 ^ FIEST SESSION 
 
 ON 
 
 ft- rErbrvsmMENDMENTS PROPOSED TO THE FOOD CONTROL ACT 
 
 AUGUST 15, 20, 1919 
 
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 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 
 1910 
 
COMMITTEE ON AGRICULTURE. 
 House or Repeesentatives. 
 
 GILBERT N. HAUGEN, Iowa, Chairman. 
 
 JAMES c. Mclaughlin, Michigan. 
 
 SYDNEY ANDERSON, Minnesota. 
 WILLIAM W. WILSON, Illinois. 
 CHARLES B. WARD, New York. 
 
 WILLIAM B. Mckinley, iiunois. 
 
 ELIJAH C. HUTCHINSON, New Jei-sey 
 FRED S. PURNELL, Indiana. 
 EDWARD VOIGT, Wisconsin. 
 M. O. Mclaughlin, Nebraska. 
 EVAN J. JONES, Pennsylvania. 
 CARL W. RIDDICK, Montana. 
 J. N. TINCHBR, Kansas. 
 J. KUHIO KALANIANAOLE, Hawaii. 
 
 L. G. HAncEN 
 
 GORDON LEE, Georgia. 
 
 EZEKIEL S. CANDLER, Mississippi. 
 
 J. THOMAS HBPLIN, Alabama. 
 
 THOMAS L. RUBEY, Missouri. 
 
 JAMBS YOUNG, Texas. 
 
 HENDERSON M. JACOWAY, Arkansas. 
 
 JOHN V. LESHEB, Pennsylvania. 
 
 Clerk. 
 
HIGH COST OF LIVING. 
 
 Committee on Agrioultuee, 
 
 House of Representatives, 
 Washmgton, D. C, Friday, August 15, 1919. 
 The committee assembled at 10.30 o'clock a. m., Hon. Gilbert N. 
 Haugen (chairman) presiding. 
 
 Present : Members of the committee. 
 
 The Chairman. The purpose of the meeting this morning is to give 
 consideration to amendments to the food-control act, proposed by the 
 Attorney General. 
 
 Without objection, I will insert in the record the Attorney Gen- 
 eral's letter, together with his draft of the proposed amendment and 
 the food-control act as it now stands : 
 
 Office or the Attokkey General, 
 ^Vaahinyton, D. C, August 12, 1919. 
 Hon. GiLBEET !s^. Hatjgen, 
 
 Chairman Committee on Agriculture, 
 
 House of Representatives, Wasldnf/ton, D. C. 
 My Deae Me. Haugen : I beg to inclose herewith draft of an act to amend the 
 food-control act so as to enlarge the definition of " necessaries " and to pro- 
 vide a penalty for the unlawful acts described in section 4 thereof. 
 
 The only changes in existing law made hy this draft are the addition of the 
 words in italics. They have the effect of adding " wearing apparel " and " the 
 containers in which foods, feeds, and fertilizers are sold" to the list of articles 
 described in the act as " necessaries." The only other amendment is indicated 
 on page 3, where a penaltj is added to section 4 of the food-control act. 
 
 It will be extremely helpful in our effort to reduce the high cost of living if 
 these amendments to the food-control act can be promptly passed. 
 Yours, truly, 
 
 A. Mitchell Palmee, 
 
 Attorney General. 
 
 AN ACT To amsnd an act entitled "An act to provide further for the national security 
 and defense by encouraging the production, conserving the supply, and controlling the- 
 distribution of food products and fuel," approved August 10, 1917. 
 
 Be it enacted iy the Senate and. House of Representatives of the Uwited, States 
 of America in Congress assemUed, That the first paragraph of the act entitled 
 "An act to provide further for the national security and defense by encouraging 
 the production, conserving the supply, and controlling the distribution of food 
 products and fuel," approved August 10, 1917, be, and the same is hereby,, 
 amended so as to read as follows : 
 
 " That by reason of the existence of a state of war, it is essential to the na- 
 tional security and defense, for the successful prosecution of the war and for 
 the support and maintenance of the Army and Navy, to assure an adequate sup- 
 ply and equitable distribution and to facilitate the movement of foods, feeds,. 
 wearing apparel (the containers im. which foods, feeds, and fertilizers are sold), 
 fuel, including fuel oil and natural gas, and fertilizer and fertilizer ingredients, 
 tools, utensils, implements, machinery, and equipment required for the actual 
 production of foods, feeds, and fuel, hereafter in this act called necessaries; to 
 prevent, locally or generally, scarcity, monopolization, hoarding, injurious specu- 
 lation, manipulation, and private controls affecting such supply, distribution,. 
 
4 . HIGH COST OF LIVING. 
 
 and movement; and to establish and maintain governmental control of such 
 necessaries during the vs'ar. For such purposes the instrumentalities, means, 
 methods, powers, authorities, duties, obligations, and prohibitions hereinafter 
 set forth are created, established, conferred, and prescribed. The President is 
 authorized to make such regulations a,nd to issue such orders as are essential 
 effectively to carry out the provisions of this act." 
 
 Sec. 2. That section 4 of the act entitled "An act to provide further for the 
 national security and defense by encouraging the production, conserving the sup- 
 ply, and controlling the distribution of food products and fuel," approved 
 August 10, 1917, be, and the same is hereby, amended so as to read as follows : 
 
 "That it Is hereby made unlawful for any person willfully to destroy any 
 necessaries for the purpose of enhancing the price or restricting the supply 
 thereof; knowingly to commit waste or willfully to permit preventable de- 
 terioration of any necessaries in or in connection with their production, manu- . 
 facture, or distribution; to hoard, as defined in section six of this act, any 
 necessaries ; to monopolize or attempt to monopolize, either locally or generally, 
 any necessaries ; to engage in any discriminatory and unfair, or any deceptive 
 or wasteful practice or device, or to make any unjust or unreasonable rate or 
 charge in handling or dealing in or with any necessaries ; to conspire, combine, 
 agree, or arrange with any other person, (a) to limit the facilities for trans- 
 porting, producing, harvesting, manufacturing, supplying, storing, or dealing 
 in any necessaries; (b) to restrict the supply of any necessaries; (c) to restrict 
 distribution of any necessaries; (d) to prevent, limit, or lessen the manufacture 
 or production of any necessaries in order to enhance the price thereof; or (e) 
 to exact excessive prices for any necessaries, or to aid or abet the doing of any 
 act made unlawful by this section. Any person violatmg any of the provisions 
 of this section upon conviction thereof shall 6e fined not exceeding $5,000 or Se 
 imprisoned for not more than two years, or both. 
 
 The food-control act will appear at the end of the day's hearing. 
 
 We have with us representatives from various farm organizations 
 and from the Department of Justice. We will hear from Mr. Miller 
 first. 
 
 Will you kindly give your full name, Mr. Miller, and state for the 
 record whom you represent? 
 
 STATEMENT OF MR. JOHN D, MIILER, NEW YORK CITY, REPRE- 
 SENTING THE NATIONAL BOARD OF FARM ORANIZATIONS. 
 
 Mr. Miller. My name is John D. Miller, and my business is 
 located at 303 Fifth Avenue, New York City, which is the office of 
 our farm organizations. 
 
 I appear here, Mr. Chairman, as representing the national board 
 of farm organizations, having affiliated with it about 2,000,000 of 
 the organized farmers of America. 
 
 I desire to call to the attention of this committee certain facts 
 which we deem very material as bearing upon the question of this 
 amendment and as bearing upon the reasons for which the amend- 
 ment is requested, namely, to facilitate and make easy a reduction in 
 the present high prices of necessities. 
 
 I note by the memoranda that accompany the suggested amend- 
 ment 
 
 Mr. Lee (interposing) . You mean the Attorney General's proposed 
 amendments ? 
 
 Mr. Miller. Yes, sir — that the learned Attorney General thinks 
 that this amendment would be of material assistance to him in his 
 efforts to reduce the high cost of living. 
 
 My personal acquaintance with the learned Attorney General is 
 but slight. Coming from the same State of Pennsylvania, however. 
 
HIGH COST OF LIVING. 5 
 
 I have many years' knowledge of him as a lawyer of high ability 
 and as a man of exceptionally high character. 
 
 Therefore, any suggestions coming from him would be received by 
 me at least with a great deference. This does not mean, however, 
 that we can always agree upon the methods for reducing the high 
 cost of living. 
 
 And, Mr. Chairman, if your committee in its wisdom should de- 
 cide that it is necessary and expedient to enact the requested amend- 
 ment into law, we ask that it be not done in its present form, but 
 that there be attached thereto a proviso similar to the proviso to the 
 hoarding clause in the present food-control bill and the licensing 
 clause, which utterly excepts and exempts farm organizations from 
 the operation of that section. 
 
 We feel that the enactment of this amendment into law as drawn 
 will be very detrimental to the great agricultural interests of the 
 country. 
 
 Now, Mr. Chairman and gentlemen, I believe that I am accurate in 
 stating that the farmers of this country, by reason of years of study 
 and of diligent effort, are to-day efficient producers. They are pro- 
 ducing the foods of the country as economically as they can be pro- 
 duced. 
 
 Farmers, however, have been the poorest of salesmen. The foods 
 that they have produced in the years past, with so much care and 
 toil, have been marketed in a form and in a manner that has left to 
 them a price almost continuously less than the cost of its production. 
 To remedy this defect, farmers have learned that it is necessary, in 
 a measure and so far as they can, to market their own product. It 
 did not take them long to learn that, singly, they could do nothing ; 
 they must market collectively, or they could not market at all ; they 
 must bargain collectively, or they could not bargain at all — they 
 could only accept the price which the great organizations of middle 
 men that control the agencies through which their food must go to 
 the consumer dictate to them. 
 
 Therefore, all over this country, from the Atlantic to the Pacific, 
 there are growing up these farmers' cooperative organizations, or- 
 ganized and engaged in the business of making collective sales of 
 their farm products. 
 
 "V^Tiat we ask of this committee and of Congress, not only as to this 
 amendment and this law — ^because, Mr. Chairman, it may be my 
 privilege to appears before your committee at some subsequent hear- 
 ing on other laws, and I will not care to take your time to then repeat 
 what I am now going to say. 
 
 What I am going to say not only bears directly upon the question 
 before you now, but bears upon other questions that will come before 
 you later — the regulation of the packers, with others. And that is 
 that the organized farmers of America ask the Congress of the 
 United States to attach to every law that regulates the prices or 
 controls the distribution of food such provisos as will give to these 
 farm organizations liberty of action under the law. 
 
 I say to you, Mr. Chairman — and I am saying it with a full sense 
 
 of the responsibility that I incur in making the statement — that upon 
 
 these farm organizations having full liberty under the law depends, 
 
 in a measure, the adequacy of the future food supply of this country. 
 
 Why, Mr. Chairman, the great war has, in a measure accelerated. 
 
6 HIGH COST OF LIVING. 
 
 and, in a measure, simply disclosed movements long in action by the 
 operation of which the margin between this country's supply of food 
 and the consumption of it is yearly growing more narrow. One of 
 the great problems— not onlv a war problem, but a continuing peace 
 problem— that will be with us in all the years to come, is an adequate 
 future supply of food for our people. 
 
 I say again, Mr. Chairman, that in a measure that adequate food 
 supply depends upon the liberty of action that organized farmers 
 have under the law to themselves market their products, so far as 
 they can, independently of these agencies of middlemen, who stand 
 between them and the ultimate consumer. 
 
 Mr. Chairman, as emphasizing the importance of having a clear 
 right, a right that will be unchallenged, to make these collective 
 sales, I am going to ask you to let me take a few minutes to tell you 
 a story of things that have been done in the immediate past. The 
 story will take you from California to New York. I am going to 
 try to tell this story dispassionately ; I am not going to express opin- 
 ions on it, but will ask you to characterize it as, in your better judg- 
 ment, you think it deserves, and if any remedy is needed that you 
 will know what remedy. 
 
 If you find from the story that I tell you that there is any concert 
 of action between the organized middlemen of this country and cer- 
 tain officials of our State departments of justice — for in this story 
 you will find figuring milk dealers, organized middlemen; you will 
 find State prosecuting attorneys, and in one or two instances Federal 
 district attorneys — we are going to ask you to decide what these 
 facts mean. 
 
 In June the organized farmers of California engaged in the busi- 
 ness of making collective sales of their milk were arrested. The 
 sensational newspapers of California branded them as criminals. 
 They were indicted— for what? Not for profiteering; oh, no; but 
 for simply making collective sales of farm products. 
 
 Mr. Young. Was that in the State or the Federal courts ? 
 
 Mr. MiuaER. That was in the State courts, under the State law. 
 They were tried, and on the 31st day of July were promptly ac- 
 quitted. But that was an expensive trial. Farmers can not afford 
 to be continually and perpetually fighting lawsuits to justify their 
 right or defend their right to make collective sales. A few such 
 victories will bankrupt that organization. 
 
 Let us next go to Chicago. In the fall of 1917 the organized 
 farmers that supplied the Chicago district with milk were indicted. 
 The investigations which led up to those indictments were oppres- 
 sive in their character. They were indicted as having violated the 
 State antitrust law. 
 
 About that time it became necessary, however, for Mr. Hoover, 
 our able Food Administrator, to deal with, farm organizations, and 
 where they were not organized, to see that they were, in order to 
 help in the solving of the great and important problems with which 
 he was wrestling. 
 
 And so this very organization in Chicago was called to his assist- 
 ance. Well, they soon saw that it would be ironical to be trying 
 those men over on Fifteenth Street for committing acts which, at 
 the very time of the trial, over on Fourteenth Street they were doing 
 with the acquiescence, by the consent, and with the cooperation of 
 
HIGH COST OF LIVING. 7 
 
 the Federal Food Administration. So the prosecution of the indict- 
 ment under the State laws was postponed. 
 
 After the armistice, however, it was revived ; and they commenced 
 to get ready for trial. It was postponed from time to time for rea- 
 sons which it is not necessary here to relate ; and it is now fixed for 
 the 15th of September. 
 
 In April, however, it was thought that that indictment would 
 come on for trial in May ; and by a method which seems to be largely 
 peculiar to the city of Chicago and the city of New York, in order 
 that those men, accused of having the temerity of agreeing with 
 their fellow farmers as to the sales of their milk, there emanated 
 from the office of the State district attorney columns of interviews 
 in the newspapers to the effect that they were going after those 
 men^ — all of this, of course, in order that the prospective jurors who 
 were to try that case might have full knowledge in advance of the 
 iniquities of these accused men and might at the trial be prepared 
 to do them exact justice. 
 
 And by what, I am sure, was a coincidence, just at that time, in 
 April, the Federal district attorney of that district got busy and 
 commenced investigations of the same men under the Federal, anti- 
 trust act. 
 
 Mr. Young. Under the Sherman law ? 
 
 Mr. Miller. Under the Sherman law; yes, sir, the Sherman and 
 Clayton laws. The method of that I am going to relate to you ; I am 
 going to try to relate it dispassionately ; and it is for you to char- 
 acterize it. 
 
 At a given hour on a given day, say lO'oclock in the forenoon, 
 there appeared in the office of the secretary of that farmers' organiza- 
 tion two of the special agents — detectives, we assume — with a sub- 
 poena duces tecum, commanding them to appear forthwith before 
 the Federal grand jury. 
 
 Now, I am stating facts that have come to me from others. I 
 am sorry that the man from Chicago who could verify this to the 
 committee and who was here yesterday has left the city. But, as to 
 the Ohio case, which I will take up later, there is a gentleman here 
 who can speak personally. I think I am reciting the facts of the 
 Chicago case accurately; I may omit some facts madvertently, but 
 those I do state I think you will find to be accurate. 
 
 A subpoena duces tecum was served commanding them to bring 
 forthwith a large volume of their records, books, and papers. At 
 the same hour two sleuths appeared at the office of the president of 
 the organization in the same building with a like subpoena. 
 
 Fortunately, the attorney for this organization had an office in 
 the same building— that is, ex-Gov. Deneen. They telephoned him, 
 and he protected their rights under that subpoena, telling them what 
 papers to take and what papers they needed to take under that 
 subpoena. They had nothing to conceal. I am simply stating this 
 to show the methods pursued. 
 
 Now, that was very carefully staged ; for, at the same hour of the 
 same day, at about 35 points in that great territory supplying Chi- 
 cago with milk, the special agents subpoenaed the local officers of the 
 local associations with a subpoena duces tecum to proceed forth- 
 with to Chicago with all of the books, correspondence, and records 
 in their possession. 
 
6 HIGH COST OF LIVING. 
 
 Many of those men were simply ordinary, everyday farmers ; their 
 accounts were rudely kept ; they did not know the difference between 
 a subpoena duces tecum to appear forthwith, for they were told that 
 they were to accompany the detectives to Chicago — ^they would not 
 distinguish between that and a warrant of arrest. And all over that 
 territory the telephones were kept busy with the news that a drag- 
 net had been thrown out to arrest the farmers for making collective 
 sales of their products. 
 
 Now, I am going to tell you one way in which what in police 
 circles is sometimes called the " third degree " was applied : One of 
 these men was taken to an upper room where two of the detectives 
 were. They were questioning this man in regard to everything 
 connected with the matter and many things not connected with_ it. 
 By and by one of them, with a significant look at that farmer sitting 
 there, with some ostentation pulled a revolver out of his pocket and 
 laid it on the desk. He went on asking questions, and the man 
 answered them the best he could. By and by the detective took the 
 revolver up again, twirled the cylinder — twisted it around, or some- 
 thing like that. Does this make you nervous? No — that was not in 
 Russia ; it was in Chicago. 
 
 You can characterize that as you think best; I am not going to 
 do so. 
 
 Let us go on to Ohio ; as I told you at the beginning, this thing is 
 extending from San Francisco to the Atlantic Ocean. In Ohio last 
 week the officers of the farmers' milk-selling organization were in- 
 dicted — not for profiteering, but for fixing prices and making col- 
 lective sales. There was no claim that the price was too high ; there 
 can not be. 
 
 Mr. YoTJXG. Was that under the State or the National law in Ohio ? 
 
 Mr. Miller. Under State law. Some of these gentlemen who were 
 indicted learned of it by telephone messages along the course of the 
 evening. They telephoned the sheriff : " We hear we are indicted ; we 
 will be there in the morning and give bail." "All right," the sheriff 
 said. " I am sorry that the deputies have already started to arrest 
 you ; but when they get there, you tell them what I say that you can 
 come in to-morrow and give bail." Because the sheriff knew every 
 one of those men; he knew they would never be fugitives from jus- 
 tice; every one of them was a man of repute in his locality; they 
 were men of standing, occupying high positions in their localities, 
 and sometimes holding positions of trust and confidence in their 
 communities. 
 
 But when the deputy sheriffs came back and reported to the dis- 
 trict attorney, he started them off again, late at night, in automobiles ; 
 and they went around over the country in automobiles and reached 
 some of the men in the middle of the night. 
 
 Those men finally reached the jail at Cleveland at 4 o'clock in the 
 morning. They were taken into the warden's office; they were 
 searched and their personal belongings in their pockets were taken. 
 One of them, Mr. Ingersoll, who is present here this morning, called 
 the warden's attention to this : He said, " Mr. Warden, that bunch of 
 keys that you are taking are the keys of the bank." Mr. Ingersoll 
 is vice president of the local bank. He said, " Those are important 
 keys, necessary to the bank." But they were all taken, nevertheless. 
 
HIGH COST or LIVING. 9 
 
 They thought they Avould spare these criminals the ignominy of 
 placing them in cells ; and they were told that they might have the 
 use of a hospital ward. They were put into a hospital ward reeking 
 with vermin. In the morning, they had breakfast brought in that, 
 both from its quality and from the containers in which it was 
 brought, they could not taste or touch. 
 
 While they were there a photographer was introduced into the jail 
 to take the pictures of these criminals in jail. They protested against 
 the indignity; but it was insisted upon; and so they turned their 
 backs and the photographer got an elegant view of the back of the 
 heads of each one of those gentlemen. 
 
 Now, they were prepared early in the morning, as soon as they 
 could reach their friends, to give bail ; they could give any quantity 
 of bail that might be required. It was not convenient, however, for 
 the district attorney to arrange for bail to be taken until about noon. 
 
 They were kept in jail until about noon, and then taken into the 
 courthouse ; there they had to wait about half an hour or more — and 
 if I am not stating the facts correctly, Mr. IngersoU will correct me. 
 There a photographer came into the court room and took a picture 
 of the judge sitting on the bench with those six or seven men lined 
 up in the prisoners' dock. They then gave bail. 
 
 Mr. Chairman, these men were not accused of murder, or bomb 
 throwing, or anarchy, or treason. This did not happen in Russia 
 or in the middle ages. These men were simply accused of combining 
 with their fellow farmers to make collective sales of their milk. 
 
 Again, I am not going to express any opinion, but will ask you 
 to characterize it. 
 
 Let us now turn to New York City, where we reach the Atlantic 
 coast, and then I will take no more of your time upon this subject: 
 
 In January, 1918, under a State law, the officers of the farmers' 
 organization there were indicted. The State law which it was claimed 
 they had violated was the antitrust law, and the penal code contain- 
 ing the same provisions. There were no acts of oppression or intimi- 
 dation in the arrest of those men ; they were treated courteously 
 
 They gave bail. Incidentally it cost them — as soon as they found 
 tliat they were indicted they sent to a surety company to look up 
 these seven men and be ready to go their bail. Well, they did it; 
 incidentally it cost the association two or three hundred dollars 
 premium to the surety company. But that is a mere bagatelle; it 
 cost them $15,000 to fight their way out of the trouble. 
 
 They immediately asked for a change of venue. That was refused 
 by the Chicago people. But the judge in New York at once dis- 
 covered that it would be almost a travesty upon justice to try those 
 farmers, brought in from the country charged with fixing milk 
 prices — to have them tried by a jury of men buying that milk and 
 consuming it in a city; and he very promptly directed a change of 
 venue to up the State. They did not take the case to a dairying 
 county or an agricultural country, but to a mixed county, Oneida 
 County, in which. the city of TJtica is located, which is one of the 
 largest up-State cities ; a city which has a larger population than the 
 rest of the county, and larger than any agricultural county. 
 
 About that time the legislature was convened. The matter was 
 called to their attention, and they immediately passed a law amend- 
 ing the antitrust law and tlie penal code of the State, so as to permit 
 
10 • HIGH COST OF LIVING. 
 
 collective bargaining by farmers. Thereupon the district attorney 
 caused these indictments to be dismissed, stating as a reason that the 
 law having been amended, the farmers had a clear right under the 
 State law to do what they were doing. 
 
 One would think that if that were the position and the opinion of 
 the office of the district attorney, this organization at least might be 
 permitted to continue its constructive work with a certain degree of 
 peace. 
 
 About the 1st of December last, however, a milk investigation was 
 commenced in the office of the district attorney. Subpoenas were 
 issued from time to time to the officers, clerks, and employees of this 
 farm organization, commanding them to bring down to the district 
 attorney large numbers of records, papers, minute books, checks, 
 vouchers, expense accounts, and correspondence. More and more 
 were called for from time to time; and they were held several 
 months, although a part of them were material, or, at least, would 
 have been very convenient to have in the office. 
 
 There was nothing to cover up in that organization; the organi- 
 zation was very glad to give the district attorney's office any infor- 
 mation they possessed. But by-and-by they wanted those papers, 
 and they began to ask for them, and after some considerable persua- 
 sion they began to get them back in installments. Most of them by 
 this time have been returned ; not all. 
 
 Now, Mr. Chairman, such members of your committee as are law- 
 yers — I take it that the thought will immediately flash into their 
 minds. What has become of our constitutional provision against seiz- 
 ures and compelling the production of papers? But we did not 
 invoke that; we did not want to — that organization did not. We 
 wanted to give them all the information possible. But they are still 
 holding some of those papers. 
 
 If we grant clearly their right to compel the production of those 
 papers and to hold them, beyond all question the only purpose for 
 which they should be used is in judicial proceedings. What has 
 been done? They have been turned over to a sensational newspaper 
 in New York City, photographed, and last week there appeared an 
 article under a heading — I am not sure I remember the exact word- 
 ing ; but, anyhow, it was something about " The Dairymen's League 
 Branch of the Milk Trust," and these checks, vouchers, telegrams, 
 and letters are printed. Down under that is a picture of an emaciated 
 baby and the words, " The victim." 
 
 The district attorney, if he is quoted correctly by the newspapers, 
 has stated repeatedly during this investigation since last December 
 that the Dairymen's League had succeeded in obtaining a law which 
 shielded them under the State law but that they could still get them 
 under the Federal law. We have heard nothing that indicates that 
 the Federal district attorney in that State is investigating it at all ; 
 we do not know whether he is or not, but we have not heard that 
 he is. 
 
 Mr. Chairman, yesterday I picked up a New York paper. There 
 was in it the headline, "A milk famine threatened in New York." It 
 seems the city investigators out in Orange County — that is one of the 
 great dairy counties of New York State ; with one exception I thiii: 
 it is the greatest in the number of cows; it is located closer to New 
 
HIGH COST OF LIVING. 11 
 
 York than any other dairy county ; milk from that county can reach 
 the city the quickest and the cheapest. 
 
 This article went on to say : " Thousands of dairy cows being sold 
 for export " ; and this investigator reported that from all avenues 
 leading into the shipping stations were coming cows for sale, and that 
 36,000 of them were going out of that locality. 
 
 Now, Mr. Chairman, I presume that those very able and estimable 
 gentlemen who have been conducting this propaganda in New York 
 City against farm organizations see no connection between that 
 propaganda and the sale of those cows. We do. We see that the 
 relation, in part, at least, is the relation of cause and effect. 
 
 The great cry to-day, Mr. Chairman, is for more food and cheaper 
 food. The dairy cows of our countiy are the one greatest agency to 
 increase the food supply of our country. In the magnitude of its 
 annual product, it stands next to corn and above wheat, in dollars 
 and cents. 
 
 And the dairy cow is an efficient machine. She will produce more 
 food, in the form of milk, in one year — ^three times over — ^than does 
 her carcass in beef. In her entire lifetime, in the form of milk, she 
 will supply more food than will the carcass of 17 steers. And she is 
 an efficient producer. Of all the feed that she consumes, 89 per cent 
 is utterly unfit for human consumption. Therefore, she takes that 
 89 per cent of feed and, by that mysterious alchemy of motherhood, 
 converts it into a food which is palatable and nutritious. 
 
 Thirty-five thousand cows going out of the country. Mr. Chairman, 
 do you wonder that I say to you that one of the greatest and most 
 effective ways to increase the food of our people and ultimately to 
 cut down the high cost of living is to permit these farmers to have 
 liberty of action under the law ? 
 
 Mr. VoiGT. Let me interrupt you a moment : As a matter of fact, 
 were any of those cows being exported and taken out of that county 
 that you mentioned ? 
 
 Mr. Miller. This article stated that they were all for foreign 
 export — going abroad. 
 
 Mr. VoiGT. Well what are the actual facts in regard to it ? 
 
 Mr. Miller. About the export ? 
 
 Mr. VoiGT. About the taking of cows out of that county ? 
 
 Mr. Miller. Well, in that particular instance, I only laiow what 
 I read in the paper yesterday ; I have not made any personal inquiry. 
 The article states that from that locality 35,000 cows, at a price rang- 
 ing from $128 to $200 apiece, were taken out of that locality for ex- 
 port to France and England. 
 
 Mr. Jones. Do you know of your own personal knowledge Avhether 
 there is any exporting of cows from the tJnited States ? 
 
 Mr. Miller. I do not know how far that has yet reached the actual 
 exporting. I have heard from different sources that there are foreign 
 buyers here looking for dairy cattle. 
 
 Mr. Jones. Do you know whether there is anything being done 
 along that line ? 
 
 Mr. Miller. About the purchases ? 
 
 Mr. Jones. Yes ; and the exporting. 
 
 Mr. Miller. I have heard that there is, but I can give you no defi- 
 nite information on it. 
 
12 HIGH COST OF LIVING. 
 
 Mr. Jokes. What is your own opinion as to the accuracy of that 
 newspaper statement? . , 
 
 Mr. Minj5R. From what I have known of the county, I should say 
 that the facts are largely correct, but that the number ot cows is 
 largely exaggerated. But that there is a contmual movement all 
 over that territory to part with cows, there is no doubt. 
 
 Mr. Jones. Well, I presume St. Lawrence County exceeds any- 
 other county in New York State in the number of its dairy cows ( 
 
 Mr. MiLMHi. St. Lawrence County exceeds any other county m 
 number; and Orange County is the next. 
 
 Mr. Jones. Do you find that same condition existing there i 
 
 Mr. Mtt.t.er. We have not made any investigation as to that ; I can 
 not tell you. 
 
 Mr. Jones. What I am trying to get at is, whether there is any 
 particular reason for the export of these dairy cows from Orange 
 County: if there are English buyers here and the cows are being 
 exported by them, is there any particular reason why the exodus 
 should be from Orange County? 
 
 Mr. Miller. No ; I think not. I think that whatever movement is 
 going on in Orange County is fairly typical of the movement ovei 
 the entire territory; that would be my judgment. 
 
 Mr. VoiGT. Well, you think that statement is exaggerated, do you ? 
 
 Mr. MiLLEE. As to numbers, I think it is exaggerated ; but it is not 
 exaggerated enough to detract from the importance of the movement. 
 
 The Chairman. Would you prefer to finish your statement, and 
 then be questioned? 
 
 Mr. Miller. Yes ; perhaps that would be the best way, Mr. Chair- 
 man. 
 
 The Chairman. We will follow that plan. 
 
 Mr. Miller. To consider again this proposed amendment, we sub- 
 mit to you that farmers, to continue to produce, must have a Wiiy 
 satisfactory to them to fairly market their products. They have 
 found from experience that the only way they can do that is to do it 
 collectively. Therefore, if they are denied the power and the right 
 to do it collectively, they can not do it at all. This will mean that 
 some of them will quit the game; not all of them, but enough of 
 them to spell all the difference between a sufficient supply of food 
 and an insufficient supply. 
 
 Now, Mr. Chairman, if I may I should like to make a remark upon 
 the broader aspects of those things as bearing upon the high cost of 
 living. I have no panacea for the high cost of living. I find that 
 there is quite a variety of opinions as to remedies. I note that some 
 very able gentlemen here in Washington think that the best methods 
 by which the high prices may be reduced is for Congress to make 
 special appropriations to their departments. Possibly that may be 
 so ; but there is such a variety of remedies that it is hard to say. 
 
 My only suggestion, Mr. Chairman and gentlemen, is this: That 
 this is a time for sane, cool, careful, deliberate action. This wave of 
 hysteria is going to pass — and the American people in the end 
 always reach the right conclusion. And they are going to come to the 
 conclusion, that while it may be true that there is profiteering — -and 
 it seems as if there is in some localities — the great basic reasons for 
 the high cost of living are economical, beyond the power of Con- 
 
HIGH COST OF LIVING. 13 
 
 gress or the Government, that no fiat of government can correct, 
 and if it be attempted, there is the danger of making matters worse. 
 
 Do you know, Mr. Chairman, that we are viewing with some con- 
 cern — from the position of farm organizations — the news item that 
 I picked up this morning, stating that some 1,800 tubs of butter had 
 been seized and, I presume, will be thrown upon the market? No 
 doubt the reasons for that action are fully justifiable. But what I 
 am calling to your attention is the effect upon farmers, and, by rea- 
 son of the effect upon them, the ultimate effect upon production. 
 
 The price of milk to farmers depends, in a measure, upon the price 
 of butter. By contract in New York between the farm organizations 
 and the dealers, which contract runs until the 1st of December, as to 
 the method of fixing prices until the 1st of December, the prices of 
 milk to the farmers are based, in part, upon its value for the pur- 
 puse of manufacturing into butter. On the 20th day of each month 
 the prices for 30 days of butter and cheese are computed and aver- 
 aged; to them are added certain differentials to allow for the addi- 
 tional cost of producing, handling, and delivering to market milk 
 over the cost of that made into butter ; and the result of all that is the 
 next month's price of milk. 
 
 Now, suppose they throw all of that on the market and it results 
 in a slump in the price of butter and cheese. Or, assume that there 
 is no slump, but that it prevents the seasonable increase in prices; 
 for past history shows that from January to Jime there is a gradual 
 decrease, and from June to winter an increase. Farmers are now 
 studying economic conditions. That particular farm organization 
 is selling over $100,000,000 worth of milk a year, and they are forced 
 to study nationrwide and world-wide economic conditions. They 
 have entered into those contracts under the thought that normal 
 conditions would exist and normal causes would be permitted to 
 operate. 
 
 Suppose a lot of butter and cheese is seized and thrown on the 
 market and the price goes down. When those gentlemen meet on the 
 20th day of August to fix the September price of mUk, down goes 
 the price ; and the only people who have suffered are not the men who 
 had those things in cold storage, but the farmers who must furnish 
 the milk to replenish those stores; in other words, gentlemen, it is 
 the old, old story that in the end the burden comes back to the 
 farmer. 
 
 As I have stated, Mr. Chairman, I believe that the final judgment 
 of the American people on this great question, as well as on all 
 questions, will be right, and they will see that the cause of the pres- 
 ent high prices — possibly increased in some localities by profiteer- 
 ing — that the great, basic reasons are the inflation of currency, and 
 the vast destruction of material things, of man power, financial 
 power, and productive power, with the world at war. 
 
 Why, Mr. Chairman, you Members of Congress, when the United 
 States so properly accepted Germany's ultimatum of war — we could 
 not have lived with ourselves if we had not accepted it — ^but when 
 you did that you knew that from every corner of this great country 
 came a mandate to you, " Win this war ; do it quick ; and count up 
 the cost afterwards." 
 
 We have done it ; our boys went overseas and did it, in a way that 
 has given a new and more glorious meaning to the word "American." 
 
14 HIGH COST OF LIVING. 
 
 Now we must pay the price; and a part of that price is the high 
 cost of living. And I say that we, the people, who said to you ' Do 
 these things," should, in 'justice, say " We will pay this price. 
 
 I suppose, Mr. Chairman, that I would be called the vaguest of 
 theorists if I should say to vou that the present high cost of living is, 
 Lo a large part of our people, not a fact. The cost of living to men 
 with fixed incomes undoubtedly has increased. But take the great 
 mass of our people generally. Let us compare,. if you please, present 
 conditions with those of the early seventies, when all price levels were 
 at the lowest. A machinist in a railroad shop, as he goes out, takes 
 his daily wage, and he stops at the grocery store and spends it. Lei; 
 us assume that he had done that then, and that he does it now. "With 
 (hat daily wage, he will now take home more pork, more sugar, more 
 flour, more butter, and more milk than he did then. 
 
 Things are largely important as they relate to other things. 
 Measured by the dollar, there has been a vast increase in the cost of 
 living. Measured by what it cost to get that dollar — as to many 
 classes there has been no increase — the money with which it is meas- 
 ured is merely a medium of exchange, to facilitate the barter — which 
 all trade is in the last analysis, barter — money being the medium by 
 which the balances are liquidated. 
 
 Now, Mr. Chairman, I do want to express the real appreciation 
 of the farm organization that I represent and of myself for the very 
 courteous and patient hearing you have given me, and unless there are 
 some questions that the committee desires to ask, I am through. 
 
 The Chairman. Mr. Miller, I understood you to say that the 
 prosecutions to which you refer were largely under State laws ? 
 
 Mr. Miller. The prosecutions in all of these districts have been 
 under the State laws, except the prospective prosecution in Illinois ; 
 whether that will result in an indictment I do not know. 
 
 The Chairman. The reason that you are opposing this amendment 
 is that you think it would make it possible to do under the Federal 
 law what has been done under the State law ? 
 
 Mr. Miller. Exactly so. 
 
 The Chairman. You are asking for the same privilege that was 
 granted to labor — that you be not discriminated against in the law ? 
 
 Mr. Miller. We ask the same privilege that is granted to labor, 
 and that in the original Lever bill was granted to farmers, under 
 the hoarding and licensing laws. 
 
 The Chairman. But referring to other laws, in the Clayton law 
 you — the farm organizations — were discriminated against as between 
 labor ? 
 
 Mr. Miller. Very much so, Mr. Chairman. 
 
 The Chairman. That is all. 
 
 Mr. Hutchinson. Mr. Miller, I would like to ask one question: 
 You are asking to be exempted as to farm organizations. You say 
 the farm organizations are for the purpose of collective sales of milk. 
 Do they fix the price? 
 
 Mr. Miller. Milk and other farm products. 
 
 Mr. Hutchinson. Well, milk and other farm products. Do they 
 fix the price — the organization of milk producers? 
 
 Mr. Miller. The price is always determined by conference between 
 the buyers and sellers ; it is a matter of bargain. 
 
HIGH COST OF LIVING. 15 
 
 Mr. Hutchinson. Well, do they fix a price? 
 
 Mr. Miller. They ask a certain price, and the dealers offer a cer- 
 tain price, and sometimes it is their price that is agreed upon and 
 sometimes it is ours. 
 
 Mr. Hutchinson. Well, as an organization, then, you do fix a 
 price ? 
 
 Mr. Miller. The same as ony other business transaction — the man 
 selling and the man buying must fix a price between them. 
 
 Mr. Hutchinson. I want to ask you also about another matter : In 
 my State, New Jersey, they are commencing a suit against the cement 
 people to dissolve them. Do you think it would be fair to dissolve 
 the cement people and let the tanners fix the price of milk ? 
 
 Mr. Miller. I think that is a very fair question, and a pertinent 
 one. Now, let me state to you the reasons why I think that would 
 be absolutely fair. It is possible for a law to apparently favor one 
 class over another ; but the result of the enforcement of that law 
 may only place that favored class on a level with others. 
 
 I would apply one general principle to all, and that is that every 
 producer and every manufacturer, who is unable single and alone, 
 to protect his fair rights of property with bargaining, if by collective 
 bargaining he can fairly protect his fair rights of property, he ought 
 to be allowed to do it ; by all means, give him the power of collective 
 bargaining, whether it be the cement people, the packers, the milk 
 dealers, or the farmers. 
 
 But the distinction lies in this, that every one of those concerns 
 can protect their own rights of property and their own right of 
 bargaining in dealing with their customers. Farmers can not. 
 
 Mr. Hutchinson. Why? 
 
 Mr, Miller. That question also is a fair question. Let me illus- 
 trate the reason, and let me illustrate it, again, in terms of milk, 
 with which I am familiar: The organization of the Dairymen's 
 League in New York State has about 75,000 members. Chicago, I 
 thiri, has 25,000 or 30,000, and so on from that down to 5,000 or 
 6,000. Before these farm organizations become active in selling 
 their farm products, let me tell you how prices were fixed, as com- 
 pared with now, because if we do not have this right, we must of 
 necessity revert to the prior conditions. 
 
 On the 15th day of September and March of every year these milk 
 dealers, several hundred in number, with country receiving plants, in 
 number from 1,200 to 1,500, would issue notices — ^the farmers would 
 find on the morning of the 15th day of September and the 15th day 
 of March notices posted saying, " The prices for milk for the coming 
 six months will be so much." 
 
 Mr. Hutchinson. Would not that be against the law ? 
 
 Mr. Miller. No, I am not speaking of that being against the law ; 
 I am answering your question as to why the farmers can not them- 
 selves protect their rights of bargain. 
 
 That notice was put up by the buyer without consultation with 
 the farmer, utterly regardless of the costs of production and regard- 
 less of the laws of supply and demand. 
 
 It was because of those conditions that the farmers revolted and 
 formed these organizations. Now, there are 75,000 members. And 
 I ask you, in good faith and fairly, how could 75,000 men meet every 
 
16 HIGH COST OF LIVING. 
 
 month these buyers of their products? And last year we had 11 
 contracts to make. How could they do it? If there is any way by 
 which they can do it successfully, why, we will consider it almost a 
 benediction upon the farmers of the country if you can tell us how. 
 
 Mr. Hutchinson. I am not questioning the right of the farmers 
 to form cooperative organizations; but I think it is going beyond 
 the line when you give those organizations the right to fix the price. 
 
 Mr. MiLLEK. How would you suggest that the price should be fixed? 
 
 Mr. Hutchinson. It should be left to the law of supply and de- 
 mand. 
 
 Mr. MiLLEB. But who is going to determine the price as the law of 
 supply and demand has fixed it? 
 
 Mr. Hutchinson. That will find its own level. 
 
 Mr. Miliar. But who will translate it in terms of dollars and cents 
 per hundred ; somebody must do that. 
 
 Mr. Hutchinson. There is another question, if you are through 
 with that, that I want to ask you about : You said a while ago that 
 a man could buy more pork, more flour, etc., with his wages — ^the 
 average wage earner. Suppose there is a family which consists of 
 five, which is the average family, and they have one man's earning 
 power. His wages, we will say, have increased once, or twice or 
 three times, but everything he buys has increased three or four 
 times, for five persons. Where does he come out ? 
 
 Mr. Miller. If he still has the same family — if with the day's 
 wage he can take home more food, he is better off, no matter how 
 many there are in the family. 
 
 Mr. Hutchinson. I can not see that. That is all. 
 
 Mr. Jones. Mr. Miller, you have said several times in your state- 
 ment that your request is that farm organizations be given liberty 
 of action under the law. I wonder if that is synonymous with ex- 
 emption of the farm organizations from the law; is that what you 
 mean by it? 
 
 Mr. Miller. No; I would distinguish from an exception or an ex- 
 emption. Now, let me illustrate that : 
 
 Here is a law, we will say, of a given State, or of the United 
 States, that absolutely and in drastic terms, states that certain acts 
 which jxinj result in monopoly are unlawful and punishable. A mere 
 clause saying that farmers in their organizations are exempt from 
 this law would mean that farmers could go out and conspire and 
 agree, in any method they pleased, to do anything — ^to interfere with 
 interstate commerce under the Federal law. 
 
 But what we do ask — and we submit to you that it is only right 
 and just — ^is that before this session of Congress closes, you give 
 careful consideration to an amendment, already pending in the House, 
 which does not except farmers from the antitrust laws, but is a con- 
 gressional declaration that farmers engaged in making collective 
 sales of their products, and prescribing the terms and conditions of such 
 sales, are not engaging in conspiracies in restraint of trade or com- 
 merce; giving them the right to do those particular things in that 
 particular way, but not a general exemption from the antitrust law. 
 
 Does that answer the question you had in mind ? 
 
 Mr. Jones. One other question : Do you believe that farm organi- 
 zations, as well as labor organizations, or any other combination of 
 activities, should be subject to regulation and legislation ? 
 
HIGH COST OF LIVING. 17 
 
 Mr. Miller. If at any time the operation of any association — 
 labor, farmers, or whatever it may be — if by their acts they have 
 shown that they are a menace to the public, regulate them. But our 
 experience, so far as we have gone with Government regulation, has 
 been that the other fellow always escapes and we get it " in the 
 neck." 
 
 Mr. Jones. Well, would you regulate their actions after they have 
 been in existence, rather than their organization and the methods 
 by which they can begin their organization ? 
 
 Mr. Miller. Yes, sir ; if it then appears in anyway that they are a 
 menace to the public interests, Congress should have absolute power 
 to regulate them. 
 
 Mr. Jones. Are you more apt to reach the situation by legislating 
 a method by which they can organize, rather than by trying to correct 
 an evil after it has been done ? 
 
 Mr. Miller. In reply to that, I would say that in the agricultural 
 population all over the country there is a grave unrest because of 
 their lack of power to do these things, and because o'i many things 
 that have already been done by governmental regulation during the 
 war. 
 
 Mr. Jones. Yes ; I agree with you. Now, as to your Dairy League, 
 are you familiar with the charter of that league ? 
 
 Mr. Miller. I am. 
 
 Mr. Jones. Who can be members of it — or who, in fact, are mem- 
 bers of it? 
 
 Mr. Miller. By the charter itself anyone can be a member or stock- 
 holder, because it is in form a stock corporation. We are now reor- 
 ganizing under a law recently passed in New York by which only 
 producers can be members, and they can be continuous members only 
 as long as they are producing. But under our present charter our 
 by-laws provide that no one can obtain a share of stock except a 
 farmer, and those shares of stock are widely scattered. There are 
 now about $150,000 worth of them issued, or $160,000 — I am not sure 
 as to the amount — ^but they are scattered among 75,000 men. In other 
 words, the certificates run from $1.25 to $5 apiece, scattered among 
 75,000 men; so that, in substance, it is only a producers' organiza- 
 tion. 
 
 Mr. Jones. Let me ask you whether those States in which those 
 indictments were returned against those men have any law that those 
 men were violating technically ? 
 
 Mr. Miller. The district attorneys claimed that they were violating 
 the law; that is denied by the men themselves. But there is this 
 significant fact, and it may have some bearing with you gentlemen 
 as to the policy to be adopted in permitting farm organizations to 
 do this : That in the three greatest States of the Union, measured by 
 population, etc., just as soon as this question has been called to the 
 attention of the legislature, they have promptly amended their State 
 laws so as to clearly give the right we are asking you to give us 
 nationally. Pennsylvania, Illinois, and New York have done that. 
 
 Mr. Jones. Yes; that may be politics. I think that is true of 
 Congress. 
 
 Mr. McLaughlin. You did not name the third State. 
 
 137691—10 2 
 
18 HIGH COST OF LIVING. 
 
 Mr. Miller. New York, Pennsylvania, and Illinois. The Pennsyl- 
 vania statute is in a form authorizing the association to make these 
 collective sales under the power of contract. Pennsylvania itself has 
 no drastic antitrust law. but the enacted this cooperative act so as to 
 clearly legalize this and protect the farmers against the common law, 
 which has some teeth in it even as to this same proposition— not as 
 much as the statute law. Now, the very fact that three States hav- 
 ing within their borders the three largest cities of the country — and 
 bear in mind that Greater New York has more population than the 
 outside population of New York State— and yet they promptly passed 
 that law. 
 
 Mr. Heflin. You feel that, since there is centralization of power 
 amongst the manufacturers who use, the raw materials from the 
 farms, that the farms should be permitted to organize in order that 
 they may receive a fair and reasonable price for their raw material? 
 
 Mr. Miller. Exactly so. 
 
 Mr. Heflinw You distinguish that right on the part of the farmer 
 from the position that would give him authority to arbitrarily and 
 unjustly fix prices to the detriment of the consumer? 
 
 Mr. Miller. Exactly so. 
 
 Mr. Jones. Then, should not both organizations be regulated by 
 law? 
 
 Mr. Miller. But these other organizations, if they are doing these 
 things by concerted action, already come within the very teeth of the 
 Sherman law ; still they are going on doing it. 
 
 Mr. Jones. The farmers would do it if they were exempt under it? 
 
 Mr. Miller. Well, let me submit this to you : No one farmer has 
 a personal interest sufficient to permit him for very long to imperil 
 his reputation by an indictment. Now, if this clear right is not 
 given, it will result in either one of two things, in my judgmenl^-r 
 either that these farm organizations will disintegrate because they 
 can not find leaders that will do the work, or it will mean the ad- 
 vancement of radical leaders, the result of which might be simply 
 disastrous. 
 
 Mr. Jones. I think, Mr. Chairman, that we ought to recommend 
 to this organization that they retain their present leader and repre- 
 sentative. I have never heard a clearer and better presentation of 
 a case before a committee than I have heard to-day. [Applause.] 
 
 The Chairman. We all agree that Mr. Miller has made a very good 
 statement. 
 
 Mr. VoiGT. Let me ask you this question: Have you any sugges- 
 tions to make for reducing the high cost of living? 
 
 Mr. Miller. I have certain views on the subject that I would be 
 glad to state, if they are of any interest to the committee, although 
 they are so purely my personal views that they may not be of any 
 interest. 
 
 Mr. Jones. That is the purpose of these hearings, Mr. Miller — to 
 enable us to determine some basis by which that result can be attained. 
 
 Mr. A^oiGT. Yes ; these hearings have been called to ascertain the 
 facts with regard to the high cost of living ; and I understand that it 
 is the purpose of this committee to trj' to find some way to reduce 
 that. 
 
 Mr. Miller. Well, Mr. Chairman, I think somebody has " wished 
 on " you a pretty good job. fTiaughter.! 
 
HIGH COST OF LIVIIS'G. 19 
 
 To speak broadly and without getting down to too many details, 
 I think that the present high cost of living is the necessary result of 
 certain causes. To change the result we must go back and change 
 the cause. 
 
 What are the causes? First, the inflation of the currency, which 
 has so materially reduced the producing power of the dollar. 
 
 Mr. VoiGT. Do you consider that the principal cause ? 
 
 Mr. Miller. I consider that the greatest one single cause; yes, 
 sir. 
 
 Let me first speak as to deflation. A deflation would unquestion- 
 ably gradually reduce the price of all commodities, because that 
 operates upon all classes of commodities alike; but the danger of 
 deflation, if it is too rapid, would be that it would be such a shock 
 to commerce and business that it Avould bring about widespread 
 failures. So that deflation must be accomplished with a great deal 
 of discretion and only carried on step by step so that it would not 
 cause an undue shock to business. 
 
 Now, as to the remainder of the causes. I know of no Avay to 
 remedy the high cost of living except to work, and work, and work. 
 \'\1iy? Because the world has been engaged in an orgy of destruc- 
 tion. Millions and millions of men have been taken from the ranks 
 of production — farmers, manufacturers, miners, every one; we have 
 been diligently seeking out, not ways of increasing production, but 
 ways to clestroy. 
 
 Mr. VoiGT. If you will pardon me, I think the committee under- 
 stands those fundamental causes pretty well. 
 
 Mr. Miller. I think you do. 
 
 Mr. VoiGT. What I am trying to get from you is this: Suppose 
 you were a member of this committee and had to recommend some- 
 thing in the shape of legislation to reduce the high cost of living, 
 what would you recommend? 
 
 Mr. Miller. First, I would recommend that associations of farm- 
 ers making collective sales of their products be given a clear right 
 to do it that way. (Laughter and applause.) 
 
 It is a fair answer to the gentleman's question — and I think it is a 
 fair question — ^to say that not only will it encourage production, but 
 will permit these organizations in a way to say to the middleman, 
 " You must not profiteer, but you must pass it on to the ultimate 
 consumers at a fair price." 
 
 Mr. Jacowat. Let me ask you this question. If the Federal 
 Government gives the producers a market for everything they raise 
 and cuts out the unnecessary middleman between the prodiicer and 
 the consumer, it might give him the power of organization and cut 
 out all the unnecessary middlemen between the producer and the 
 consumer. 
 
 Mr. Miller. That is a very fair question, and it raises a question 
 that has received a great deal of attention in public life. I may be 
 considered old-fashioned in what I am going to say. 
 
 Mr. VoiGT. I think you are right up to the minute. 
 
 Mr. Miller. Somehow or other I have a reluctance to go too far 
 away from the ancient landmarks. I have an impression that the 
 more powers of business, as distinguished from powers of govern- 
 ment, the most powers of business you confer upon the Government, 
 the more you are subtracting from the liberty of the people, and 
 
20 HIGH COST OF LIVING. 
 
 that only an autocratic Government can successfully do business. 
 You may not agree with that, but that is the general thought I have 
 in my mind. 
 
 Mr. Jones. If we were to repeal the law we would be better off, 
 would we not? 
 
 Mr. Mellee. If we would repeal the law we would be better off; 
 it would almost seem so. It may be the remedy that has been sug- 
 gested would be the only one, but my idea would be to exhaust other 
 remedies first. 
 
 Mr. VoiGT. Aside from this matter of farm organization, have 
 you any further remedy to offer ? 
 
 Mr. MiLUEE. Yes ; but with a great deal of diffidence, because it is 
 such a tremendous problem, involving so many factors. The only 
 additional remedy I can see would be to hunt out the profiteer — that 
 illusive African gentleman whom we are all after, but whom no one 
 so far has been able to find. 
 
 Mr. Jones. Are you sure he exists ? 
 
 Mr. MiLUEE. I am not. I believe it exists in some circles; I am 
 not sure. 
 
 Mr. Jones. Do you not think if it had so much to do with the high 
 cost of living it would be observed ? 
 
 Mr. MiuoEK. I believe it would. 
 
 Mr. VoiGT. Would you favor a law forbidding the exportation of 
 cows? 
 
 Mr. MiLUBE. No. I think the more you have of governmental regu- 
 lation the more you interfere with the natural and legitimate in- 
 fluence of supply and demand, and the worse the situation will 
 become. I believe the Government has performed its full duty and 
 its safe duty when it prevents all parties from interfering with the. 
 operation of the natural economic laws. 
 
 Mr. VoiGT. If we kept all the cows at home, the chances are the price 
 of milk would come down ; is that not so ? 
 
 Mr. Milder. Temporarily. But if it did come down, what would 
 be the result? The farmers in New York State for the month of 
 August are losing 27 cents a hundred on every quart of milk they 
 produce. In other words, because of the fact that several of the 
 leaders of that organization were foolish enough to get into a con- 
 tract by which they are loosing money that is the result. How long 
 will they go on losing money if the prices of the feeds they use do not 
 go down? According to a survey made the week before last, the 
 prices of the cattle feeds these men buy increase on the average from 
 ?56 to $76 a ton. 
 
 Mr. VoiGT. Would you favor the enactment and enforcement of 
 measures by the Federal Government to force food products out of 
 cold storage at this time to reduce the cost of living? 
 
 Mr. Miller. No; I think that is fraught with very grave danger. 
 There is enough food on the market. If there was a scarcity of food, 
 I would say yes, by all means. But with the quantities which, as de- 
 veloped in the testimony here — I think the testimony of Mr. Marshall, 
 from the Bureau of Markets of the Department of Agriculture — 
 shows but a little more than the normal supply is in the storage houses, 
 laid up for future use. If that is thrown on the market now it means 
 immediately a decrease in prices to the farmer. Then, where is the 
 
HIGH COST OF LIVIITG. 21 
 
 supply coming from next winter, which these storage warehouses 
 usually supply ? 
 
 Gentlemen, in the course of my investigation of this subject some 
 time ago I discovered that in England in the early part of the nine- 
 teenth century there were some laws enacted against hoarding. Those 
 laws remained on the statute books for years ulitil they were repealed, 
 and the reasons were given by Macaulay when he said those laws had 
 converted a scarcity into a famine. 
 
 Mr. VoiGT. Laws against hoarding are a part of the common law 
 of the States now? 
 
 Mr. Miller. I think so. 
 
 Mr. VoiGT. The price of milk is fixed by your organization, acting 
 collectively ; that is, the owners of the cows act collectively with the 
 purchasers of the milk — ^that is, the milk dealers. You get together 
 occasionally and fix the price you are to get from the dealers. Under 
 those circumstances what becomes of the law of supjily and demand ? 
 
 Mr. Miller. The law of supply and demand, to a large extent, de- 
 termines the price then agTeed upon, so near as the operation of that 
 law can be determined upon in advance. 
 
 Mr. VoiGT. It looks to me as though by that process you cut out the 
 operation of the law of supply and demand. There is a lack of indi- 
 vidual bargaining in many cases, which fixes the price ; you fix the 
 price arbitrarily. That is, you get what you can under those circum- 
 stances. 
 
 Mr. Miller. As has been suggested, these contracts are for a very 
 limited period, and, as I stated before, in determining the prices 
 with our particular organizations we will all agree that butter and 
 cheese are subject to world-wide competition. Our prices for Sep- 
 tember would be determined by the prices of butter and cheese for the 
 30 days ending August 20, adding thereto the additional cost of pro- 
 ducing market milk. 
 
 Mr. VoiGT. The object of your collective bargaining is to procure a 
 higher price than the farmer would otherwise receive. 
 
 Mr. Miller. Undoubtedly so; but that does not mean that we al- 
 ways ask for a higher price, because voluntarily we frequently after 
 a survey of market conditions agree upon a lower price. 
 
 Mr. VoiGT. The farmers could not bargain collectively with the milk 
 dealers if it were not to the financial advantage of the farmers. 
 
 Mr. Miller. Absolutely so. His purpose is to get a better price. 
 
 Mr. Heflin. When he does that he simply employs the same meth- 
 ods that the dry-goods merchant and the hardware merchant employ 
 when they figure on the cost of putting their goods in their establish- 
 ments and getting a fair profit on them. 
 
 Mr. Miller. Exactly so. 
 
 Mr. Jones. Take a carload of milk which comes from St. Lawrence 
 County and goes to New York City over the New York Central road. 
 The original cost is determined by this aggregation of farmers 
 bargaining with the dealers. 
 
 Mr. Miller. Yes. 
 
 Mr. Jones. That cost, I presume, is the cost of the milk in the car — 
 or where is the price fixed? 
 
 Mr. Miller. Our territory is 500 miles long, but everyone concedes 
 that the price should be uniform ; everyone concedes that necessarily 
 
22 HIGH COST OF LIVING. 
 
 is SO, or else some dealers would be in a more advantageous position 
 than others and be able to get their milk at a cheaper price than others. 
 The price is fixed at a point 200 miles from New York. 
 
 Mr. Jones, xlt a railroad jooint? 
 
 Mr. MiujDE. At a railroad point ;, between that point and New 
 York, or, rather, a point about 60 miles from New York, because no 
 milk goes into New York City, and within 60 miles the freight differ- 
 ential is added to the price. Beyond 200 miles from New York the 
 freight differential is subtracted. 
 
 Mr. Jones. Take the concrete case of a carload of milk from St. 
 Lawrence County, at a point on the New York Central Railroad. 
 How many persons, firms, or corporations handle that milk before it 
 reaches the customer in New York City ? 
 
 Mr. Miller. There is a diversity of custom in regard to that. As 
 to a large part of it, it is handled only by one dealer, and that is the 
 same dealer • 
 
 Mr. Jones (interposing). The same dealer that bargained with 
 the farmer ? 
 
 Mr. Miller. Yes. 
 
 Mr. Jones. But he does not make the delivery to the consumer of 
 that milk? 
 
 Mr. Miller. Yes ; because their office is in the city, and they have 
 complete distributing organizations and their people deliver it at 
 the residences in the city. 
 
 Let me tell you a fact thete which I have not told before. For July 
 and August the price to the farmers in that district was 7 cents a 
 C[uart. That was the average cost, 7 cents a quart. The customers 
 in New York City are paying 16 cents a quart for that milk. 
 
 Mr. Jones. Why? 
 
 Mr. Miller. I do not know. 
 
 Mr. Jones. What was the freight charge on that milk which the 
 farmer got 7 cents a quart for ? 
 
 Mr. Miller. I think that would be from 1 to 1^ cents a quart. It 
 depends upon the form in which it is shipped. 
 
 Mr. Jones. Then that milk would get into New York at a cost to 
 the dealer of about 8^ cents a quart? 
 
 Mr. Miller. No ; I think, in all fairness to the dealer, I could not 
 say that, because he has the expense of his country receiving station, 
 and also 
 
 Mr. Jones (interposing). I thought the price of 7 cents was the 
 price on the car ? 
 
 Mr. Miller. No; the dealer pays that for the milk delivered to 
 the plant which the dealer operates. And there are many of them 
 who pasteurize it and ice it and then they load it on the cars. Then 
 comes the charge for the freight. When it reaches New York it 
 is taken usually in trucks and distributed to points throughout the 
 metropolitan district. It is distributed to large customers, to whom 
 direct deliveries are made in large trucks, while the deliveries to 
 small customers are made by wagons. 
 
 Mr. Jones. Is there any distinction between the price the customer 
 pays on milk within the differential zone and that which comes, for 
 instance, from St. Lawrence County? 
 
 Mr. Miller. No ; it is all the same. 
 
HIGH COST OF LIVING. 23 
 
 Mr. Jones. Does the farmer who produces this milk within the 
 differential zone get more for his milk than the farmer in St. Law- 
 rence County? 
 
 Mr. Miller. Yes, sir ; he does. That is a measure that may result 
 sometimes in injustice, but there has been no way found yet to 
 rectify it; of course the value of an investment depends upon the 
 proximity to the market. 
 
 Mr. Jones. That does not inure to the benefit of the consumer at 
 all : he pays about the same price ? 
 
 Mr. Miller. I have never seen it. 
 
 Mr. Htjtchinson. Have you any idea how many quarts of milk a 
 delivery wagon can deliver in a day ? 
 
 Mr. Miller. They do not work a whole day. They deliver by the 
 load. In Philadelphia I understand the average load is something 
 like 350 quarts ; in New York it is a little bit less than that. 
 
 Mr. Hutchinson. How many men are on that delivery wagon? 
 
 Mr. Miller. I do not know exactly ; less than a thousand. 
 
 Mr. Hutchinson. I do not think you understood my question. I 
 mean how mony men are on one delivery wagon. 
 
 Mr. Miller. On one delivery wagon I think there is one man. 
 
 Mr. Young. Your concrete suggestion is, in regard to the recom- 
 mendation filed by the Attorney General with reference to amending 
 the war-time food bill, that a proviso be inserted to the effect that 
 this law shall not apply to organizations of farmers. 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Young. On that point, there is a very rapid tendency for the 
 population to move to these congested centers and to become con- 
 sumers of food instead of producers of food, is there not? 
 
 Mr. Miller. Quite marked. 
 
 Mr. Young. That is very marked, is it not? 
 
 Mr. Miller. Yes. 
 
 Mr. YoTjxG. Have you any idea now as to the proportion of the 
 population that is made up of consumers in the cities and towns, and 
 how that population compares with the producers? 
 
 Mr. Miller. Nation-wide? 
 
 Mr. Young. Yes, sir. 
 
 Mr. Miller. Anything I might say in regard to that would be so 
 entirely an estimate that I would be reluctant to say, 
 
 Mr. Young. But the tendency is to abandon the farm life for the 
 city and town life. 
 
 Mr. Miller. That tendency is very marked. 
 
 Mr. Young. Do you know what there is in the situation that 
 causes the people to leave the productive capacity of the farm and 
 move to centers of population ? 
 
 Mr. Miller. The one great basic cause is that it is less profitable. 
 
 Mr. Young. That is on the farm? 
 
 Mr. Miller. Yes. 
 
 Mr. Young,. This is a representative form of government, and the 
 Members of Congress are elected directly by the people, as well as the 
 Executive authority of the Government. If Congress, as, the law- 
 making power of the Nation, should embark on the proposition of 
 passing Federal statutes that would be so drastic as to reach the 
 farmers of the country under conditions that now exist, where the 
 
24 HIGH COST or LIVING. 
 
 farmers are moving to the centers of population — and probably now 
 the consumptive capacity of the country is greater than the produc- 
 tive capacity of the farm. 
 
 Mr. MiLLEK. Beyond question. 
 
 Mr. YoTjNG. So "if this course is persisted in it will only be a short 
 time until this clamor for statutory enactment will come from the 
 congested centers that will practically make a slave of the man who 
 produces. 
 
 Mr. Miller. Beyond question that will be the result. 
 
 Mr. Young. That will be the very danger of the tendency, and 
 that can result in only one thing, and that is to make the people cease 
 production. 
 
 Mr. Miller. That is exactly so. 
 
 Mr. YoTJNG. This condition does exist in your section of the coun- 
 try, does it not, that labor is very high on the farm ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Young. Resulting from the congested centers bidding against 
 the farmers for labor, and farm labor has gone rapidly into the con- 
 gested centers and depleted the farms. 
 
 Mr. Miller. Yes. 
 
 Mr. Young. This is true in my section of the country, that the 
 average small farmer with a family of four or five children who 
 formerly employed farm labor to help till the acres on the farm, 
 finds under the present scale of wages he has to pay on the farm that 
 the wage earner can not be profitably used on his farm, and that has 
 resulted in this, that the farmer and his family are proceeding to till 
 just what they can and take their chances in the market with what 
 they make or produce with their individual eflForts, and that they 
 can not employ this surplus labor which they formerly employed. 
 That is true in my section of the country and I presume it is true in 
 every other section of the country. 
 
 Mr. Miller. Yes, sir ; and I believe it is becoming more and mor& 
 marked all over the country. 
 
 Mr. Young. That being true, there is one cause for it. The 
 farmer wishes to get a dividend out of his investment, and so th& 
 acreage which he and his family can not work lies idle. If the pres- 
 ent condition continues to exist then, of necessity, the food supply 
 will become inore and more restricted for those congested centers,, 
 and you think it is a dangerous proposition to enact any legislation 
 that will probably result in drawing people from the farm so that 
 they become consumers in these large congested centers? 
 
 Mr. Miller. Most dangerous. 
 
 Mr. Young. I heartily agree with you on that. How many farm 
 organizations are there in this Nation ? 
 
 Mr. Miller. I can not answer that? 
 
 Mr. Young. How many do you represent? 
 
 Mr. Miller. There are many small local organizations. Mr. 
 Lyman, the secretary of our organization, can probably tell you. 
 
 Mr. Lyman. We have 14 National and State organizations, with 
 a combined membership of 2,000,000. The National Farmers' Union 
 probably has a dormant membership of 2,000,000 which can be 
 counted" on to work in a crisis. If your question is in regard to the 
 membership of the farm associations over the country, I think there 
 are from 16,000 to 18,000 of those organizations. 
 
^IGH COST OF LIVING. 25 
 
 Mr. Young. I want to know how many organizations this bill 
 would reach, and against whom prosecutions under this bill could be 
 begun ? 
 
 Mr. Lyman. It is impossible for anybody to say that because so 
 many of the associations are organized around the proposition of 
 purchasing supplies and the only trouble they have is from the boy- 
 cotting and discriminations of powerful trade associations which do 
 not want to do business with them. This bill would not affect them. 
 I do not believe the Department of Agriculture or the Bureau of 
 Markets know exactly the number of organizations that are engaged 
 in collective sales, but it will run into the neighborhood of between 
 10,000 and 15,000, I think, because if we take the creameries and 
 organizations of that sort, it is a very large number. 
 
 Mr. Young. What I want to know is this. You have been speak- 
 ing of the organization of the milk producers in the section of the 
 country which you represent. What other products of the farm 
 come under the organization capacity of farmers, within your knowl- 
 edge ? 
 
 Mr. Miller. There is cotton 
 
 Mr. Young (interposing). How does cotton come under that? I 
 am curious to know how that is. I am not aware that there is such 
 an organization. 
 
 Mr. Miller. I thought you said that could come under. 
 
 Mr. Young. I mean now under organizations that now exist. 
 
 Mr. Miller. Selling organizations? 
 
 Mr. Young. Organizations like the ones that come under the 
 present law you are dealing with. 
 
 Mr. MuLER. There are wheat organizations making collective 
 sales, raisin organizations, orange organizations, milk organizations, 
 potato organizations, fruit organizations, poultry organizations, and 
 egg organizations that I now recall. 
 
 Mr. Young. Citrus fruits, strawberries, and things like that? 
 
 Mr. Miller. Yes. 
 
 Mr. Young. So that if the amendment to the statute as proposed 
 is not restricted in regard to these various organizations which pro- 
 duce the various food supplies you have named, those food supplies 
 would be more or less affected. 
 
 Mr. Miller. Exactly so. 
 
 Mr. Young. And would be disastrously affected, because it would 
 then go back to the consumers, in that these people, not knowing 
 what will be the result of this legislation, will defer their operations 
 and cease to be producers, and then, instead of having a surplus to 
 go on the market, there would be no surplus to feed the people who 
 are now howling down the high cost of living. 
 
 Mr. Miller. I see no escape from that. 
 
 Mr. Jones. Are there any farm labor organizations; that is, or- 
 ganizations of men who are employed on the farms? 
 
 Mr. Miller. I do not know of any. 
 
 Mr. Anderson. Some attempts are being made in that direction 
 right now, I think. 
 
 Mr. MnxER. Possibly so, but I do not Imow. 
 
 The Chairman. Do you desire to ask any questions, Mr. Lesher? 
 
26 HIGH COST OF LIVING. 
 
 Mr. Leshee. Nothing. I only desire to say this, that I approve 
 everything Mr. Miller has said. I think he has sized up the situa- 
 tion entirely correctly. 
 
 Mr. Lee. Does your organization include the Farmers' Union and 
 Grange ? 
 
 Mr. MiLUER. It includes the Farmers' Union ; it includes the Penn- 
 sylvania State Grange, but the National Grange, by reason of the 
 form of its organization as it now stands — ^it may be changed — ^has 
 no power to join another. But we are working in the closest coop- 
 eration and have daily conferences. 
 
 Mr. Yox7NG. To clarify the situation in answer to a question which 
 was asked you a while ago, I desire to ask you this question : Under 
 your present organization, by which the farmers through their or- 
 ganization deal with the milk-supply people and contract with them 
 for the supply in the city of New York, as I understand it, these 
 contracts are made for 30-day periods? 
 
 Mr. MrLLEE. For short periods — sometimes 30 days and sometimes 
 60 days. 
 
 Mr. Young. If the contract is to be entered into on the 1st of the 
 coming month for a 30-day period, the producers know already 
 about what their productive capacity is for the coming month ; that 
 is true, is it not? 
 
 Mr. MnxEE. Yes. 
 
 Mr. Young. They know what they can produce? 
 
 Mr. Miliar. Yes. 
 
 Mr. Young. And they know what the cost is of that — the overhead 
 cost of the production of the article? 
 
 Mr. MiLUER. Yes. 
 
 Mr. Young. Those facts are also known by the prospective pur- 
 chaser who is going to contract for that milk with the farmer organi- 
 zation ? 
 
 Mr. MiuLER. Yes. 
 
 Mr. Young. So that in making this contract for this 30-day period, 
 or for a short period, as well as the human mind can see those 
 things ahead, under the existing conditions, which they have in 
 mind, the law of supply and demand does enter into this contract? 
 
 Mr. MiLuiE. It absolutely does ; we never can escape doing that. 
 
 Mr. Young. With these men living several hundred miles from 
 the congested center of New York, I presume you have many small 
 farmers who have one or two or half a dozen cows, and if there 
 was not some system of that kind through which he could sell his 
 dairy products he would have to go out of business, because he is 
 too far from the market centers to enable him to market that stuff 
 himself. You find that that occurs in your situation ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. McLaughlin of Nebraska. Mr. Jones brought out the fact 
 that outside of the receiving points and the expense of distributing 
 in the city, the cost of the milk to these buyers is about 8^ cents a 
 quart. Can you give us an estimate, from your experience, as to 
 about how much a quart is incurred in the way of expense at the 
 receiving stations? 
 
 Mr. Miulee. I can not segregate it. I can give you these conclu- 
 sions reached: A milk commission which was appointed by Mr. 
 
HIGH COST OF LIVING. 27 
 
 Hoover studied the prices in that territory from December, 1917, 
 vmtil July, 1918. They investigated both the cost of production and 
 of distribution. That commission did not have power to issue sub- 
 poenas and to compel the production of documents or the attendance 
 of witnesses. They took the testimony of both sides, who brought 
 witnesses before them, and they made the most intelligent investi- 
 gation that they could. The commission found at that time — and 
 this was in January and February in 1918 — that the entire cost of 
 distribution from the time the milk was taken in at the door of the 
 receiving station until it was delivered to the residence in the city, 
 was 6.8 cents per quart. Now, since then there has been one strike 
 of the drivers of milk wagons, which resulted in a raise of their 
 wages, and I think there has been one other raise. In fact, the 
 last month when Mr. Hoover's deputy was overseeing the determina- 
 tion of the prices, the dealers stated that one readjustment of the 
 wages added 1 cent a quart to their cost. 
 
 Mr. McLaughlin of Nebraska. That 6.8 cents per quart for dis- 
 tribution would include the profit of the distributor, would it ? 
 
 Mr. Miller. No, sir. 
 
 Mr. McLaughlin of Nebraska. You say the milk is selling at 16 
 cents a quart in New York City? 
 
 Mr. Miller. Yes. 
 
 Mr. McLaughlin of Nebraska. On that basis it would give them 
 a profit of 1.2 cents? 
 
 Mr. Miller. I believe it is only fair to the dealers to say that they 
 have other heavy expenses. 
 
 Mr. McLaughlin of Nebraska. Relative to the three communities 
 of which you have spoken, Chicago, Cleveland, and New York, are 
 you in a position to state approximately what proportion of the 
 supply of milk that is distributed in these various communities is 
 produced by the organized dairymen? 
 
 Mr. Miller. In the district of New York ? 
 
 ilr. McLaughlin of Nebraska. In all or any of these districts. 
 
 Mr. Miller. In New York we could only state that by the number 
 of cows. We have never had a definite survey. Judged by the num- 
 ber of cows the organized dairymen supply about 40 per cent. The 
 dealers claim that the organized dairymen control 65 per cent. 
 
 Mr. McLaughlin of Nebraska. I would like to ask this question: 
 If through this exemption, which I believe I would favor, the con- 
 dition would arise where the dairymen — of course that would apply 
 to the other organizations you have spoken of, but more especially 
 to the dairymen — the condition would arise where the dairymen were 
 so completely organized that they would control the entire supply of 
 milk. Then under that condition the producers would be privileged 
 absolutely to set the price, would they not? 
 
 Mr. Miller. Yes. 
 
 Mr. McLaughlin of Nebraska. Do you think it would be safe, 
 looking toward the future, to reach that condition ? 
 
 Mr. Miller. Absolutely safe for a man who is producing things 
 to fiix the prices, unless developments show that they are using the 
 power of their organization to exact unjust prices. If that condition 
 should occur, then you should curb them, and we will be with you in 
 the curbing. 
 
28 HIGH COST or LIVING. 
 
 Mr. Leshee. There is room for somebody else to start in the 
 business. 
 
 Mr. MiLtEK. Always. 
 
 Mr. Leshee. They correct it that way, occasionally. 
 
 Mr. MiLUEE. There are a number of abandoned dairy farms in New 
 York State to start with. 
 
 Mr. Jacoway. You represent the dairy activities of a certain por- 
 tion of the country ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Jacoway. I think everybody in this room agrees that you 
 know what you are talking about. If you get 7 cents a quart for milk 
 you produce, and it is sold to the ultimate consumer for 16 cents, tak- 
 ing into consideration the increased cost of living, what have you to 
 say as to whether or not 16 cents is a fair price for the milk to be 
 sold at, or whether it is an unreasonable price? What is your con- 
 clusion ? 
 
 Mr. Miller. I would prefer that you relieve me from answering 
 that question. 
 
 Mr. Jacoway. I think the committee would like to know your 
 opinion about it. 
 
 Mr. Miller. There are so many opportunities for misjudgment. 
 In the State of New York there are thousands of good people that 
 absolutely believe the farmers are profiteering. I know they are not. 
 There are some people who think that the dealer's profit is altogether 
 too much, but 
 
 Mr. Jacoway (interposing). I am not asking you about the price 
 the farmer gets for his products. I want to know your idea about 
 the price of 16 cents which is charged for the milk, as you say, in the 
 city of New York. Is that a fair price or an exorbitant price ? 
 
 Mr. Miller. I will say this, that it will be a safe answer to that 
 question to say what I have repeatedly stated in public in New York, 
 that the fact that there is a spread of 9 cents is a grave indictment 
 of present conditions. 
 
 Mr. Jacoway. Then I will get back to the other question. If you 
 were to cut out the unnecessary middle man — and I will say that 
 there are some middle men who are necessary, but I put the emphasis 
 on the word unnecessary — if you cut out the unnecessary middle men 
 and the milk was sold direct to the milk consumer, and eliminate the 
 unnecessary middle man, would that enable the price to the milk con- 
 sumer to be reduced ? 
 
 Mr. Miller. I think so ; I believe it would. 
 
 Mr. Jacoway. Then, coming back to the other question, do you 
 not think one of the ways of reducing the cost of living is to give 
 to the producers of this country a comprehensive marketing system 
 for everything produced by the farmer, so that he could have quo- 
 tations on everything which he sells? 
 
 Mr. MiLLEE. You mean the Government should act as a sales 
 agent? 
 
 Mr. Jacoway. Extend the activities of the Bureau of Markets so 
 that they would reach the entire country, like a network of infor- 
 mation. 
 
 Mr. MiLXEE. Again I can only say that I have but very little faith 
 in conferring upon the Government power to do business; that the 
 
HIGH COST OF LIVING. 29 
 
 proper functions of the Government are to govern, not to do business, 
 and that only an autocratic government can successfully engage in 
 this. 
 
 Mr. Jacoway. I think you do not understand my question. Let 
 us take a concrete example. Two years ago there appeared before 
 this committee some gentleman whose name I do not recall, who rep- 
 resented the potato growers of Arostook County, Me., which, as 
 I understand it, is the greatest potato-producing portion of the 
 country. The figures I am about to state may not be exactly correct, 
 but the lesson is there. He said the producers of those potatoes in 
 Maine were getting 70 cents a bushel and they were almost within 
 what you might call holloing distance! of the consumers; that the 
 consumers of those potatoes were paying $1.10 a bushel. Through 
 the Bureau of Markets down here in the Agricultural Department 
 bringing in contact the producer and the consumer of those potatoes 
 and making the two ends of the wire alive, that has produced which 
 might be termed an anomaly within an anomaly. The producers 
 of the potatoes got 10 or 15 cents more for their potatoes and the 
 ultimate consumer got their potatoes for 10 or 15 cents cheaper, giv- 
 ing a greater price to the producer and a less cost price to the con- 
 sumer by cutting out the unnecessary middle man, and the reason 
 why he was cut out was because they had these telegraphic reports 
 of the prices, as a result of the activities of the Bureau of Markets. 
 If that is true of the potatoes, why could it not be equally true with 
 every other product of the farm? 
 
 Mr. Miller. I fully agree that any work that any governmental, 
 department or any individual can do, or any service that a govern- 
 mental department or anybody else can render to bring the pro- 
 ducers and the consumers closer together, is to their benefit. 
 
 Mr. McLaughlin of Nebraska. I want to ask you a question in 
 regard to the matter of the middleman. A while ago I understood 
 you to say that the distributers dealt directly with the producers 
 of the milk. That being the case in this particular industry, as you 
 have outlined it, there is no place there for the elimination of the 
 middleman. 
 
 Mr. Miller. Perhaps I should qualify that statement. The larger 
 percentage of milk is handled, as I told you ; there may be a hundred 
 or possibly more small dealers in New York that buy a few cans of 
 milk and pay the big dealers for it. They buy the milk from the 
 big dealers. There are three companies in New York that probably 
 handle the largest percentage of the milk and their distribution is 
 direct. 
 
 Mr. Jones. Those small dealers simply pay what would otherwise 
 be the dealer's profit on the milk? 
 
 Mr. Miller. Yes. 
 
 Mr. Jones. Why could not the dealers sell their inilk at the same 
 pi'ice at which they sell it to these few intermediaries ? 
 
 Mr. INTiLLEE. It would seem as if they might. 
 
 Mr. Jacoway. I want to ask you a question in regard to the over- 
 lapping deliveries of milk. There are many overlapping deliveries 
 of milk, and as a result many unnecessary expenses. Do not the 
 people engage in these overlapping deliveries perform the same func- 
 tion that the commission merchant does in regard to other stuff? 
 
30 HIGH COST OF LIVING. 
 
 Mr. Miller. At first blush that would seem to be true, ten a very 
 great extent, and it may be true to some extent, but when you ask 
 those who have been in this for some time why they can not reduce 
 their expenses by a system of zoning, and have one wagon supply an 
 entire block, we have neA^er gotten a satisfactory answer to that 
 question. It has developed that, however, in some of the investiga- 
 tions by the New York State Legislature. 
 
 Mr. McLaughlin of Michigan. It was impossible for me to be 
 here when you began your statement this morning, ao that I missed 
 the first part of your remarks. I gather that you are objecting to 
 the fixing of a penalty in section 4 unless the farmers are exem.pted 
 in the way you suggest? 
 
 Mr. MiixEE. Yes. 
 
 Mr. McLaughlin of Nebraska. "What language in section 4 do you 
 think can be invoked against the farmer? 
 
 Mr. Miller. That would involve a rather long explanation of sec- 
 tion 4. I find that for many of the things prohibited in section 4 
 there are already penalties in the act, and for some of them penal- 
 ties more severe than the amendment seeks to provide. For instance, 
 by examining section 9 you will see that the conspiracy clause there 
 has a penalty of $10,000 fine as distinguished from the fine of $5,000 
 provided for in the amendment. Our position is this: That if any 
 change at all is to be made in the law in any way, and whether any 
 change is made or not, we would be glad to have in there a paragraph 
 that would contain about the same provision as is contained in paia- 
 -graphs 5 and 6. 
 
 Mr. McLaughlin of Michigan. Then you do not point out the 
 words you think could be invoked in a harmful way against the 
 farmers. Let me call your attention to the next to the last line 
 in section 4, which provides that it shall be unlawful to conspire, 
 combine, agree, or arrange with any person " to exact excessive prices 
 for any necessaries." 
 
 Do you think such an arrangement, as you say, has been made and 
 is in existence between the milk producers of New York and the 
 dealers' organizations of New York would be in violation of that 
 portion of the act I have read ? 
 
 Mr. Miller. The contract between our organization and the dealer 
 would not be a violation of that phrase, but if our organization sells, 
 they must, of necessity, fix prices, and whether or not they are to 
 go to the penitentiary under that law depends on whether their acts 
 come within the purview of that section. 
 
 Mr. McLaughlin of Michigan. Some of the anticombination laws 
 make it unlawful for two or more persons to get together to fix prices. 
 
 Mr. Miller. Yes, sir. 
 
 Mr. McLaughlin of Michigan. Thisi does not make unlawful any- 
 thing of that kind. This simply makes it unlawful to exact excessive 
 prices for any necessaries. Now, your combined associations and 
 sellers ask simply to fix prices. 
 
 Mr. Miller. Let me answer that in this way: Whether or not a 
 price is excessive is a fact to be determined by a jury, upon evidence. 
 Our organization, as many others, must fix prices for a period in 
 advance, as best we may, taking into consideration what will be the 
 cost of production, conditions of supply and demand, and that would 
 leave the resultant price for that period. 
 
HIGH COST or LIVING. 31 
 
 If it later developed that the price was too low they would be inno- 
 cent under that clause, but if it later developed that with the very 
 best of intention the price was too high they would have to go to the 
 Federal penitentiary, because in the conspiracy clause the intent is 
 immaterial. 
 
 Mr. McLaughlin of Michigan. Without expressing an opinion as 
 to the merits of your suggestiouj I would say it is not unlawful to fix a 
 price and let it stop there. This would make it unlawful to agree to 
 exact excessive prices for necessaries, and, in my judgment, the entire 
 merit of the case would be determined upon whether or not under the 
 circumstances existing at the time it was done it was an excessive 
 price, and the question whether or not it was an excessive price would 
 be determined upon by a United States court. 
 
 Mr. Miller. By a ]ury. 
 
 Mr. McLaughlin of Michigan. By the court in its regular pro- 
 cedure. 
 
 Mr. Miller. The jury are the finders of the facts. 
 
 Mr. Young. If the law is left as it is and they get that contract, 
 that contract would be subjected to be presented to the grand jury, 
 and thej' would be subject to indictment upon it, and if an indictment 
 was rendered it would be up to them to defend those indictments. 
 
 Mr. McLaughlin of Michigan. Here are cases for inquiry. But 
 the laws are full of provisions of one land and another by which 
 private property is taken and the conduct of private individuals is 
 inquired into and the matter is determined by trial in the United 
 States court. The Government could go out and commandeer prop- 
 erty and start condemnation proceedings for property worth 
 $1,000,000, and the question of whether or not the amount of money 
 offered by the Government was a fair price would be determined by 
 a trial in the United States court. So these laws are to apply to 
 transactions and to property involving unlimited sums of money. 
 They never have been objected to. They are thought to be reasonable 
 and they are thought to be the proper way of reaching the questions 
 in dispute between individuals and the public or the Government. 
 Now, if the same method is provided for determining whether or not 
 the price of a quart of milk is excessive and unreasonable as is pro- 
 Added in determining whether or not the price offered by the Govern- 
 ment for $100,000,000 worth of property is excessive, would you ob- 
 ject to it? 
 
 Mr. MniLER. May I ask you this question: In that case, how do 
 you distinguish between giving the farmer that right and the right 
 you have already given to labor? The farmers are selling the fruits 
 of their labor and the labor organizations are selling their labor itself. 
 By section 20 of the Clayton Act you have given labor that exemp- 
 tion. What is the distinction between the two ? 
 
 Mr. McLaughlin of Michigan. You did not answer my question. 
 You are asking another question that is not entirely the same. Will 
 you or Mr. Young answer the question and let it go into the record ? 
 
 Mr. Young. I will answer it all right. 
 
 Mr. McLaughlin of Michigan. I want to have the gentleman's 
 opinion. 
 
 Mr. Young. You asked me to answer it. 
 
32 HIGH COST OF LIVING. 
 
 Mr. McLaughlin of Michigan. I have not expressed my opinion 
 for the record or anywhere else on the question raised. I want 
 to know if this gentleman thinks it will be unfair to provide the same 
 machinery to determine whether or not an excessive price of a quart 
 of milk is charged, whether the price charged for milk is excessive 
 as is provided to determine Tshether or not the price of very valuable 
 property, real estate, and so on, such as the Government has taken 
 over during the war, is fair? 
 
 Mr. Miller. Premising my answer with the statement that it 
 seems clear to me that you have already answered the question to your 
 own satisfaction, my answer would be that it would be absolutely un- 
 fair to require an individual farmer or an association of individual 
 farmers, poor men, to engage in these expensive litigations to defend 
 their rights. The right should be clearly given or it is worthless. 
 
 Mr. McLaughlin of Michigan. You have asked a question in an- 
 swering my question, and I did not mean to have you do that, but I 
 am very glad to have your opinion as you have stated it. But in 
 some of the laws you know it is made unlawful to get together to fix 
 prices, excessive or otherwise ? 
 
 Mr. Miller. What law is that? 
 
 Mr. McLaughlin of M|chigan. It is unlawful to fixe prices. There 
 are such laws. 
 
 Mr. Miller. I think that is a result of the Sherman and Clayton 
 Act^. 
 
 Mr. McLaughlin of Michigan. This does not go that far. This 
 proposes to make it unlawful to exact unreasonable or excessive prices, 
 and the question of whether or not it is an excessive price is to be de- 
 termined by the court. 
 
 Mr. Miller. And the enemies of farmer's organizations, unless the 
 clear right to make collective sales is given, can destroy these organi- 
 zations by continual prosecutions, resulting even in acquittals. 
 
 Mr. McLaughlin of Michigan. I do not laiow whether you know 
 it or not, but some time ago the Attorney General was asked for an 
 opinion on this proposition. The farmers in a certain section of the 
 country advised among themselves as to the extent of production 
 that they would make for the coming year. They took action as to 
 what they would think would be a reasonable price for their products. 
 The Attorney General was asked for his opinion on that as to whether 
 or not it was a violation of any provision of this law, and although 
 months and months have elapsed he has not given aii opinion and 
 no proceeding has ever been taken under this law against any such 
 action on the part of farmers. Did you know that ? 
 
 Mr. Miller. I think I heard several months ago of some request 
 made to the Attorney General of that character. What has been 
 done about it I do not know. 
 
 Mr. McLaughlin of Michigan. You do not know whether or not 
 the Attorney General has given an opinion ? 
 
 Mr. Miller. No. 
 
 Mr. McLaughlin of Michigan. I will say he has not given an 
 opinion. Your request now is that if a penalty is attached to this 
 section 4 an exemption covering farmers, similar to the exemption 
 in oth"r sections should be added. 
 
 Mr. Miller. Exactly so. 
 
HIGH COST OF LIVING. 33 
 
 Mr. TiNCHER. You were asked if an embargo on the shipment of 
 dairy cattle would in your judgment reduce the cost of living. I will 
 ask you if, on the other hand, we are to export the surplus dairy cattle 
 of this country as a result of the war, or any other result, if you do 
 not think it will have a tendency to stimulate the dairy production of 
 the country. 
 
 Mr. Miller. It will. 
 
 Mr. TiNCHER. Do you not think if we had had an export market 
 for the surplus dairy cattle of the country it would have had a 
 tendency to have kept the new, unused dairy farms of New York in 
 action ? 
 
 Mr. MiLtEE. Yes, sir. 
 
 Mr. TiNCHER. As I understand it the Sherman antitrust law, as 
 well as war measures in force in the United States, have this exemp- 
 tion provision in them which you are asking to have in this measure. 
 
 Mr. Miller. Yes. Section six of the Clayton Act has a form of 
 exemption. The farmers have found that it is not adequate, and 
 there is a bill pending to make that more complete, and it was a 
 complete statement of congressional intent and policy to exempt 
 farmers' organizations. That intent has been followed later by a 
 proviso in an appropriation bill to the effect that the money appro- 
 priated in that bill must not be used to prosecute farmers' organi- 
 zations, and in a recent law they were exempted from taxation. So 
 that the congressional intent and policy has been well defined. 
 
 Mr. McLaughlin of Michigan. In regard to those suits that have 
 been begun that have harassed the milk producers, are the dealers 
 with whom the farmers made their arrangements made parties de- 
 fendants to those suits? 
 
 Mr. Miller. No, sir. 
 
 Mr. McLaughlin of Michigan. Can you give us the wording of 
 the law under -which that indictment was brought that allowed them 
 to proceed against one party alone to the bargain? 
 
 Mr. MhJ/EK. I can not give you the exact language, but the New 
 York law in substance prohibited any combination, conspiracy, agree- 
 ment, or arrangement in restraint of trade or commerce, and it was 
 under that section that the indictment was brought. The Illinois act 
 is similar to that. I do not know about the Ohio act. 
 
 Mr. McLaughlin of Michigan. In proceeding under a statute of 
 that kind, is it not customary, and would it not be necessary to 
 bring in both of the parties to that alleged illegal arrangement? 
 
 Mr. Miller. The offense with which they were charged was not 
 the making of a contract with the buyers, but against the farmers 
 getting together and agreeing among themselves as to what they 
 
 should ask. , , i . 
 
 Mr. McLaughlin of Michigan. They got together and agreed to 
 submit certain prices, did they not? . , , . . 
 
 Mr. Miller. That is what they were charged with, as having vio- 
 lated the act. . „ , , 1 ,1 ■ -x 
 
 Mr. McLaughlin of Michigan. After they suggested the price it 
 was a matter of bargaining between them and the association repre- 
 senting the dealers and the consumers? .. ^i ^ 
 
 Mr. Miller. It always has been. I agree with you that it that 
 case had come to trial those men would have been acquitted, but to 
 
 137691—19 3 
 
34 HIGH COST OF LIVING. 
 
 fight it as far as it had gone cost them $15,000 and a trial of six 
 ■\\eeks or so in New York City or Utica would have cost theni' 
 $25,000 or $30,000 more. The farmers' organizations can not spend 
 that much money. 
 
 Mr. Anderson. ,You have referred to some affirmative action recog- 
 nizing the right of collective bargaining among farmers. Can you 
 give us a more specific reference to the bill you have referred to ? 
 
 Mr. Miller. I think I can give you the number. It has been in- 
 troduced in the Senate by Senator Capper, and in the House, either': 
 by Mr. Barbour or Mr. Hersman. I have not the number of the 
 House bill. The number of the Senate bill is 845. The House bill, 
 is not exactly the same as the Senate bill because there have been 
 some amendments made to it, but the House bill is the bill we are 
 going to ask you gentlmen to consider. 
 
 Mr. Anderson. Who introduced that bill? 
 
 Mr. Miller. Congressman Hersman or Congressman Barbour, 
 both of whom are from California. The California people are 
 pioneers in this matter. 
 
 Mr. Anderson. Is it your idea that in recognizing the right of 
 collective bargaining on the part of a farm organization that right 
 should be limited to the products of the members of the organiza- 
 tion? 
 
 Mr. Miller. Yes, 3ir ; I think it should be. 
 
 Mr. Anderson. That is the question I am trying to raise, whether 
 this is a general exemption to permit organizations of farmers to 
 deal in products which they did not raise? 
 
 Mr. Miller. That ought not to be done, but it should concern 
 simply the products of the members of the organization. It would 
 be giving too much power. Or, as has been suggested to me, they 
 ou^t to have the power of buying their necessities collectively. 
 Generally speaking that would apply only to the products of the 
 members of the organizations to be sold. 
 
 Mr. Anderson. In the price you submitted, which you contracted 
 for with the New York dealers, did you estimate profits to the 
 farmer on the milk? 
 
 Mr. Miller. No. 
 
 Mr. Anderson. Had you previously gone into the cost of prodoic- 
 tion alone ? 
 
 Mr. Miller. Very thoroughly. 
 
 Mr. Anderson. But the contract price did not include any profit 
 to the farmer? 
 
 Mr. Miller. No, sir; the costs of production have not been the 
 principal factor in determining the price since the 1st of April. 
 During the war we were supposed to be working under a rule in 
 regard to costs of production, but while working under that rule 
 we received costs of production for two months out of 18 or 19 
 months, and those are the only two months, and one of those months 
 was December, and in those months only we got the costs of pro- 
 duction. 
 
 Mr. Anderson. If your prices were limited to the costs of pro- 
 duction plus a reasonable profit, whether regulated at that time by 
 arrangement or otherwise, if the construction as given to section 4 
 of the law by Mr. McLaughlin, of Michigan, is correct, that section 
 
HIGH COST OF LIVING. 35 
 
 ■would not seem to apply to that arrangement. Am T correct about 
 that? 
 
 Mr. Miller. That particular section. But there are several other 
 sections, and I have already answered in reply to that, that whether 
 or not the price is excessive is a question of fact that can only be 
 determined by a jury, and if that price was moderate and fair — 
 but we have to continually defend our rights to make a price at all, 
 and if we have to go on doing that our organization must go out of 
 business. 
 
 Let me quote to you another section which refers to the prevention, 
 the limiting, or the lessening of manufacture of production of neces- 
 saries. 
 
 Suppose there is a potato organization. They make a survey. 
 And before I go on with that let me say this: The farmer is com- 
 pelled by the natural law to be the biggest gambler there is any- 
 where, and he has got to take the risks of weather of freeze, heat, 
 of drought and other things of that sort, and what we are seeking is 
 to see that he will take a less gamble on his market. Let us saj"^ 
 that, here is a potato association. They must deal in big things in 
 maMng a survey in connection with the conditions that exist. They 
 make a survey so that they can get an idea of the acreage proposed 
 to be planted. They find that Sie acreage is insufficient, and that 
 if only that amount is planted it will result in scarcity. So, they 
 send out word to all their members to increase their acreage, or 
 there will not be enough potatoes. Say they found by means 
 of the survey they made that the situation was just the other way, 
 that it was reversed, and that they found that the acreage proposed to 
 be planted was such that if that amount was planted it would mean 
 that thousands of bushels of potatoes must go on the dump and they 
 sent out word to their members to cut down their acreage. They 
 would immediately, under that section, be subject to a fine of $5,000. 
 
 Mr. Jones. Does not that refer to manufacture? 
 
 Mr. MiLLEK. I think the word production would include that. 
 
 Mr. YoTJNG. Do you not think it is absolutely necessary for the 
 life of the farmers that they shall take into consideration those physi- 
 cal facts governing the potato crop or any other crop, and if the pro- 
 duction is going to be more than would be consumed they ought to 
 have the right to have that intelligence distributed to the farmers 
 of the country? 
 
 Mr. Miller. They must have it. 
 
 Mr. Young. That is what the intelligent farmers in the South did, 
 about which Mr. McLaughlin, of Michigan, made a reference. 
 
 Mr. Miller. They must have; and every other manufacturer has 
 the right to survey his prospective demand so that he may produce 
 properly. Is that right to be denied to the farmers? They can not 
 do it individually, but they must do it collectively or not at all. 
 
 Mr. McLaughlin of Michigan. This law is only a war measure. 
 
 Mr. Miller. I understand that; yes. 
 
 Mr. McLaughlin of Michigan. It ceases with the proclamation of 
 peace by the President. 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Anderson. Is there any difference between the limiting of pro- 
 duction for the purpose of meeting the market requirements and thr 
 
36 HIGH COST OF LIVING. 
 
 limiting of production for the purpose of enhancing the price of an 
 article ? 
 
 Mr. Miller. This particular section has a conspiracy clause. It 
 says that to conspire, confine, or agree is prohibited, regardless of the 
 intent with which it is done. The intent miglit be the purest possible ; 
 but that would not make any difference.^ 
 
 Mr. McZaughlin of Michigan. Are you entirely right about that 
 as to subdivision E. You are referring to section 4? 
 
 Mr. Miller. To section 4. 
 
 Mr. McLaughlin of Michigan. Are you entirely right about that 
 in regard to subdivision E? 
 
 Mr. Miller. "We would come under restriction of distribution if 
 we refused to sell milk or potatoes, and you are right as to that ; the 
 intent is material. But that does not have any particular bearing on 
 the question we are discussing. 
 
 Mr. ANnERSON. I want to get your point of view. Is it your idea 
 that the right of collective bargaining extends to the point of refus- 
 ing to sell at all? 
 
 Mr. Miller. Absolutely so. If they do not agree on prices, how 
 else could they bai-gain ? If they could not refuse to sell at all they 
 must take the other fellow's price. 
 
 Mr. Anderson. There ought to be a limitation both ways. Of 
 course,, if the farmers could get together in New York and say, 
 " Unless our price is agreed to we will not deliver milk at all for a 
 period of 10 days," you think that would be a proper exercise of the 
 right of collective bargaining? 
 
 Mr. Miller. Absolutely so, if the price they ask is a fair price, 
 because the trouble would be with the other people. That power must 
 exist or else they have no power at all. 
 
 Mr. Jones. Do you want to eliminate the right to determine whether 
 it is a fair price by a court and jury ? 
 
 Mr. Miller. If that is left to a court and jury these other prosecu- 
 tions would destroy the organizations. 
 
 Mr. Jones. Then your answer is " Yes," to my question, is it not? 
 
 Mr. Miller. Your question was what? 
 
 Mr. Jones. Your answer to Mr. Anderson was that the farmers 
 should have the right, if they could not agree with the dealers, to say 
 they would not deliver milk at all. You answered that by saying 
 they ought to have the right if their price was fair, and I ask you 
 whether you mean there should be no determining power to determine 
 whether it was a fair price or whether that should be left absolutely 
 to the farmers themselves? 
 
 Mr. Miller. I say it should be absolutely left to the farmer himself, 
 just as when he goes to a merchant he must pay the merchant's price. 
 If that power is refused to him you have destroyed the efficiency of 
 his organization, because if he must deliver in any event and continue 
 to deliver, the other fellow will still dictate the price. 
 
 Mr. Anderson. Would you object in a case of that sort — if the right 
 is given and it extends to the point of taking full advantage of the 
 necessity of the consuming public, we are bound to set up somewhere, 
 either by judicial process or by arbitration, some method by which 
 the question of the fair or excessive character of the price can be de- 
 termined, because it must be admitted, particularly in the case of milk, 
 that the necessities of the consumer are very great. 
 
HIGH COST OF LIVING. 37 
 
 Mr. Miller. That might be workable if, in addition to the powers 
 you give to this regulatory body, we will say, to fix the price of milk, 
 that [)ody also fixes the price of all the feeds the dairymen must buy, 
 which enter into the cost of the milk, and from there you would have 
 to go back. This price fixing by a governmental body can never logi- 
 cally stop short of the tree in the forest and the coal in the mine. We 
 say to you now, here, that if the Government can devise any plan by 
 which they will fix a fair price on what we have to buy, go to it and 
 fix the price on everything we have to sell ; but until that time comes 
 we object. 
 
 Mr. Anderson. I do not have any trouble in agreeing with you 
 about the price-fixing proposition. It never has worked out and prob- 
 ably never will, and it has been tried for 4,000 years. But somewhere 
 between the absolute right of an organization which may eventually 
 have a complete monopoly of the production of an article and the 
 necessities of the consuming public there has to be a middle course of 
 some sort or some intervention. 
 
 Mr. Miller. Very well. Then, if Congress determines that that 
 rule should apply to the farmers, we ask you to apply the same rule 
 to the labor we must buy, to the cattle feed we must buy ; regulate 
 everything, if you are going to regulate anything. 
 
 Mr. Jones. I want to ask you a question in regard to the matter of 
 a fair price. Mr. Anderson's inquiry simply goes to the point of 
 whether there should not be an intermediary of some kind to deter- 
 mine whether the price is fair in case the dairymen and middlemen 
 did not agree on a price. You say the farmer should have the sole 
 discretion of fixing the price ? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. Jones. And yet you differentiate somewhat by saying provided 
 it is fair. Yet you nullify that by saying the farmers should be the 
 sole judges. Mr. Anderson's inquiry does not go to the point of fixing 
 the prices, but goes to the point of determining whether that was a 
 fair price that the farmers asked, and the question of labor and every- 
 thing else goes into the question of determining whether that was a 
 fair price. 
 
 Mr. Miller. I can only say, as I think I have already stated, il 
 you are going to leave it to a jury or to any governmental tribunal 
 to determine whether that price "^ is fair or unfair, good-bye farm 
 organizations. 
 
 Mr. Jones. I did not say a court and jury. 
 
 Mr. Jacowat. Is not this your answer: Your organization has 
 no objection whatever to having any jury of 12 men sit on the in- 
 tegrity of your proceedings, but you organization is hampered for 
 funds and you can not successfully fight these suits day in and day 
 out. Is not that the answer to the question ? 
 
 Mr. Miller. Yes. 
 
 Mr. Anderson. I do not want to have any misconception by any- 
 body "of my own position. I am in favor of farm organizations and 
 in favor of their having the power of collective bargaining. But I 
 do not feel that that power can be granted absolutely without limi- 
 tation. I do not think it ought to be granted to a labor union abso- 
 lutely without limitation, and I was trying to ascertain from you 
 whether you thought it ought to be granted entirely without limita- 
 tion, and if you do not, what the limitation ought to be. 
 
38 HIGH. COST OF LIVING. 
 
 Mr. Miller. It ought to be granted absolutely without limitatioj 
 until a time when Congress through the same body determines th 
 price of everything else, because a governmental regulatory body 
 purely advisory, has no force, and such a body must have the price 
 fixing power to be efficient. I think we would all agree on that. 
 
 Mr. Anderson. Do you recognize any difference between the righ 
 of anybody to fix the price of his commodity and the right o: 
 people to do it collectively ; do you recognize any difference betweei 
 the danger involved in the exercise of two rights, one by the in 
 div idual and the other by a collection of individuals ? 
 
 Mr. Miller. Yes, sir; I recognize that. But the farmers are pro 
 ducing stuff to sell, and as ordinary men with ordinary commoi 
 sense their every interest is to have their product reach the ultimati 
 consumer at as low a price, consistent with the cost of production 
 as possible, thus increasing the number of consumers and the con 
 sumption of his product. A collection of farmers that would hold bad 
 their stuff from the markets, so much of it being perishable — mill 
 must be delivered daily. A suspension of the delivery of milk costi 
 the farmers in our territory millions of dollars because they are no 
 prepared to take care of it. Their interest is to have their product! 
 continually moving toward the market. As in the case of any ordi 
 nary business man, their interest is in having satisfied customers— 
 those who will use the utmost possible of their products — and thrif 
 is just as strong in the case of the farmers as it is in the case oj 
 men engaged in any other lines. I say, until the farmers' organiza 
 tions have shown an indication of the abuse of this power give then 
 a chance to work out their own problems. 
 
 Mr. Anderson. I think you have answered my question by sayinj 
 that the economic conditions under which the farmer produces hii 
 article is its limitation upon his exercise of this right of collective 
 bargaining, which may be granted by Congress or he may have as i 
 natural right. 
 
 Mr. Miller. Exactly so. I think you have expressed it bette- 
 than I did. 
 
 Mr. McLaughlin of Michigan. You say if the farmer is no 
 exempted as you suggest, then the Government ought to protect hin 
 in the price he has to pay for what he has to buy in carrying on hii 
 work.. 
 
 Mr. MiLtER. No ; I have not stated that. I think that is a misun 
 derstanding. I have not stated that unless he is granted this exemp 
 tion — ^what I meant to have stated was that if the Government ii 
 
 foing to fix prices on our products, then the Government ought t( 
 X the prices on everything we have to buy. I do not say if we an 
 not granted this exemption 
 
 Mr. McLaughlin of Michigan. There is nothing here about fixing 
 prices. 
 
 Mr. Miller. That was directly raised by the questions asked, as ! 
 understood them. 
 
 Mr. McLaughlin of Michigan. I did not ask any such questioi 
 as that. I did not think the question of the Government fixin| 
 prices, not being in this section and nothing of that kind contem 
 plated, I did not think it was raised. 
 
 Mr. Miller. I have no complaint to make because this discussioi 
 is somewhat afield from this act, because I departed from it, but thi 
 
HIGH COST OF LIVING. 39 
 
 questions did necessarily bring out a discussion of price fixing and 
 the governmental powers in that regard. 
 
 Mr. McLaughlin of Michigan. Section 1 relates to fertilizers, fer- 
 tilizer ingredients, tools, utensils, implements, and machinery re- 
 quired for the actual production of foods, feeds, and fuel. That was 
 put in with the idea that the President, or the agency or agencies he 
 employed, might fix and control the prices of those things named to 
 the farmer. 
 
 Mr. MiLLEK. To what extent has that been successful, would you 
 suggest? 
 
 Mr. McLAtTGHLiN of Michigan. It is hard to say whether or not 
 the operation of that would be successful. The fact is that the Sec- 
 retary of Agriculture was vested with authority, and that subject 
 was given to him to take care of, and I know of nothing he has done 
 under it at all. It has been said that he bought fertilizer, but there is 
 another section that authorizes the President to buy any of these 
 necessaries and dispose of them at cost. My impression is that the 
 fertilizers bought by the Secretary were bought under the other sec- 
 tion, and if that is right, then I am right in saying that nothing has 
 ever been done under section 1, although the Secretary had the 
 authority, and he has chosen, wisely or otherwise, to do nothing. 
 So far as the enactment of the law is concerned, there has been an 
 attempt to help the farmers in the matter of purchase and the prices 
 of the things he would have to buy. 
 
 Mr. Miller. You did not ask a question of me, did you? 
 
 Mr. McLATJGHLiiir of Michigan. You are familiar with section l** 
 
 Mr. Miller. I thought you were making an argument. 
 
 Mr. McLaughlin of Michigan. I was making a statement in re- 
 gard to what the law contained. No action has been taken in any 
 respect under section 1. 
 
 Mr. Miller. I can not tell what the activities of the Government 
 have been. 
 
 The Chairman. It has been pointed cut that no action has been 
 taken against profiteers so far, although the Secretary had the au- 
 thority to do so. 
 
 I call your attention 1 o section 9. That imposes a fine not to ex- 
 ceed $10,000 or not more than two years' imprisonment or both, for 
 limiting the facilities for the transportation, production, manufac- 
 ture, supply, storage, or dealings in any necessaries. The amendment 
 proposes to add " harvesting." If the amendment is agreed to any- 
 body violating any of the provisions of this section upon conviction 
 thereof shall be fined not to exceed $5,000 or imprisoned for not 
 more than two years, or both. I take it that under that provision 
 some might allege that unless a farmer gets up at 6 o'clock in the 
 morning and harvests grain until sundown, he would be limiting har- 
 vesting. Is that your contention ? 
 
 ]Mr. Miller. Mr. Chairman, I would say with an experience, more 
 or less varied, for 35 years in the practice of law that I have never 
 found, so far as I now recall, a provision the violation of which would 
 subject an offender to the penitentiary so difficult of construction as 
 the one vou have just referred to. 
 
 The Chairman. Anyone refusing to work for a number of days, 
 or on a certain day, could be held under this provision, haled into 
 court, convicted, and fined $5,000 or imprisoned for two years? 
 
40 HIGH COST OF LIVING. 
 
 Mr. Miller. It would bear that construction. 
 
 The Chairman. I judge from what you have said this morning 
 that what has taken place under State laws might possibly take place 
 under the Federal law if the amendments are enacted ? 
 
 Mr. Miller. Exactly so. 
 
 The Chairman. It is a dangerous proposition? 
 
 Mr. Miller. Yes, sir. 
 
 Mr. McLaughlin of Michigan. Section 9 says that if any of these 
 things are done in order to enhance the price thereof, and it should 
 be borne in mind, too, that this is strictly a war measure to meet con- 
 ditions during the emergency, and its operation shall cease upon the 
 declaration of peace, and it was supposed that all classes of people 
 would be willing to conform to the law made necessary by the emer- 
 gency. 
 
 Mr. Miller. May I answer that now? 
 
 Mr. McLaughlin of Michigan. There is no suggestion here in any 
 way that that be made permanent law. 
 
 Mr. Miller. I think the farmers of American need no defense 
 •from me as to what they did during the war. I had full knowledge, 
 representing the organizations with which I was then and am now 
 connected, of this bill being before Congress. You will look in vain 
 through your records to find any names connected with those organ- 
 izations in opposition to it. Those men were willing to do anything 
 to win the war. The war is now over, and we want to get back to 
 the old conditions. 
 
 The Chairman. You were discussing prohibiting exports. Ex- 
 ports represent the balance of trade and increases the supply of gold. 
 
 Mr. Miller. Yes, sir. 
 
 The Chairman. The balance of trade is settled in gold. 
 
 Mr. Miller. The balances are settled in gold. 
 
 The Chairman. Our currency is based on gold. 
 
 Mr. Miller. Yes, sir. 
 
 The Chairman. If you decrease the balance of trade you decrease 
 the supply of gold. 
 
 Mr. Miller. Yes, sir ; I think so. 
 
 The Chairman. When the gold supply decreases it will be neces- 
 sary to increase the amount of paper currency? 
 
 Mr. Miller. It might become necessary. 
 
 The Chairman. That would depreciate the value of the currency? 
 
 Mr. Miller. Yes, sir. 
 
 The Chairman. And it is now depreciated 50 per cent; it is only 
 worth about 50 per cent of what it was worth before the war ? 
 
 Mr. Miller. I do not think it is worth more than that. 
 
 The Chairman. French currency has depreciated even more so. 
 
 Mr. Miller. Yes, sir. 
 
 The Chairman. The French currency has depreciated to the ex- 
 tent that it is only worth about one-quarter of our currency? 
 
 Mr. Miller. Yes, sir. 
 
 The Chairman. In other words, the French currency has de- 
 jreased to about one-eighth of its value before the war. To cut off 
 the balance of trade would further decrease the value of our cur- 
 rency, would it not ? 
 
 Mr. Miller. Yes, sir. 
 
HIGH COST OF LIVING. 41 
 
 The Chaieman. If export of f arni products is prohibited, can any 
 reason be given why the prohibition should not be extended all alone 
 the line? ^ 
 
 Mr. MiLtEK. Exactly so. 
 
 The Chairman. Prohibiting exports would cut off production and 
 demand for labor. As a result labor would be out of employment 
 instead of receiving twice the wages it ever received before. 
 
 Mr. MnjiEE. Yes, sir. 
 
 Mr. YoTJNG. You spoke of not appearing in opposition to war 
 regulations. There has been no criticism from any source in regard 
 to the action of the farmers during the war, and there is no doubt 
 that the farmer during this emergency — that is, the American 
 farmer — has done his part to feed the world. 
 
 Mr. M1LI4EE. I think the American farmer needs no defense at my 
 hands. 
 
 Mr. McLaughlin of Michigan. If that question is referring to my 
 remark, let me state that I have made no such criticism, and if it is 
 meant that I have made such criticism you are entirely wrong. I 
 have not been all the time insisting on getting my opinion in the 
 record on this proposition. 
 
 Mr. Young. I have, because I think it is important. 
 
 Mr. McLaughlin of Michigan. I have been trying to bring out 
 the facts on both sides. 
 
 Mr. Young. I am informed that one of the members of the com- 
 mittee wanted to hear Mr. IngersoU. Mr. IngersoU is here. 
 
 The Chairman. Thank you, Mr. Miller. We will be glad to hear 
 Mr. IngersoU. 
 
 STATEMENT OF MR. H. W. INGERSOU, OF ELYRIA, OHIO, PRESI- 
 DENT OHIO STATE DAIRY ASSOCIATION. 
 
 Mr. Ingersoll. Mr. Chairman, I have been asked to say a word, 
 and I want to say first that I appreciate very much the opportunity 
 to be heard on this matter. 
 
 I am one of the men who was indicated, as Mr. Miller has told 
 you. What I say to you I say from personal experience. We have 
 an organization known as the Ohio Farmers' Cooperative Milk Co., 
 which is composed of farmers producing milk and delivering it in 
 Cleveland. Ohio, We do not control 65 per cent of the milk that 
 goes into the city. We have been meeting from time to time and 
 laying before the various dealers the conditions under which we 
 were producing milk, and we have asked them to advance our price. 
 During the month of July we got 7^ cents a quart for milk, and it 
 was sold in the city at 15 cents a quart. In August we have con- 
 ditions which were so changed that we were compelled to pay about 
 $25 a ton or more for all varieties of feed, and we have been paying 
 as high as $100 a ton for oil meal. ,,-,■■, 
 
 About the 1st of August the wave of cuttmg down of the high cost 
 of living spread over the country, and a special grand jury in Cuy- 
 hoga County, Ohio, was convened, and at that meeting some of the 
 dealers appeared, and the producers' executive committee, of which 
 I am chairman, were indicted. This news was spread abroad over 
 the wires, and I at once got in communication with the sheriff and 
 suggested that it was a physical impossibility to get in there on that 
 
42 HIGH COST OF LIVIBTG. 
 
 day, and said that we would report at 9 o'clock the next morning, 
 and I would see that all of the indicted men were present in his 
 office. Deputies were sent out and notified us, and returned to the 
 city without action except to notify us that we were wanted in the 
 morning. 
 
 The deputy went back to his office in Cleveland, the one who gath- 
 ered up four of us who lived west of Cleveland, and, as he expressed 
 it, he got the most severe boiling out he ever got because he did not 
 bring the prisoners in. He started back and called up Mr. Clark, 
 in Medina County, about midnight, and he was caused to leave his 
 family ; and he came on and took one of the other men, and then he 
 came on to Elyria, where I was taken, and we were all taken to Cleve- 
 land about half past 4 o'clock in the morning into what was known 
 as the hospital ward of the jail, and there the conditions were cer- 
 tainly deplorable; and there were vermin in there and also insane, 
 and we were associated with them. We were there from about half 
 past 4 in the morning, the four I was taken in with ; the other three 
 were taken in there about half past 2 in the morning. We remained 
 there until about half past 10 or 11 o'clock. Then, through the assist- 
 ance of an attorney, we were allowed to be taken before the judge 
 and allowed to give bail and came out. 
 
 These men, two or three of them, came from east of Cleveland, 
 and they were taken out of the fields at 4 o'clock in the morning, and 
 they are men of exemplary character, some of them township trustees, 
 and holding other positions of trust, and they were taken to the city 
 and not permitted to have food that night, and did not get anything 
 until they got out the next day. 
 
 The families of all these men indicted and brought of course were 
 heartbroken. We had one man, a county commissioner elect, taking 
 his office in September. We had a deputy sheriff of the county and 
 court bailiff, and that shows the character of the men. 
 
 The result is that the producers in that vicinity are simply up in 
 arms, and I want to say right here that the rank and file of the pro- 
 ducers are continuing to furnish their milk to the city of Cleveland, 
 and the inhabitants of Cleveland as a class are not opposed to our or- 
 ganization or its workings. 
 
 We have never had costs of production at any time, and accord- 
 ing to the best evidence we can get, according to the records that have 
 been kept by our own producers, we are not getting them now. We 
 did ask an advance for that reason and we have been indicted. 
 
 I know it is late and I do not want to take up any more of your 
 time, but I will be glad to answer any questions. 
 
 Mr. Jones. What is the status of the suit now ? 
 
 Mr. Ingersoll. We were simply indicted, brought into court, plead 
 " not guilty," gave bond, and the suit is set for the first day of the 
 September term, which is September 8, for trial. I doubt very much 
 whether it will be reached at first, but it soon after will be. And 
 this is only one of the many suits that have been instituted all over 
 the country against organized agriculture. 
 
 Mr. Jones. That is under the State law? That is a suit in the 
 State court, isn't it? 
 
 Mr. Ingeesoll. That is under the State law, yes, sir. 
 
 Mr. McLaughlin of Michigan. Has there been any action against 
 the officers who acted that way against you gentlemen ? 
 
HIGH COST OF LIVING. 43 
 
 Mr. Ingeesoll. The county officers? 
 
 Mr. McLaughlik of Michigan. Yes. 
 
 Mr. Ingeesoll. No, sir. 
 _ Mr. McLaughlin of Michigan. Was the matter called to the atten- 
 tion of the Governor ? 
 
 Mr. Ingeesoll. It was. 
 
 Mr. McLaughlin of Michigan. And he took no action? 
 
 Mr. Ingeesoll. I understand not. But this happened — you know, 
 it was only a week ago to-night that we were drawn out, and I left 
 Tuesday, and I have not heard of what has happened. It was last 
 week, Saturday morning early, when we were put in the hospital 
 ward of the prison and kept until Sunday noon. 
 
 Mr. Jones. I would think there would be an assault and battery 
 case grow out of it. 
 
 Mr. Ingeesoll. There certainly would be if it had occurred in the 
 daytime. 
 
 Mr. Heflin. Has the governor requested anything to be done 
 about it? 
 
 Mr. Ingeesoll. We have not appeared yet before the governor. 
 
 Mr. Heflin. You have not taken it up with him ? 
 
 Mr. Ingeesoll. He has not been appealed to by our organization. 
 I appreciate the late hour and you men are busy, and I haven't any- 
 thing further to say. I can go into more detail, but I hardly thinJi 
 it necessary. It simply explains to you how men of high character 
 and standing are treated like criminals and taken out of their beds 
 at night and brought in and put in jail and not permitted to give 
 bond. I had made arrangements with the sheriff before that we 
 would appear just as soon as the judge could be reached and would 
 give bond and that all of use would be present. 
 
 Mr. VoiGT. Are you a farmer ? 
 
 Mr. Ingeesoll. Yes, sir ; I have a farm which has been in my fam- 
 ily name for a little over a hundred years and it has never been out, 
 and has never been mortgaged. 
 
 Mr. VoiGT. You operate the farm yourself? 
 
 Mr. Ingeesoll. I operate the farm myself. I hire some labor and 
 I have a son who assists me, but I go out there myself and do some 
 work. 
 
 Mr. VoiGT. Are you one of the officers of this farmers and pro- 
 ducers association? 
 
 Mr. Ingeesoll. I am president of the Ohio Farmers' Milk Co., and 
 president of the Ohio State Dairy Association. 
 
 Mr. VoiGT. Just what are you indicted for ; how does the indictment 
 read? 
 
 Mr. Ingeesoll. I am sorry that the attorney we engaged has my 
 copy of the indictment, but it is an indictment under what is known 
 as the Ballantyne antitrust law, in which we are charged, in a word, 
 with combining to advance the price of food stuffs. 
 
 Mr. Jones. Is that a war measure in the State of Ohio, or is it an 
 
 old law? 
 
 Mr. Ingeesoll. That is a law that has been on the statute book for 
 some time, but no prosecutions have occurred under it previous to 
 
 The Chaikman. Thank you, Mr. IngersoU. We will be pleased 
 to hear from the representative of the Attorney General 
 
44 HIGH COST OF LIVING. 
 
 STATEMENT OF HON. C. B. AMES, ASSISTANT TO THE ATTORNEY 
 
 GENERAL. 
 
 Mr. Ames. Mr. Chairman and gentlemen of the committee, I wish 
 to confine my remarks entirely to the amendments to the food-control 
 law. The President in his message to Congress last Friday sug- 
 gested, among other things, that the operation of the food-control 
 act should be extended to other commodities and that there should be 
 some penalties inserted on things that are now prohibited but without 
 any penalty attaching for a violation. 
 
 The only bill that has been drafted by the Department of Justice, 
 and probably the only one that will be drafted, unless we are re- 
 quested by some committee of Congress, is this. It amends the 
 first section of the act and the fourth section of the act. The amend- 
 ment to the first section of the act consists of inserting the following 
 words, in the definition of necessaries, " wearing apparel and the 
 containers in which foods, feeds, and fertilizers are sold." Other- 
 wise that section is reenacted exactly as it was. 
 
 The purpose, of course, is disclosed by the language used. It is 
 intended to reach profiteering in wearing apparel and the containers 
 in which foods, feeds, and fertilizers are sold. The other amendment 
 merely adds a penalty to the prohibitions already contained in sec- 
 tion 4 of the act. It makes no new law at all; it embarks upon no 
 new policy at all. Section 4 at the present time declares certain 
 things to be unlawful. Sections 6, 8, and 9 prescribe penalties for 
 some of the things declared unlawful by section 4. The following 
 at present are declared unlawful, but no penalty is attached to their 
 violation: Knowingly to commit waste or willfully to permit pre- 
 ventable deterioration of any necessaries or in connection with their 
 production, manufacture, or distribution. At present that is pro- 
 hibited, but there is no way by which the Department of Justice can 
 enforce it. So far as statements which have been made relative to 
 exempting farm organizations, if the committee desires to permit 
 farm organizations to knowingly commit waste or willfully to permit 
 preventable deterioration, the Department of Justice is not here to 
 object. It is merely our desire to get an amendment to this law 
 which will enable us to enforce it. 
 
 Another thing now prohibited but not penalized is this: To mo- 
 nopolize or to attempt to monopolize, either locally or generally, any 
 necessaries. Another thing is to engage in any discriminatory or 
 unfair or any deceptive or wasteful practice or device, or to make 
 any unjust or unreasonable rate or charge in handling or dealing in 
 any necessaries. And the last thing that is now prohibited but not 
 punished is combinations to exact excessive prices for any neces- 
 saries. 
 
 The main thing that the Department of Justice is desirous of secur- 
 ing the authority to do is to punish profiteering. We now have a law 
 to punish profiteering, which is the result of combinations or agree- 
 ments, but we have no adequate law to punish profiteering by the in- 
 dividual. In connection with that subject, of course, you all under- 
 stand without a statement that this amendment does not extent the 
 life of the act at all; it terminates with the war. 
 
 Mr. McLatjghun of Michigan. You are going on to speak about 
 another subject now, and I want to ask you a question as to just 
 
HIGH COST OF LIVING. 45 
 
 what you said before : You have no law by which you can reach an 
 individual who is guilty of profiteering? 
 
 Mr. Ames. No, sir; unless it be in connection with someone else. 
 An individual, who of his own unaided power profiteers, can not be 
 reached by the present law. 
 
 Mr. McLaughlin of Michigan. Are you overlooking the power 
 given by the licensing clause? 
 
 Mr. Ames. No ; I am not. 
 
 Mr. McLaughun of Michigan. Does not that give you authority 
 to reach profiteering? 
 
 Mr. Ames. It did, but the licensing operations have, in the main, 
 come to an end. 
 
 Mr. McLaughlin of Michigan. Oh, that is true by proclamation 
 of the President, but the law is just the same as it was before. 
 
 Mr, Ames. Oh, yes. What I meant was the Department of Justice 
 had no power to enforce it by prosecution. Under the law as origi- 
 nally enacted, certain things prohibited in section 4 were punished 
 by sections 6, 8, and 9. The other things that are now unpunished 
 were covered by the licensing regulations. 
 
 The Chairman. I will read from the President's message: 
 
 May I not call attention to the fact, also, that, although the present act pi-o- 
 hibits profiteering, the prohibition is accompanied by no penalty. 
 
 I understood you to state that it is accompanied by a penalty — 
 that section 5 did provide a penalty ? 
 
 Mr. Ames. No; you misunderstood me, Mr. Chairman. 
 
 The Chairman. The penalty was enforced in the past under sec- 
 tion 5? 
 
 Mr. Ames. You misunderstood me. Let me make my position clear 
 on that. The method by which the prohibitions of section 4 were 
 originally enforced was through the Food Administration, the Fuel 
 Administration, and those organizations that have now ceased to 
 function. That was the licensing system. They would license the 
 dealer, and they would prescribe his margins of profit. If he failed 
 to comply with the margin of profit prescribed, the penalty was a 
 revocation of his license. That was the practice. 
 
 Now, since the war has come to a close, the Food Administration 
 has largely ceased to function. Its license regulations have in the 
 main been canceled. There are still a few, but there is at present, 
 even for those few, no adequate machinery to enforce them. So that 
 the net result is now that thfe licensing regulations having been can- 
 celed, the prohibition remains, but there is no practicable method 
 by which it can be enforced. 
 
 The Chairman. I agree with you ; but the President referred to 
 the act, he referred to the past, and through the licensing system 
 the President was authorized to issue a license, and he was ^.Iso 
 authorized to issue orders as to what would be fair practices and 
 profits. 
 
 Mr. Ames. Yes, sir. „ , „ -, . -, ^ -^ ^ 
 
 The Chairman. Section 5 of the food-control act provides tor 
 punishment by a fine of not exceeding $5,000 or by imprisonment for 
 not more than two years, or both, of any person engaged in the 
 business of importation, manufacture, storage, mmmg, or distribu- 
 tion of any foods, feeds, fuel, or other articles defined as necessaries, 
 
46 HIGH COST OF LIVING. 
 
 who fails or refuses to discontinue any unjust, unreasonable, dis- 
 criminatory, and unfair storage charge, commission profit, or prac- 
 tice ordered discontinued by the President. 
 
 Mr. Ames. Yes; that was the fact during the time the license 
 regulations applied. 
 
 Mr. McLaughlin of Michigan. What is the idea now, that we 
 should pass a law directing the President to reestablish the Food 
 Administration ? 
 
 Mr. Ames. Not at all. 
 
 Mr. McLaughlin of Michigan. And again put into life these 
 licenses ? 
 
 Mr. Ames. Not at all. 
 
 Mr. McLaughlin of Michigan. Then, why do you refer to the fact 
 that the Food Administration has been disorganized and dissolved 
 and that the license system is no longer resorted to ? 
 
 Mr. Ames. I referred to it because I was interrogated about it, 
 to the effect of his withdrawing the machinery by which the prohibi- 
 tions of section 4 were enforced. They were enforced through the 
 licensing system, and the licensing system has been canceled as a 
 whole. There are a few cases still — sugar, for instance — but now we 
 are left with the prohibitions of section 4 and without the machinery 
 of section 5, which is the licensing clause, so that now individual 
 profiteering is not reached in any practical way. With an act of 
 Congress imposing a penalty for profiteering, it is thought thai 
 effective steps can be taken to reach a number of commodities in. 
 which it is said that profiteering exists. 
 
 Mr. Voigt. Eight there; The penalty could be put into force by 
 licensing these dealers, could it not? 
 
 Mr. Ames Yes. 
 
 Mr. VoiGT. And there is nothing to prevent the President at this 
 time from starting the food machinery in motion ? 
 
 Mr. Ames. Except the lack, of funds and the fact that the end of 
 the war is in sight. To rehabilitate that machinery would cost a 
 million dollars a month, and there is no appropriation to cover it; 
 and it would probably be impossible to do it even with an appropria- 
 tion, because the Food Administration was a volunteer organization 
 almost entirely. 
 
 Mr. Jones. Then do I understand the amendments' that the Attor- 
 ney General has suggested to this act will answer the same purpose? 
 
 Mr. Ames. That is the thought, yes ; that they will accomplish that 
 same result through the policy of prosecution in aggravated cases. 
 
 Mr. McLaughlin of Michigan. What have you to say about the 
 possibility of extending the life of this law ? 
 
 Mr. Ames. Beyond the termination of the war ? 
 
 Mr. McLaughlin of Michigan. Yes. 
 
 Mr. Ames. I am not in a position to express the opinion of the De- 
 partment of Justice on that point. Congressman. 
 
 Mr. McLaughlin of Michigan. The Congress would have no au- 
 thority io pass such a law as this except under the war power ? 
 
 Mr. Ames. No. 
 
 Mr. McLaughlin of Michigan. Is not that true T 
 
 Mr. Ames. I think so. If you will permit me to express my indi- 
 vidual opinion without in any way committing the Department of 
 Justice, I will say I believe that these things which are involved in. 
 
HIGH COST OF LIVING. 47 
 
 the food-control act, affecting interstate commerce, can, in the main, 
 be extended into times of peace through the use of the commerce 
 clause of the Constitution. Those things that involve something that 
 is not interstate commerce, I do not think can be extended. 
 
 Mr. Jones. That would be new legislation? 
 
 Mr. Ames. That would be new legislation. 
 
 Mr. Jones. You do not mean to pick out the particular things from 
 this act and keep them in force, do you ? 
 
 Mr. Ames. Oh, no. 
 
 Mr. Jones. The act would cease upon the demobilization ? 
 
 Mr. Ames. Yes. And, if you adopt these amendments, the act as 
 amended 
 
 Mr. Jones. Will continue until the demobilization. 
 
 Mr. Ames. Terminates upon the proclamation of peace. This does 
 not extend the life of the act in any way ; it merely extends its opera- 
 tions for the time being. 
 
 Mr. McLattghlin of Michigan. Suppose section 4 was amended as 
 you suggest, and suppose the life of the act was extended a year be- 
 yond the war, do you think the Attorney General would be author- 
 ized to pick out and to proceed against the cases that would come 
 under the interstate-commerce clause and pay no attention to those 
 did not come within that provision? 
 
 Mr. Ames. That would depend, of course, on whether the court 
 would hold the provisions were separable. If the provisions are 
 separable in the judgment of the court, they might be enforced to 
 the extent of their validity. 
 
 Mr. McLaughlin of Michigan. I am not very well informed on 
 that question of separating these things, but you will recall the work- 
 men's compensation act was held unconstitutional because by its pro- 
 visions it related to the railroads in interstate commerce and in intra- 
 state commerce and to the men employed on interstate and intrastate 
 roads. 
 
 Mr. Ames. My recollection is in that case the court held the provi- 
 sions could not be separated, and consequently the entire act fell. I 
 think that was the result. And if you take the food-control act, for 
 instance, and undertake to extend it in times of peace, you are at once 
 confronted with the power of Congress to regulate anything that is 
 not interstate commerce. Now, the regulations as to intrastate and 
 interstate commerce are rather closely knitted together in the food- 
 control act, and the court might say they can not be separated and 
 " you can not say that Congress would have passed the act as to inter- 
 state commerce if the other had been stricken out." 
 
 Mr. Jones. There would be no need of the Department of Justice 
 acting under the interstate-commerce law if the violation happened 
 during the life of this bill; you could proceed under the bill? 
 
 Mr. Ames. Not at all. ' That act we say now is valid under the war 
 power. These two amendments we ask we say are valid under the 
 war power and they continue in force so long as the war lasts. When 
 the war ceases they all fall and, of course, the Department of Justice 
 would not undertake to enforce the act after the war ends. 
 
 Mr VoiGT. Do you think Congress could exercise the war power 
 after a declaration of peace in situations that grew directly out of the 
 war? 
 
48 HIGH COST OF LIVING. 
 
 Mr. Ames. I do not think so. I think the war power of Congress 
 ends with the war. 
 
 Mr. Jones. This is to extend and amend an existing bill. 
 
 Mr. Ames. To extend. 
 
 Mr. Jones. Then what right would Congress have to pass these 
 amendments, in your opinion? 
 
 Mr. Ames. The war has not terminated. Of course, the termina- 
 tion of the war is a technical question and is defined in the act. 
 
 Mr. TiNCHER. I want to ask you a question concerning the amend- 
 ment: What was the idea of inserting the word "harvesting" in 
 section 9? 
 
 Mr. Ames. That is in the original act. We did not insert that. 
 
 The Chairman. There is no penalty for limiting the facilities for 
 " harvesting " now ? 
 
 Mr. Ames. The word " harvesting," did you say ? 
 
 The Chairman. Yes. That is in section 4: and not in section 9. 
 In drafting the food-control act the word " harvesting " was stricken 
 out of section 9, so as to except the farmers. Now, if we attach a 
 penalty to section 4, then the penalty applies to limiting facilities 
 for " harvesting." 
 
 Mr. Ames. That is preventable deterioration — preventable waste. 
 
 The Chairman. No limiting the facilities for "harvesting." 
 
 Mr. Ames. I have overlooked the word. 
 
 The Chairman. I will read from the act. Section 9 reads : " To 
 limit facilities for transporting, producing, manufacturing, supply- 
 ing, storing, or dealing in any necessaries." Section 4 reads : " To 
 limit the facilities for transporting, producing, " harvesting," manu- 
 facturing, supplying, storing, or dealing in any necessaries." • 
 
 Mr. Ames. We took section, 4 as it is. It is in section 4 now. 
 
 The Chairman. It is in section 4. You propose now to fix a 
 penalty to section 4, which includes to limit the facilities for "har- 
 vesting." 
 
 Mr. Ames. We just copied section 4 and added a penalty. 
 
 The Chairman. In drafting the original act, in copying a portion 
 of section 4 into section 9 and attaching a penalty to that section we 
 purposely omitted " harvesting." 
 
 Mr. Ames. That is in section 9 ? 
 
 The Chairman. Yes. So that now if we apply the penalty to all 
 the provisions in section 4, we would make it a penalty for limiting 
 the facilities for " harvesting." 
 
 Mr. Ames. Well,, strike out the word " harvesting." 
 
 The Chairman. I was speaking of the amendments suggested by 
 the department. 
 
 Mr. Ames. Yes. We just took section 4 as we found it and added a 
 penalty. We have no objection, of course, to the committee meeting 
 its own views with reference to legislative policies. Except the ap- 
 plication to farm products if you like, strike out "harvesting," if 
 you like. The only thing we ask is, if you desire profiteering penal- 
 ized, we must have the penalty attached to violations. 
 
 Mr. TiNCHER. On that question of profiteering, I want to ask a 
 question or two for my own information. You had your food de- 
 partment and, for instance, at Kansas City, Mo., there was a branch 
 »mder the auspieces of Mr. Piaccac. 
 
 Mr. Ames. That was the grain corporation. 
 
HIGH COST OF LIVING. 49 
 
 Mr. TiNCHEK. Who made the compromises with the profiteers, for 
 the Government? 
 
 Mr. Ames. As to that I am not advised as to whether there were 
 compromises or not. I know in a general way the affairs of the Grain 
 Corporation, when they reached the form of a complaint of a viola- 
 tion of the regulations, were usually referred to the Enforcement 
 Division, which had its headquarters in Washington. 
 
 Mr. TiNCHEE. Who was in charge of the Enforcement Division? 
 
 Mr. Ames. Mr. Boyden, a lawyer from Boston, was the head of 
 the Enforcement Division. 
 
 Mr. TiNCHEE. Under whom did he work? Was he supposed to be 
 connected with the Department of Justice? 
 
 Mr. Ames. He worked under Mr. Hoover. 
 
 Mr. TiNCHEE. He was not connected with the Department of Jus- 
 tice? 
 
 Mr. Ames. No ; he worked under the Food Administration. 
 
 Mr. Jacoway. Wasn't he district attorney ? 
 
 Mr. FowLEE. He cooperated with the district attorney a,t Boston. 
 
 Mr. Jacowat. Wasn't he the district attorney ? 
 
 Mr. Ames. No ; I think Mr. Boynton was district attorney. 
 
 Mr. TiNCHEE. Was the Department of Justice called upon or has 
 the Department of Justice ever rendered an opinion that after the 
 penalty has attached the Food Administration has the_ authority to 
 compromise with profiteers who had violated the provisions of this 
 act? 
 
 Mr. Ames. I am not able to answer that question. I have only 
 been with the Department of Justice since the 1st of June, and noth- 
 ing has come within my knowledge since that time. 
 
 Mr. TiNCHEE. My attention was called yesterday to a case at the 
 Kansas City office "where the food commissioner had fined a man 
 $19,500, and the offender sent an attorney down to Washington, 
 without his books or anything, and got a clean bill of health for $500, 
 and he brought his receipt back and showed it around town. It was 
 called to my attention, and I wrote right. back for it, and I was 
 wondering who was engaged in giving these receipts, because it has 
 a tendency to encourage profiteering. 
 
 Mr. Ames. I would only say it was not the Department ot J ustice. 
 
 The Chairman. Your contention is that the department is with- 
 out power to proceed against profiteers or to impose fines ? 
 
 Mr. Ames. Yes, sir. . 
 
 The Chaieman. I desire to call attention to an article appearing 
 in the Washington Post of August 14. It states : 
 
 ImDortant new developments in tlie Government's fi.slit to reduce the, high 
 cost of living came yesterday. One of. the most interestlns was the announce- 
 mentbv Attorney General Palmer that the first Federal conviction for profiteer- 
 Sg had been obtained. District Attorney Uicey telegraphed from Bingham- 
 ton, N Y.; that a retail grocer had been fined $500 for selling sugar at 15 
 cents a pound. 
 
 So evidently some authority has been discovered somewhere 
 Mr Ames I have wired Mr. Lucev for information about that 
 case ' We had information from him by telegraph that a conviction 
 had'occurred. A similar proposition has been institiitedin Pitts- 
 burgh, but that grows out of a conspiracy alleged to be existing 
 137691—19 4 
 
50 HIGH COST OF LIVING. 
 
 there. ' Apparently, from the telegram we have received from Bing- 
 hamton, there is an individual who has been fined. I am anxious to 
 see what the facts are in that case. It is possible that the court has 
 held that the common-law penalties for crime apply in the Federal 
 courts. There are some lawyers who think so. It is the opinion of 
 the Department of Justice, however, that they do not. Now, it may 
 be that at Binghamton that theory has been applied. 
 
 The Chaieman. You have no knowledge of prosecutions in the 
 past? For instance, the President called attention to the depart- 
 ment that the Federal Trade Commission had secured certain in- 
 formation. Is it proper for you to state whether prosecutions are 
 being instituted against the packers referred to by the Federal 
 Trade Commission as guilty of violations of the law ? 
 
 Mr. Ames. Do you inquire about the packers ? 
 
 The Chairman. Yes ; the packers. 
 
 Mr. Ames. The Department of Justice has decided to proceed 
 against the packers. The particular procedure has not yet been 
 announced, and I apprehend the committee would not wish to inquire 
 as to deliberations of the department before conclusions have been 
 reached. Some other cases are under investigation, and a suit was 
 filed this week against the cement organization. 
 
 The Chairman. Judge Ames, the committee will be glad to have 
 you here at some later hour. 
 
 Mr. Ames. Unless the committee desires me to return, I have said 
 all I have to say. 
 
 Mr. Hutchinson. Judge Ames, I want to ask you a question for 
 information, and I am going to illustrate with my own home city. 
 Our district attorney general has gotten very active in the last 10 
 days. He has called all the county food administrators together 
 that fixed prices, and also called the United States grand jury to- 
 gether for next week to consider certain cases where they found 
 people guilty of violations. Now, I understand that under this 
 arrangement all that will be useless. There are no penalties pro- 
 vided. 
 
 Mr. Ames. There are no' penalties provided except in sections 6, 
 8, and 9. Section 6 provides a penalty for hoarding, section 9 pro- 
 vides a penalty for those things prohibited in section 4, and section 
 8 provides a penalty for another one of those prohibited matters — 
 the destruction of necessaries. These investigations going on now 
 and the prosecutions being instituted are under those sections of the 
 act, but which do not happen to apply to individual profiteering. 
 
 Mr. Hutchinson. Those people originally were licensed, weren't 
 they? ■ 
 
 Mr. Ames. Yes; if they were food dealers they were all licensed 
 except those retailers doing less business than $100,000 a year. 
 
 Mr. Hutchinson. Those licenses went out in February, did they 
 not, and how are you going to make those people liable now, having 
 stopped the fixing of prices under the Food Administration ? 
 
 Mr. Ames. The hoarding prohibition has been a crime all the way 
 through, separate and distinct from licensing. The offenses pro- 
 hibited in sections 6, 8, and 9 have been penalized all the way 
 through. 
 
HIGH COST OF LIVING. 51 
 
 Mr. Jones. The Department of Justice is just using the Food Ad- 
 ministration for the purpose of gathering this evidence, or they are 
 aiding you in securing the testimony or evidence under this act. 
 
 Mr. Ames. Yes; we have called upon them for further volunteer 
 service. They will be of great assistance to us in finding what is a 
 fair price. 
 
 Mr. Hutchinson. The Department of Justice has just realized the 
 necessity of these prosecutions? 
 
 Mr. Ames. Yes; I may say the matter has not been called to the 
 attention of the Department of Justice very long. 
 
 Mr._ TiNCHEE. I want to ask you, Judge Ames, if it is your under- 
 standing that the prosecution of the packers by the Department of 
 Justice is based on the findings of conclusions of the Federal Trade 
 Commission as made public in June, 1918 ? 
 
 Mr. Ames. Not entirely. Those reports of the Trade Commission 
 have been given very careful consideration by the department, and 
 also other evidence. 
 
 Mr. TiNCHER. But it is your understanding, as I understand it, 
 that is the most recent. On page 7 of the pamphlet I have here, 
 headed " Profiteering (which is S. Doc. 248, 65th Cong., the 27th 
 day of June, a calendar day, really the 29th day of June, 1918), is 
 an exhaustive report of the Federal Trade Commission disclosing the 
 fact beyond any question that the five big packers of the United 
 States were engaged in profiteering and violating the laws in a 
 vicious manner, and there has been no prosecution based upon that 
 report. It is just now contemplated the commencement of prose- 
 cutions ? 
 
 Mr. Ames. The department has announced that it intends to pro- 
 ceed against the packers. The proceedings have not been instituted, 
 but preparations are being made for it. I might say that informa- 
 tion has been under consideration by the department for three or four 
 months — for more than three or four months. It involves the ex- 
 amination of a vast mass of papers and documents and the analysis 
 and weighing of it as evidence. 
 
 Mr. Tinchee. As far as you know, the Department of Justice has 
 never asked Congress to appropriate any money for that — to prose- 
 cute the packers under that finding? 
 
 Mr. Ames. We are asking Congress now for an appropriation. 
 
 Mr. Tinchee. Have you made an estimate? 
 
 Mr. Ames. We have an appropriation to enforce the antitrust laws 
 of $100,000, and we are asking an additional appropriation of 
 $200,000. 
 
 Mr. Tinchee. May I ask when you furnished that estimate to the 
 Committee on Appropriations? 
 
 Mr. Ames. Just a few days ago. It is part of the million and a 
 
 half. 
 Mr. Ttncher. It was since the address of the President to the joint 
 
 session of Congress? 
 
 Mr. Ames. Yes. . • , n xi -r. • i ^ i 
 
 The Chairman. The information was furnished the President by 
 the Federal Trade Commission in a letter over a year ago in response 
 to his request, and also in the report referred to by Mr. Tincher, 
 published 13 months ago. 
 
62 HIGH COST OF LIVING. 
 
 Mr. Ames. The information has been studied and is being studied 
 by the department ever since the present Attorney General came 
 into office. How long before that I do not know. 
 
 The Chairman. Can the statute of limitations be pleaded it the 
 prosecution is delayed further? 
 
 Mr. Ames. No, sir. 
 
 The Chairman. How long would it run? , 
 
 Mr. Ames. Three years, as I recall, and the findings are withm 
 the statute. 
 
 Mr. Jacoway. Does the statute in these cases run from the com- 
 mission of .the crime or the discovery? 
 
 Mr. Ames. From the commission, as I recall it. I will not answer 
 that definitely, however. • • j: 
 
 Mr. Jacoway. Another question: How much has the activity of 
 the Department of Justice been increased during the war? 
 
 Mr. Ames. The activities of the Department of Justice, so far as 
 the antitrust laws are concerned 
 
 Mr. Jacoway. I mean since the beginning of the war has your 
 force been increased ; and if so, to what extent ? 
 
 Mr. Ames. On account 
 
 Mr. Jacoway. Of business before the Department of Justice. 
 
 Mr. Ames. During the war? 
 
 Mr. Jacoway. Yes. 
 
 Mr. Ames. I am not able to answer that question, because, as I 
 say, I have only been connected with the department since June 1. 
 
 Mr. Jacoway. It has been great? 
 
 Mr. Ames. I can not say; I have no information on th.at subject. 
 
 Mr. Heplin. You say you have only been with the department 
 since the 1st of June? 
 
 Mr. Ames. Yes. 
 
 Mr. Heplin. But you do not mean to leave the impression tliat 
 the Department of Justice has failed in any regard in the prosecu- 
 tion of profiteers? 
 
 Mr. Ames. No, sir. 
 
 Mr. Heelin. Or any others who violated the antitrust law? 
 
 Mr. Ames. No, sir. If what I said left that impression, I am glad 
 you called attention to it. 
 
 Mr. Heflin. The Department of Justice acts upon a case and in- 
 formation when it is brought to its attention ? 
 
 Mr. Ames Yes, sir. 
 
 Mr. Heelin. Do you know of any instance where it has failed to 
 prosecute, where charges have been made ? 
 
 Mr. Ames. I know of no instance where prosecution has been 
 withheld in a case where the department thought the facts justified 
 it. Some cases, of course, come into the department, which the de- 
 partment thinks as a matter as fairness and justice ought not to be 
 prosecuted, and in those cases prosecution is not started. 
 
 Mr. Heflin. You think, then, the department has been diligent in 
 looking after the enforcement of the law all along the line? 
 
 Mr. Ames. I am sure it has, so far as my knowledge of it goes. 
 I will say this, however, that it was my information that during the 
 actual existence of a state of war, on account of the cooperation that 
 was being practiced between various governmental agencies and 
 various business organizations, it was not regarded advisable; and 
 
HIGH COST OF LIVING. 53 
 
 for other reasons, the question for instance of new financing in the 
 event of the dissokition of a great corporation, and other considera- 
 tions, it was not believed advisable to press to hearing the antitrust 
 cases. For instance, a number of cases that are now pending in the 
 Supreme Court have been passed during the hostilities. They will 
 be argued at the next term. 
 
 Mr. Jacoway. Then the department has got at this matter at the 
 verj' earliest possible time? 
 
 Mr. Ames. Yes, sir. 
 
 The Chairman. We are very grateful to you. Judge Ames. 
 
 (The food-control act follows:) 
 
 [Public — No. 31 — 65th Conguess.] 
 
 [H. R. 4961.] 
 
 AN ACT To provide further for the national security and defense by encour- 
 aging the production, conserving the supply, and controlling the distribution 
 of food products and fuel. 
 
 Be it enacted by the Senate and House of Rejiresentatives of the United States 
 of America in Congress assembled, That by reason of the (existence of a state 
 of war, it is essential to the national security and defense, for the successful 
 prosecution of the war, and for the support and maintenance of the Army and 
 Navy, to a.«isure an adequate supply and equitable distribution, and to facilitate 
 the movement, of foods, feeds, fuel including fuel oil and natural sas, and 
 fertilizer and fertilizer Ingredients, tools, utensils, implements, machinery, and 
 equipment required for the actual production of foods, feeds, and fuel, hereafter 
 in this act called necessaries ; to prevent, locally or generally, scarcity, monop- 
 olization, hoarding, injurious speculation, manipulations, and private controls, 
 affecting such supply, distribution, and movement: and to establish and main- 
 tain governmental control of such necessaries during the war. For such pur- 
 poses the instrumentalities, means, methods, powers, authorities, duties, obliga- 
 tions, and prohibitions hereinafter set forth are created, established, conferred, 
 and prescribed. The President is authorized to make such regulations and to 
 issue such orders as are essential effectively to carry out the provisions of 
 this act. 
 
 Sec. 2. That in carrying out the purposes of this act the President is author- 
 ized to enter into any voluntary arrangements 'or agreements, to create and 
 use any agency or agencies, to accept the services of any person without com- 
 pensation, to cooperate with any agency or person, to utilize any department 
 or agency of the Government, and to coordinate their activities so as to avoid 
 any preventable loss or duplication of effort or funds. 
 
 Sec. 3. Tliat no person acting either as a voluntary or paid agent or em- 
 ployee of the United States in any capacity, including an advisory capacity, 
 shall solicit, induce, or attempt to induce any person or officer authorized to 
 execute or to direct the execution of contracts on behalf of the United States to 
 mnke any contract or give any order for the furnishing to the United States of 
 work, labor, or services, or of materials, supplies, or other property of any kind 
 or character, if such agent or employee has any pecuniary interest in such con- 
 tract or order, or if he or any firm of which he is a member, or corporation, 
 joint-stock company, or association of which he is an officer or stockholder, or 
 in the pecuniary profits of which he is directly or indirectly interested, shall 
 be a party thereto. Nor shall any agent or employee make, or permit any com- 
 mittee or other body of which he is a member to make, or participate in mak- 
 ing, anv recommendation concerning such contract or order to any council, 
 board, or commission of the United States, or any member or subordinate 
 thereof, without making to the best of his knowledge and belief a full and com- 
 plete disclosure in writing to such council, board, commission, or subordinate of 
 any and every pecuniary interest which he may have in such contract or order 
 anil of his interest In any firm, corporation, company, or association being a 
 party thereto. Nor shall he participate in the awarding of such contract or giv- 
 ing such order. Any willful violation of any of the provisions of this section 
 shall be punishable by a fine of not more than $10,000, or by imprisonment of 
 not more than five years, or both : Provided, That the provisions of this section 
 
54 
 
 HIGH COST OF LIVING, 
 
 shall' not change, alter, or repeal section forty-one of chapter three hundred and 
 twenty-one, Thirty-flfth Statutes at Large. 
 
 Sec. 4. That it is hereby made unlawful for any person willfully to destroy- 
 any necessaries for the purpose of enhancing the price or restricting the supply- 
 thereof ; knowingly to commit waste or willfully to permit preventable deterio>- 
 ration of any necessaries in or in connection with their production, manufacture, 
 or distribution ; to hoard, as defined in section six of this act, any necessaries ; to 
 monopolize or attempt to monopolize, either locally or generally, any necessaries ; 
 to engage in any discriminatory and unfair or any deceptive or wasteful practice 
 or device, or to make any unjust or unreasonable rate or charge, in handling or 
 dealing In or with any necessaries ; to conspire, combine, agree, or arrange with 
 any other person, (a) to limit the facilities for transporting, producing, har- 
 vesting, manufacturing, supplying, storing, or dealing in any necessaries; (b) to 
 restrict the supply of any necessaries; (c) to restrict distribution of any nec- 
 essaries; (d) to prevent, limit, or lessen the manufacture or production of any 
 necessaries in order to enhance the price thereof, or (e) to exact excessive 
 prices for any necessaries ; or to aid or abet the doing of any act made unlawful 
 by this section. 
 
 Sec. 5. That, from time to time, whenever the President shall find it essential 
 to license the importation, manufacture, storage, mining, or disribution of any 
 i)ecessarie.s, in order to carry into effect any of the purposes of this act, and 
 shall publicly so announce, no person shall, after a date fixed in the announce- 
 ment, engage in or carry on any such business specified in the announcement of 
 importation, manufacture, storage, mining, or distribution of any necessaries as 
 set forth in such announcement, unless he shall secure and hold a license issued 
 pursuant to this section. The President is authorized to issue such licenses and 
 to prescribe regulations for the issuance of licenses and requirements for sys- 
 tems of accounts and auditing of accounts to be kept by licenses, submission of 
 reports by them, with or without oath or affirmation, and the entry and inspec- 
 tion by the President's duly authorized agents of the places of business of 
 licensees. Whenever the President shall find that any storage charge, commis- 
 sion, profit, or practice of any licensee is unjust, or unreasonable, or discrimina- 
 tory and unfair, or wasteful, and shall order such licensee, within a reasonable 
 time fixed in the order to discontinue the same, unless such order, which shall 
 recite the facts found, is revoked or suspended, such licensee shall, within the 
 time prescribed in the order, discontinue such unjust, unreasonable, dis- 
 criminatory and unfair storage charge, commission, profit, or practice. The 
 President may, in lieu of any such unjust, unreasonable, discriminatory, and 
 unfair storage charge, commission, profit, or practice, find what is a just, 
 reasonable, nondiscriminatory ' and fair storage charge, commission, profit, or 
 practice, and in any proceeding brought in any court such order of the Presi- 
 dent shall be prima facie evidence. Any person who, without a license issued 
 pursuant to this section, or wbose license shall have been revoked, knowingly 
 engages in or carries on any business for which a license is required under this 
 section, or willfully fails or refuses to discontinue any unjust, unreasonable, dis- 
 criminatory and unfair storage charge, commission, profit, or practice in accord- 
 ance with the requirement of an order issued under this section, or any regu- 
 lation prescribed under this section, shall, upon conviction thereof, be punished 
 by a fine not exceeding $5^000, or by imprisonment for not more than two years, 
 or both : Provided, That this section shall not apply to any farmer, gardener, 
 cooperative association of farmers or gardeners, including live-stock farmers, 
 or other persons with respect to the products of any farm, garden, or other 
 land owned, leased, or cultivated by him, nor to any retailer with respect to the 
 retail business actually conducted by him, nor to any common carrier, nor shall 
 anything in this section be construed to authorize the fixing or imposition of a 
 duty or tax upon any article imported into or exported from the United States 
 or any State, Territory, or the District of Columbia : Provided further, That for 
 the purposes of this act a retailer shall be deemed to be a person, copartner- 
 ship, firm, corporation, or association not engaging in the wholesale business 
 whose gross sales do not exceed $100,000 per annum. 
 
 Sec. 6. That any person who willfully hoards any necessaries shall upon 
 conviction thereof be fined not exceeding $5,000 or be imprisoned for not more 
 than two years, or both. Necessaries shall be deemed to be hoarded within 
 the meaning of this act when either (a) held, contracted for, or arranged for 
 by any person in a quantity in excess of his reasonable requirements for use or 
 consumption by himself and dependents for a reasonable time; (b) held, con- 
 tracted for, or arranged for by any manufacturer, wholesaler, retailer, or other 
 
HIGH COST OF LIVING. 55 
 
 denier in a quantity in excess of the reasonable requirements of his business 
 for use or sale by him for a reasonable time, or reasonably required to furnish 
 necessaries produced in surplus quantities seasonally throughout the period of 
 scant or no production; or (c) withheld, whether by possession or under any 
 contract or arrangement, from the market by any person for the purpose of 
 imreasonably increasing or diminishing the price: Provided, That this section 
 shall not include or relate to transactions on any exchange, board of trade, or 
 similar institution or place of business as described in section thirteen of this 
 act that may be permitted by the President under the authority conferred upon 
 him by said section thirteen: Provided, however. That any accumulating or 
 withholding by any farmer or gardener, cooperative association of farmers or 
 gardeners, including live-stock farmers, or any other person of the products of 
 ^any farm, garden, or other land owned, leased, or cultivated by him shall not 
 be deemed to be hoarding within the meaning of this act. 
 
 Sec. 7. That whenever any necessaries shall be hoarded as defined in sec- 
 tion six they shall be liable to be proceeded against in any district court of 
 the United States within the district where the same are found and seized by 
 a process of libel for condemnation, and if such necessaries shall be adjudged 
 to be hoarded they shall be disposed of by sale in such manner as to provide 
 the most equitable distribution thereof ag the court may direct, and the pro- 
 ceeds thereof, less the legal costs and charges, shall be paid to the party 
 «ntitled thereto. The proceedings of such libel cases shall conform as near as 
 may be to the proceedings in admiralty, except that either party may demand 
 trial by jury of any issue of fact joined in any such case, and all such proceed- 
 ings shall be at the suit of and in the name of the United States. It shall be 
 the duty of the United States attorney for the proper district to institute and 
 prosecute any such action upon presentation to him of satisfactory evidence to 
 sustain the same. 
 
 Sec. 8. That any person who willfully destroys any necessaries for the pur- 
 pose of enhancing the price or restricting the supply thereof shall, upon con- 
 viction thereof, be fined not exceeding $5,000 or imprisoned for not more than 
 two years, or both. 
 
 Sec. 9. That any person who conspires, combines, agrees, or arranges with 
 ■any other person (a) to limit the facilities for transporting, producing, manu- 
 facturing, supplying, storing, or dealing In any necessaries; (b) to retrict 
 the supply of any necessaries; (c) to restrict the distribution of any neces- 
 saries; (d) to prevent, limit, or lessen the manufacture or production of any 
 necessaries in order to enhance the price thereof shall, upon conviction thereof, 
 ■be fined not exceeding $10,000 or be imprisoned for not more than two years, 
 ■or both. . 
 
 Sec. 10. That the President is authorized, from time to time, to requisition 
 foods, feeds, fuels, and other supplies necessary to the support of the Army or 
 the maintenance of the Navy, or any other public use connected with the com- 
 mon defense, and to requisition, or otherwise provide, storage facilities for 
 such supplies; and he shall ascertain and pay a just compensation therefor. 
 If the compensation so determined be not satisfactory to the person entitled to 
 receive the same, such person shall be paid 75 per cent of the amount so 
 determined by the President, and shall be entitled to sue the United States to 
 recover such further sum as, added to said 75 per cent will make up such 
 amount as will be just compensation for such necessaries or storage space, and 
 jurisdiction Is hereby conferred on the United States district courts to hear and 
 determine all such controversies: Provided, That nothing in this section, or 
 in the section that follows, shall be construed to require any natural person to 
 furnish to the Government any necessaries held by him and reasonably required 
 for consumption or use by himself and dependents, nor shall any person, firm, 
 corporation, or association be required to furnish to the Government any seed 
 necessary for the seeding of land owned, leased, or cultivated by them. 
 
 Sec 11 That the President Is authorized from time to time to purchase, to 
 store 'to provide storage facilities for, and to sell for cash at reasonable prices, 
 wheat, flour, meal, beans, and potatoes: Provided, That if any minimum price 
 shall have been theretofore fixed, pursuant to the provisions of section 14 of 
 this act then the price paid for any such articles so purchased shall not be less 
 than such minimum price. Any moneys received by the United States from or 
 in connection with the disposal by the United States of necessaries under this 
 section may, in the discretion of the President, be used as a revolving fund 
 for further carrying out the purposes of this section. Any balance of such 
 
•56 HIGH COST OF LIVING. 
 
 moneys not used as part of such revolving fund shall be covered into the Treas- 
 ury as miscellaneous receipts. 
 
 Sec. 12. That whenever the President shall find it necessary to secure an 
 adequate supply of necessaries for the support of the Army or the maintenance 
 of the Navy, or for any other public use connected with the common defense, he 
 Is authorized to requisition and take over, for use or operation by the Govern- 
 ment, and factory, packing house, oil pipe line, mine, or other plant, or any 
 part thereof, in or through which any necessaries are or may be manufactured, 
 produced, prepared, or mined, and to operated the same. Whenever the Presi- 
 dent shall determine that the further use or operation by the Government of 
 any such factor, mine, or plant, or part thereof, is not essential for the national 
 security or defense, the same shall be restored to the person entitled to the 
 possession thereof. The United States shall make just compensation, to be 
 determined by the President, for the taking over, use, occupation, and operation 
 by the Government of any such factory, mine, or plant, or part thereof. If the 
 compensation so determined by unsatisfactory to the person entitled to receive 
 the same, such person shall be paid 75 per cent of the amount so determined 
 by the President, and shall be entitled to sue the United States to recover 
 such further sum as, added to said 75 per cent, will m.ake up such amount as 
 will be just compensation, in the manner provided by section 24, paragraph 
 20, and section 145 of th? Judicial Code. The President is authorized to pre- 
 scribe such regulations as he may deem essential for carrying out the purposes of 
 this section, including the operation of any such factory, mine, or plant, or part 
 thereof, the purchase, sale, or other disposition of articles used, manufactured, 
 produced, prepared, or mined therein, and the employment, control, and com- 
 pensation of employees. Any moneys received by the United States from or 
 in connection with the use or operation of any such factory, mine, or plant, or 
 part thereof, may, in the discretion of the President, be used as a revolving 
 fund for the purpose of the continued use or operation of any such factory, mine, 
 or plant, or part thereof, and the accounts of each such factory, mine, plant, or 
 part thereof, shall be kept separate and distinct. Any balance of such moneys 
 not used as part of such revolving fund shall be paid into the Treasury as mis- 
 cellaneous receipts. 
 
 Sec. 13. That whenever the President finds it essential in order to prevent 
 undue enhancement, depression, or fluctuation of prices of, or in order to pre- 
 vent injurious speculation in, or in order, to prevent unjust market manipulation 
 or unfair and misleading market quotations of the prices of necessaries, here- 
 after in this section called evil practices, he is avithorized to prescribe such 
 regulations governing, or may either wholly or partly prohibit, operations, prac- 
 tices, and transactions at, on, in, or under the rules of any exchange, board of 
 trade, or similar institution or place of business as he may find essential in order 
 10 prevent, correct, or remove such evil practices. Such regulations may re- 
 quire all persons comins within their provisions to keep such records and state- 
 ments of account, and may require such persons to make such returns, verified 
 under oath or otherwise, as will fully and correctly disclose all transactions at, 
 in. or on, or under the rules of any such exchange, board of trade, or similar 
 institution or place of business, including the making, execution, settlement, 
 and fulfillment thereof. He may also require all persons acting in the capacity 
 of a clearing house, clearing association, or similar institution, for the purpose 
 of clearing, settling, or adjusting transactions at, in, or on, or under the rules 
 of any such exchange, lioard of trade, or similar institution or place of busi- 
 ness, to keep such records and to make such returns as will fully and correctly 
 disclose all facts in their possession relating to such transactions, and he may 
 appoint agents to conduct the investigations necessary to enforce the provisions 
 of this section and all rules and regulations made by him in pursuance thereof, 
 and may fix and pay the compensation of such agents. Any person who will- 
 fully violates any regulation made pursuant to this section, or who knovf^ingly 
 engages In any operation, practice, or transaction prohibited pursuant to this 
 section, or who willfully aids or abets any- such violation or any such prohibited 
 operation, practice, or transaction, shall, upon conviction thereof, be punished 
 by a fine not exceeding .$10,000 or by imprisonment for not more than four 
 years ,or both. 
 
 Sec. 14. That whenever the President shall find that an emergency exists 
 requiring stimulation of the production of wheat and that It is essential that 
 the producers of wheat, produced within the United States, shall have the 
 benefits of the guaranty provided for in this section, he is authorized, from 
 time to time, seasonably and as far in advance of seeding time as practicable, 
 
HIGH COST or LIVING. 57 
 
 to determine and to fix and to give public notice of what, under specified con- 
 ditions, is a reasonable guaranteed price for wlieat, in order to asmre such 
 producers a reasonable prollt. The President shall thereupon iix such guaran- 
 teed price for each of the official grain standards for wheat as established 
 under the United States grain standards act, approved August eleventh, nine- 
 teen hundred and sixteen. The President shall from time to time establish 
 and promulgate such regulations as he shall deem wise in connection with 
 such guaranteed prices, and in particular governing conditions of delivery and 
 payment, and differences in price for the several standard grades in the prin- 
 cipal primary markets of the United States, adopting number one northern 
 spring or its equivalent at the principal interior primary markets as the basis. 
 Thereupon, the Government of the United States hereby guarantees every pro- 
 ducer of wheat produced within the United States, that, upon compliance by 
 him with the regulations prescribed, he shall receive f:or any wheat produced in 
 reliance upon this guarantee \A-ithin the period, not exceeding eighteen months, 
 prescribed in the notice, a price not less than the guaranteed price therefor 
 as fixed pursuant to this section. In such regulations the President shall pre- 
 scribe the terms and conditions upon which any such producer shall be en- 
 titled to the benefits of this guaranty. The guaranteed prices for the several 
 standard grades of wheat for the crop of nineteen hundred and eighteen, shaD 
 be based upon number one northern spring or its equivalent at not less than 
 $2 per bushel at the principal interior primary markets. This guaranty shall 
 not be dependent upon the action of the President under the first part of this 
 section, but is hereby made absolute and shall be binding until May first, nine- 
 teen hundred and nineteen. When the President finds that the importation 
 into the United States of any wheat produced outside of the United States 
 materially enhances or is likely to materially enhance the liabilities of the 
 United States under guarantees of prices therefor made pursuant to this sec- 
 tion, and ascertains what rate of duty, added to the then existing rate of duty 
 on wheat and to the value of wheat at the time of importation, would be suffi- 
 cient to bring the price thereof at which imported up to the price fixed there- 
 for pursuant to the foregoing provisions of this section, he shall proclaim such 
 facts, and thereafter there shall be levied, collected, and paid upon wheat when 
 imported in addition to the then existing rate of duty, the rate of duty so 
 ascertained ; but in no case shall any such rate of duty be fixed at an amount 
 which will eftect a reduction in the rate of duty upon wheat under any then 
 existing tariff law of the United States. For the purpose of making any guar- 
 anteed price effective under this section, or whenever he deems it essential in 
 order to protect the Government of the United States against material en- 
 hancement of its liabilities 'arising out of any guaranty under this section, the 
 President is authorized also, in his discretion, to purchase any wheat for 
 which a guaranteed price shall be fixed under this section, and to hold, trans- 
 port, or store it, or to sell, dispose of, and deliver the same to any citizen of 
 the United States or to any Government engaged in war with any country 
 with which the Government of the United States is or may be at war or to 
 use the same as supplies for any department or agency of the Government of 
 the United States. Any moneys received by the United States from or in 
 connection with the sale or disposal of wheat under this section may, in the 
 discretion of the President, be used as a revolving fun for further carrying 
 out the purposes of this section. Any balance of such moneys not used as part 
 of such revolving fun shall be covered into the Treasury as miscellaneous 
 receipts. 
 
 Sec. 15. That from and after 30 days from the date of the approval of this act 
 no foods, fruits, food materials, or feeds shall be used in the production of dis-. 
 tilled spirits for beverage purposes; Provided, That under such rules, regula- 
 tions, and bonds as the President may prescribe, such materials may be used in 
 the production of distilled spirits exclusively for other than beverage purpose, 
 or for the fortification of pure sweet wines as defined by the act entitled "An 
 act to Increase the revenue, and for other purposes," approved September 8, 1916. 
 Nor shall there be imported into the United States any distilled spirits. When- 
 ever the President shall find that limitation, regulation, or prohibition of the 
 use of foods, fruits, food materials, or feeds in the production of malt or vinous 
 liquors for beverage purposes, or that reduction of the alcoholic content of any 
 such malt or vinous liquor, is essential, in order to assure an adequate and con- 
 tinuous supply of food, or that the national security and defense will be sub- 
 served thereby, he is authorized, from time to time, to prescribe and give public 
 notice of the extent of the limitation, regulation, prohibition, or reduction so 
 
58 HIGH COST OF LIVING. 
 
 necessitated. Whenever such notice shall have been given and shall remain 
 unrevolied no person shall, after a reasonable time prescribed in such notice, 
 use any foods, fruits, food materials, or feeds in the production of malt or 
 vinous liquors, or import any such liquors except under license issued by the 
 President and in compliance with rules and regulations determined by him gov- 
 erning the production and importation of such liquors and the alcoholic content 
 thereof. Any person who willfully violates the provisions of this section, or who 
 shall use any foods, fruits, food materials, or feeds in the production of malt 
 or vinous liquors, or who shall import any such liquors, without first obtaining a 
 license so to do when a license is required under this section, or who shall 
 violate any rule or regulation made under this section, shall be punished by a 
 fine not exceeding $5,000, or by imprisonment, for not more than two years, or 
 both : Provided further, that nothing in this section shall be construed to author- 
 ize the licensing of the manufacture of vinous or malt liquors in any State, 
 Territory, or the District of Columbia, or any civil subdivision thereof, where 
 the manufacture of such vinous or malt liquor is prohibited. 
 
 Sec. 16. That the President is authorized and directed to commandeer any or 
 all distilled spirits in bond or in stocli at the date of the approval of this act for 
 redistillation, in so far as such redistillation may be necessary to meet the re- 
 quirements of the Government in the manufacture of munitions and other mili- 
 tary and hospital supplies, or in so far as such redistillation would dispense with 
 the necessity of utilizing products and materials suitable for foods and feeds in 
 the future manufacture of distilled spirits for the purposes herein enumerated. 
 The President shall determine and pay a just compensation for the distilled 
 spirits so commandeered ; and if the compensation so determined be not satis- 
 factory to the person entitled to receive the same, such person shall be paid 75 
 per cent of the amount so determined by the President and shall be entitled to 
 sue the United States to recover such further sum as, added to said 75 per cent, 
 will make up such amount as will be just compensation for such spirits, in tho 
 manner provided by section 24, paragraph 20, and section 145 of the Judicial 
 Code. 
 
 Sec. 17. That every person who willfully assaults, resists, impedes, or inter- 
 feres with any officer, employee, or agent of the United States in the execution 
 of any duty authorized to be performed by or pursuant to this act shall, upon 
 conviction thereof, be fined not exceeding $1,000 or be imprisoned for not more 
 than one year, or both. 
 
 Sec. 18. That the sum of $2,500,000 is hereby appropriated, out of any moneys 
 In the Treasury not otherwise appropriated, to be available until June 30, 1918, 
 for the payment of such rent, the expense, including postage, of such printing 
 and publications, the purchase of such material and equipment, and the employ- 
 ment of such persons and means, in the city of Washington and elsewhere, as 
 the President may deem essential. 
 
 Sec. 19. That for the purposes of this act the sum of $150,000,000 is hereby 
 appropriated, out of any moneys in the Treasury not otherwise appropriated, to 
 ■be available during the time this act is in effect : Provided, That no part of this 
 appropriation shall be expended for the purposes described in the preceding sec- 
 tion : Provided further. That itemized statements covering all purchases and dis- 
 bursements under this and the preceding section shall be filed with the Secretary 
 of the Senate and the Clerk of the House of Representatives on or before the 
 25th day of each month after the taking effect of this act, covering the business 
 of the preceding month, and said statements shall be subject to public inspection. 
 
 Sec. 20. That the employment of any person under the provisions of this act 
 shall not exempt any such person from military service under the provisions 
 of the selective-draft law approved May 18, 1917. 
 
 Sec. 21. The President shall cause a detailed report to be made to the Con- 
 gress on the 1st day of January each year of all proceedings had under this 
 act during the year preceding. Such report shall, in addition to other matters, 
 contain an account of all persons appointed or employed, the salary or compen- 
 sation paid or allowed each, the aggregate amount of the different kinds of 
 property purchased or requisitioned, the use and disposition made of such 
 property, and a statement of all receipts, payments, and expenditures, together 
 with a statement showing the general character, and estimated value of all 
 property then on hand, and the aggregate amount and character of all claims 
 against the United States growing out of this act. 
 
 Sec. 22. That 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 
 
HIGH COST OF LIVING. 59 
 
 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. 23. That words used in this act shall be construed to import the plural 
 or the singular, as the case demands. The word " person," wherever used in this 
 act, shall include individuals, partnerships, associations, and corporations. 
 When construing and enforcing the provisions of this act, the act, omission, or 
 failure of any official, agent, or other person acting for or employed by any 
 partnership, association, or corporation within the scope of his employment or 
 office shall, in every case, also be deemed the act, omission, or failure of such 
 partnership, association, or corporation as well as that of the person. 
 
 Sec. 24. That the provisions of this act shall cease to be in effect when the 
 existing state of war between the United States and Germany shall have ter- 
 minated, and the fact and date of such termination shall be ascertained and 
 proclaimed by the President ; but the termination of this act shall not affect any 
 act done, or any right or obligation accruing or accrued, or any suit or proceed- 
 ing had or commenced in any civil case before the said termination pursuant to 
 this act ; but all rights and liabilities under this act arising before its termina- 
 tion shall continue and may be enforced in the same manner as if the act had 
 not terminated. Any offense committed and all penalties, forfeitures, or lia- 
 bilities incurred pribr to such termination may be prosecuted or punished in 
 the same manner and with the same effect as if this act had not been terminated. 
 
 Sec. 25. That the Pi-esident of the United States shall be, and he is hereby, 
 authorized and empowered, whenever and wherever in his .iudgment necessary 
 for the efficient prosecution of the war ; to fix the price of coal and coke, wherever 
 and whenever sold, either by producer or dealer, to establish rules for the regula- 
 tion of and to regulate the method of production, sale, shipment, distribution, 
 apportionment, or storage thereof among dealers and consumers, domestic or 
 foreign ; said authority and power may be exercised by him in each case through 
 the agency of the Federal Trade Commission during the war or for such part of 
 said time as in his judgment may be necessary. 
 
 That if, in the opinion of the President, any such producer or dealer falls or 
 neglects to conform to such prices or regulations, or to conduct his business 
 efficiently under the regulations and control of the President as aforesaid, or 
 conducts it in a manner prejudicial to the public interest, then the President 
 is hereby authorized and empowered in every such case to requisition and take 
 over the plant, businei^s, and all appurtenances thereof belonging to such pro- 
 ducer or dealer as a going concern, and to operate or cause the same to be 
 operated in such manner and through such agency as he may direct during 
 the period of the war or for such part of said time as In his judgment may be 
 necessary. 
 
 That any producer or dealer whose plant, business, and appurtenances shall 
 have been requisitioned or taken over by the President shall be paid a just 
 compensation for the use thereof during the period that the same may be requi- 
 sitioned or taken over as aforesaid, which compensation the President shall 
 fix or caused to be fixed by the Federal Trade Commission. 
 
 That if the prices so fixed, or if, in the case of the taking over or requisi- 
 tioning of the mines or business of any such producer or dealer the compen- 
 sition therefor as determined by the provisions of this Act be not satisfactory 
 to the perscon or persons entitled to receive the same, such person shall be 
 paid seventy-five per centum of the amount so determined, and shall be en- 
 titled to sue the United States to recover such further sum as, added to said 
 seventy-five per centum, will make up such amount as will be just compensa- 
 tion in the manner provided by section twenty-four, paragraph twenty, and 
 section one hundred and forty-five of the Judicial Code. 
 
 While operating or causing to be operated any such plants or business, the 
 President is authorized to prescribe such regulations as he may deem essential 
 for the employment, control, and compensation of the employees necessary to 
 
 conduct the same. , ,, , . ^, ■ • 4.1, t i, „„„ 
 
 Or if the President of the United States shall be of the opinion that he can 
 thereby better provide for the common defense, and whenever, in his judg- 
 ment it shall be necessary for the efficient prosecution of the war, then he is 
 hereby authorized and empowered to require any or all producers of coal and 
 coke either in any special area or in any special coal fields, or in the entire 
 IMted States, to sell their products only to the United States through an 
 agency to be designated by the President, such agency to regulate the resale 
 of sue^ """i oT„j nAirp nn<i thp nricps thPronf, and to estabUsh rulcs for the 
 
60 HIGH COST OF LIVING. 
 
 regulation of and to regulate the methods of production, shipment, distribu- 
 tion, apportionment, or storage thereof among dealers and consumers, domestic 
 or foreign, and to make payment of the purchase price thereof to the producers 
 thereof, or to the person or persons legally entitled to said payment. 
 
 That -n'ithin fifteen days after notice from the agency so designated to a;iy 
 producer of coal and coke that his, or its, output is to be so purchased by the 
 United States as hereinbefore described, such producer shall cease shipments 
 of said product upon his own account and shall transmit to such agehcy ah 
 orders' received and unfilled or partially unfilled, showing the exact extent to 
 which shipments have been made thereon, and thereafter all shipments shall 
 be made only on authority of the agency designated by the President, and there- 
 after no such producer shall sell any of said products except to the United 
 States through such agency, and the said agency alone is hereby authorized 
 and empowered to purchase during the continuance of the requirement thu 
 output of such producers. 
 
 that the prices to be paid' for such products so purchased shall be based 
 upon ,a fair and just profit over and above the cost of production, including 
 pl-oper maintenance and depletion charges, the reasonableness of such profits 
 and cost of production to be determined by the Federal Trade Commission, and 
 if the prices fixed by the said commission of any such product purchased by the 
 United States as hereinbefore described be unsatisfactory to the person or per- 
 sons entitled to the same, such person or persons shall be paid seventy-five 
 per centum of the amount so determined, and shall be entitled to sue the 
 United States to recover such further sum as, added to said seventy-five per 
 centum, will make up such amount as will be just compensation in the manner 
 provided by section twenty-four, paragraph twenty, and section one hundred 
 and forty-five of the Judicial Code. 
 
 All such products so sold to the United States shall be sold by the United 
 States at such uniform prices, quality considered, as may be practicable ami 
 as may be determined by said agency to be just and fair. 
 
 Any moneys received by the United States for the sale of any such coal and 
 coke may, , in the discretion of the President, be used as a revolving fund for 
 further carrying out the purposes of this section. Any moneys not so used 
 shall be covered into the Treasury as miscellaneous receipts. 
 
 That when directed by the President, the Federal Trade Commission is hereby 
 required to proceed to make full inquiry, giving such notice as it may deem 
 practicable, into the cost of producing under reasonably efficient management 
 at the various places of production the following commodities, to wit, coal and 
 coke. 
 
 The books, correspondence, records, and papers in any way referring to 
 transactions of any kind relating to the mining, production, sale, or distribution 
 of all mine operators or other persons whose coal and coke have or may be- 
 come subject to this section, and the books, correspondence, records, and papers 
 of any person applying for the purchase of coal and coke from the United 
 States shall at all times be subject to inspection by the said agency, and such 
 person or persons shall promptly furnish said agency any data or information 
 relating to the business of such person or persons which said agency may call 
 for, and said agency is hereby authorized to procure the information in refer- 
 ence to the business of such coal-mine operators and producers of coke and 
 customers therefor in the manner provided for in sections six and nine of the 
 Act of Congress approved September twenty-sixth, nineteen hundred and four- 
 teen, entitled "An Act to create a Federal Trade Commission, to define its 
 powers and duties, and for other purposes," and said agency is hereby author- 
 ized and empowered to exercise all the powers granted to the Federal Trade 
 Commission by said Act for the carrying out of the purposes of this section. 
 
 Having completed its inquiry respecting any commodity in any locality, it 
 shall, if the President has decided to fix the prices at which any such com- 
 modity shall be sold by producers and dealers generally, fix and publish maxi- 
 mum prices for both producers of and dealers in any such commodity, which 
 maximum prices shall be observed by all producers and dealers until further 
 action thereon is taken by the commission. 
 
 In fixing maximum prices for producers the commission shall allow the 
 cost of production. Including the expense of operation, maintenance, deprecia- 
 tion, and depletion, and shall add thereto a just and reasonable profit. 
 
 In fixing such prices for dealers, the commission shall allow the cost to the 
 dealer and shall add thereto a just and reasonable sum for his profit in the 
 transaction. 
 
HIGH COST OF LIVING. 61 
 
 The maximum prices so fixed and published shall not be construed as invali- 
 dating any contract in which prices are fixed, made in good faith, prior to 
 the establishment and publication of maximum prices by the commission. 
 
 Whoever shall, with knowledge that the prices of any such commodity have 
 been fixed as herein provided, ask, demand, or receive a higher price, or wlio- 
 ever shall, with knowledge that the regulations have been prescribed as herein 
 provided, violate or refuse to conform to any of the same, shall, upon convic- 
 tion, be punished by fine of not more than .$5,000, or by imprisonment for not 
 more than two years, or both. Each independent transaction shall constitute a 
 separate ofCense. 
 
 Nothing in thi.s section shall be construed as restricting or modifying in any 
 manner the right the Government of the United States may have in its own 
 behalf or in behalf of any other Government at «ar with Germany to purchase, 
 requisition, or take over any such commodities for the equipment, maintenance, 
 or support of armed forces at any price or upon any terms that may be agreed 
 upon or otherwise lawfully determined. 
 
 Sec. 26. That any person carrying on or employed in commerce among the 
 several States, or with foreign nations, or with or in the Territories or other 
 possessions of the United States in any article suitable for human food, fuel, or 
 other necessaries of life, who, either in his individual capacity or as an officer, 
 agent, or employee of a corporation or member of a partnership carrying on or 
 employed In such trade, shall store, acquire, or hold, or who shall dc^stroy or 
 make away with any such article for the purpose of limiting the supply thereof 
 to the public or afCecting the market price thereof in such commerce, whether 
 temporarily or otherwise, shall be deemed guilty of a felony, and, upon con- 
 viction thereof, shall be punished by a fine of not more than $5,000 or by im- 
 prisonment for not more than two years, or both: Provided, That any storing 
 or holding by any farmer, gardener, or other person of the products of any farm, ' 
 garden, or other land cultivated by him shall not be deemed to be a storing or 
 holding within the meaning of this act : Provided further, That farmers and 
 fruit growers, cooperative and other exchanges, or societies of a similar char- 
 acter shall not be included within the provisions of this section : Provided fur- 
 ther, That this section shall not be construed to prohibit the holding or ac- 
 cumulating of any such article by any such person in a quantity not in excess 
 of the reasonable requirements of his business for a reasonable time or in a 
 quantity reasonably required to furnish said articles produced in surplus quan- 
 tities seasonally throughout the period of scant or no production. Nothing con- 
 tained in this section shall be construed to repeal the act entitled "An act to 
 protect trade and commerce against unlawful restraints and monopolies," ap- 
 proved July 2, 1890, commonly known as the Sherman Antitrust Act. 
 
 Sec. 27. That the President is authorized to prociire, or aid in procuring, such 
 stocks of nitrate of soda as he may determine to be necessary, and find Avail- 
 able, for increasing agricultural production during the calendar years 1917 and 
 1918, and to dispose of the same for cash at cost, including all expenses connected 
 therewith. For carrying out the purposes of the section there is hereby appro- 
 priated, out of any moneys in the Treasury not otherwise appropriated, avail- 
 able immediately and until expenses, the sum of $10,000,000, or so much thereof 
 as may be necessary, and the President is authorized to make such regulations 
 and to use such means and agencies of the Government as, in his discretion, he 
 may deem best. The proceeds arising from the disposition of the nitrate of soda 
 shall go into the Treasury as miscellaneous receipts. 
 
 Approved, August 10, 1917. 
 
 (The committee thereupon took a recess until 2 o'clock p. m.) 
 
man cost of living. 
 
 Committee on Agriculture, 
 
 House of Representatives, 
 Wednesday, August £0, 1919. 
 The conunittee this day met, Hon. Gilbert N. Haugen (chairman) 
 presiding. 
 
 The Chairman. The committee will come to order. We have with 
 us this morning the Attorney General. We will be pleased to hear 
 from you, Mr. Attorney General, on the recommendations made by 
 you in regard to the bill under consideration. 
 
 STATEMENT OF HON. A. MITCHELL PALMER, ATTORNEY GEN- 
 ERAL OF THE UNITED STATES. 
 
 Attorney General Palmer. Mr. Chairman, I have been shown a 
 copy of the confidential committee print of the bill — I do not know 
 whether it has been introduced — but I understand it is being con- 
 sidered by the committee. 
 
 The Chairman. It is a confidential print for the committee; it is 
 being considered as the basis for the legislation suggested. 
 
 Attorney General Palmer. Mr. Chairman, I feel that I should 
 say that, after having given very careful and sympathetic considera- 
 tion to the proposition as contained in this committee bill, I still 
 believe that it would be the part of practical wisdom, in the cir- 
 cumstances, to report and pass only the amendments to the food- 
 control act which were comprised within the draft of the measure 
 I sent to the committee, and I would like to state my reasons to the 
 committee. 
 
 The draft which I sent to the committee made only two changes 
 in the food-control act. The first included wearing apparel and 
 certain containers within the meaning of the word " necessaries," 
 and the second was to put a penalty of $5,000 fine and two years 
 imprisonment upon all of the acts prohibited by section 4. Sections 
 6, 8, and 9 of the food-control act placed a penalty upon certain of 
 the things prohibited by section 4, but did not place a penalty upon 
 individual profiteering, which is the one thing we are after at this 
 time most strongly. This individual profiteering, the charging of 
 an unjust and unreasonable rate of profit, is what my amendments 
 were designed to put a penalty upon. I am convinced that if I 
 could be armed with that kind of a law I could make some con- 
 spicuous examples of profiteers in various cities and towns of the 
 country, which would make it unnecessary to go into any general 
 drive against high prices, as far as profiteers are concerned. 
 
64 HIGH COST OF LIVING. 
 
 Now, your amendment does two things in addition to what I pro- 
 posed. In paragraph 2j section 2, of your bill you state the methods 
 by which profiteering shall be determined and, in the second place, 
 you exempt from the operation of the law all retailers, or persons 
 doing a business of $100,000 or less per annum. When I drafted 
 this bill I will frankly say to you gentlemen that I had my own 
 legislative experience in my mind. I believed that since it wa,s 
 important that we should do this work as promptly as possible, 
 legislation could be passed most quickly which contained the mini- 
 mum of changes in the present law and therefore would provoke 
 the minimum of discussion and debate. 
 
 My carefully considered opinion is that this subsection 2 of sec- 
 tion 2 of your bill is so drastic and far-reaching, and constitutes aii 
 embarkation upon such a new policy of government, namely, the un- 
 dertaking of executive price fixing, that it will provoke unlimited 
 discussion and debate, if not on this side, certainly on the other end 
 of the Capitol, and I doubt if you can have any hope of getting it 
 passed in time to make it effective, because, after all, this entire 
 law goes out of existence when peace comes and that certainly is not 
 so far off that we can use much time in the debate of general matters 
 of this character and hope to get any real enforcement of the law. 
 I say that because it is a brand new policy and far-reaching change 
 in our system of reaching matters of this kind. To have the Execu- 
 tive deliberately fix the prices at which every person may sell the 
 necessaries of life is a very forward step, and while there may be and 
 doubtless is merit in it there is going to be a very large proportion of 
 the gentlemen in the Capitol who will dispute it with you, and I 
 would not have any hope, from my knowledge of things, as I say, 
 that you could put that section in this food control act before the 
 act itself runs out. 
 
 Further than that, if you did, that section will require the re- 
 building of the Food Administration. You say: 
 
 Whenever the President flnds that any storage charge, commission, profit, or 
 practice of any such person is unjust or unreasonable, or discriminatory and 
 unfair, or wasteful, he shall order such person, etc. 
 
 Obviously, you do not expect the President to do that as an indi- 
 - vidual. You lay upon the President the duty of finding whether a 
 price asked by an individual is fair or unfair, but the President, of 
 course, is too much engaged in various other things to be expected 
 to do that personally. He has got to do it through representatives 
 and, Mr. Chairman, he can not do it without collecting again in 
 Washington an organization as large and as far-reaching as the 
 Federal Food Administration was during the war and, in my 
 judgment, that is unthinkable. 
 
 The Chairman. May I interrupt you? 
 
 Attorney General Palmer. Certainly. 
 
 The Chairman. The intention was not to make it compulsory 
 but to leave it to the discretion of the President. I desire to call 
 atention to the fact that it follows the present language of section 5 
 of the food-control act. As Judge Ames stated the other day, you 
 have this power now, under the licensing system. The proposed change 
 in the method would permit the President to do these very things 
 that he now has authority to do under the licensing system without 
 issuing licenses. 
 
HIGH COST OF LIVING. 65 
 
 Attorney General Palmer. That is the very point I am making. 
 Under the present law the President has the right to do these things 
 by the exercise of the licensing system. How did he do it? He 
 vested the power in the Federal Food Administration, and the Fed- 
 eral Food Administration built up an organization here in Wash- 
 ington which, with the Fuel Administration, cost approximately a 
 million dollars a month to operate, and it cost only that because it 
 was coniposed of thousands and thousands of volunteers in every part 
 of the United States. It is totally impossible to get those volunteers 
 in any such proportion now as we got them .during the war, and it is 
 totally impossible to rebuild the Federal Food Administration or 
 a large fraction of it within three or four months at the very out- 
 side. Where we would get the money to do it I do not know. We 
 might get it, but we would have to wait until an appropriation was 
 made before we could start upon the business of organizing the 
 administration to carry out that section; and, Mr. Chairman, you 
 would find before you had it one-third organized that the law would 
 be a dead letter upon the statute books, because this war is going to 
 be over some time in the not too distant future. 
 
 The Chairman. That was pointed out by Judge Ames the other 
 day. We tried to simplify matters by leaving it to the discretion 
 of the President whether to proceed direct against profiteers or to 
 exercise the power to fix prices. It is your opinion that he will 
 not have power to fix prices under section 4? 
 
 Attorney General Palmer. No. 
 
 The Chairman. It was thought that he should be given the same 
 power that he has had to fix prices since the approval of the food- 
 control act, August 10, 1917, but without having to issue licenses. 
 It is not mandatory upon the President nor is it necessary that he do 
 these things. If the power were not exercised it would do not harm, 
 for he could still proceed direct against the profiteer with a penalty 
 attached to section 4 of the food-control act. 
 
 Attorney General Palmer. I am afraid it would do harm, and I 
 will tell you why. Under your section 3 you make a violation of the 
 provisions of section 4 a crime. That is all right ; that is what we 
 ask for; that is what we want; but by inserting your section 2 
 you fix the method by which the unreasonable rate or charge shall be 
 determined, and if we undertook upon the passage of this act to 
 arrest a dealer for making an unreasonable and unjust charge we 
 will be met by the answer, "I could not tell what was just or 
 reasonable, because the President of the United States has not fixed 
 the rate as provided in this amendment to the act." _ We never could 
 get a conviction, Mr. Chairman, in our deliberate judgment, in the 
 face of that section 2 unless section 2 operates. Here is a section 
 which makes everything prohibited by section 4 a crime. That is 
 all right. That includes an unjust and unreasonable rate, but you 
 go on to determine what shall be done when the President feels 
 that there is such an unjust and unreasonable rate. When we under- 
 take to take a man before a jury because he has charged an unjust 
 or unreasonable rate, of course, he is going to make the defense 
 that he is entitled to have the President fix that price before a ]ury 
 can say that his rate was unreasonable. 
 137691—19 5 
 
66 HIGH COST OF LIVING. 
 
 The Chairman. What would you say to adding to the authority 
 herein granted to the President this or a similar proviso: 
 
 Provided, That nothing in this paragraph shall be construed to limit the 
 operation under any other paragraph of this section. 
 
 Attorney General Paumee. That will not do the business. 
 
 The Chairman. Could not a proviso be drafted if that is not the 
 proper phraseology? 
 
 Attorney General Palmer. I doubt that very much, Mr. Chair- 
 man. 
 
 Mr. TiNCHER. Let me see if I understand you. You made some 
 recommendations to this committee, and the committee, or some of 
 the members of the committee, have gone ahead now in this confi- 
 dential committee print and added to them the paragraph in quo- 
 tations on page 2, starting with "(2) The President is authorized," 
 etc. You think we ought to leave that out ? 
 
 Attorney General Palmer. I think so. 
 
 Mr. TiNCHER. And you think we ought to leave out on page 4 
 
 Attorney General Palmer. Subsection (c) at the top of the page. 
 
 Mr. TiNCHER. Subsection (c) ? 
 
 Attorney General Palmer. I think so. 
 
 Mr. TiNCHER. Outside of that you think the bill 
 
 Attorney General Palmer. Outside of that the bill is what I ask 
 for. 
 
 Mr. TiNCHER. We cut out one word — " harvester " — there. 
 
 Attorney General Palmer. I do not conceive that to be important, . 
 but I do think it would be a mistake to throw a block in the path 
 of the conviction of the profiteer, and I am perfectly satisfied that 
 this section 2 would operate in no other way, because it is not prac- 
 ticable for the President to put it in effect. He can not, under pres- 
 ent conditions, reorganize the Food Administration, and he would 
 have to do so in order to operate it, and since it is not practicable for 
 him to do it, why should we be met with the defense in every court in 
 which we attempt to convict a profiteer, " This thing has not been 
 done?" 
 
 The Chairman. Could it be done by a proclamation ? 
 
 Attorney General Palmer. Fix the price by proclamation? Yes; 
 after he has built up an organization that can determine the price, 
 but the determination of prices, basic prices, jobbers' prices, whole- 
 sale prices, and retail prices is an enormous task. 
 
 The Chairman. They have been determined? 
 
 Attorney General Palmer. They were determined by the Food 
 Administration under conditions then existing. We would not be 
 justified in accepting their prices now. 
 
 The Chairman. I take it that the President would not fix the price 
 on all necessaries ; he might undertake to fix the price, for instance, 
 on sugar, or some other commodity ? 
 
 Attorney General Palmer,. Well, the Food Administration started 
 out, you remember, and after great effort in getting organized, and 
 after full investigation, they fixed a price on flour and wheat prod- 
 ucts, and on sugar, and they ran along for months without fixing any 
 other prices, because the size of the job made it necessary for them to 
 make such widespread investigations that they could not get to the 
 rest. They did gradually go on until they fixed other prices, and 
 
HIGH COST OF LIVING. 67 
 
 when the armistice came they had gathered a considerable price list, 
 but that was, of course, only advisory. You did not give the Food 
 Administration the right to fix prices. 
 
 The Chairman. Only through the licensing system. 
 
 Attorney General Palmer. You gave them the right to control 
 
 ?irices through the licensing system, which is a very different thing 
 rom the actual fixing of prices. 
 
 Mr. McLaughlin of Michigan. There is a sentence there to the 
 effect that the President shall determine if any price is unjust or 
 unreasonable, and that he shall, in lieu thereof, determine what price, 
 and so on, is reasonable. That is in the old law. 
 The Chairman. The wording is : 
 
 The President may, in lieu if any such unjust, unreasonable, discriminatory, 
 and unfair storage charge, commission, profit, or practice, find what is a just, 
 reasonable, nondiscriminatory, and fair storage charge, commission, profit, or 
 practice, and in any proceeding brought in any court such order of the Presi- 
 dent shall be prima facie evidence. 
 
 Mr. VoiGT. The word " charge " there is equivalent to " price." 
 
 The Chairman. " Charge, commission, profit, or practice." 
 
 Attorney General Palmer. That is price fixing, I think, without 
 any question. 
 
 The Chairman. That is the wording of section 5, from which I 
 was reading. 
 
 Mr. McLaughlin of Michigan. He referred to that in answer to 
 the Attorney General's statement that the act did not give any au- 
 thority to fix prices. 
 
 Attorney General Palmer. The effect was to fix the margin of 
 profit and then control the question of price fixing by the issuing or 
 withholding or reviving of a license, and they met the retailer in ex- 
 actly the same way. 
 
 Mr. McLaughlin of Michigan. Through the license to the whole- 
 saler? 
 
 Attorney General Palmer. Through the license to the wholesaler. 
 
 Mr. McLaughlin of Michigan. Is it your desire to reach the re- 
 tailer directly as to prices? 
 
 Attorney General Palmer. Yes, sir. 
 
 Mr. McLaughlin of Michigan. All of them ? 
 
 Attorney General Palmer. Yes, sir. 
 
 The Chairman. Eetailers as defined in section 5 are exempted? 
 
 Attorney General Palmer. "Well, that is not an exemption from 
 charging honest prices. They are not licensed under section 5, the 
 retailers, but the way they were reached was this. If a retailer was 
 charging an unconscionable profit, they had the right to issue licenses 
 to wholesalers and revoke licenses to wholesalers, and they went to 
 the wholesaler who had sold to the retailer and said, "We make it 
 one of the conditions of your license that you shall not sell to this 
 man who is profiteering as a retailer," and, of course, that had the 
 effect of stopping the retailer from profiteering 
 
 My iudgment IS, Mr. Chairman, and this is the report we are get- 
 ting from all over the country, that while the vast body of retail 
 merchants are fair and are recognizing conditions as they are and 
 making only a reasonable profit, there are black sheep among them, 
 and there is in almost every town and city a corner grocery store 
 
68 HIGH COST OF LIVING. 
 
 or a corner shoe-store retailer who is taking advantage of his limited 
 circle of patrons, telling them they know prices are high and condi- 
 tions are bad, to make them believe he is justified in adding on a 
 profit which the facts do not justify, and in a town of 10,000 you 
 will absolutely destroy this act and all its purposes if you eliminate 
 the retailer who does a business under $100,000. 
 
 We have more complaints of the retail gouger tha,n of anybody 
 else, possibly because he is the man that the people come directly 
 in contact with and there is a strong conviction — I do not know 
 whether it is entirely justified or not — that some of these men are 
 taking advantage of the present conditions and charging unconscion- 
 able profits, and I would feel hopeless when it came to getting some 
 relief for the people if I were restricted only to the great department 
 stores and immense organizations which admittedly sell cheaper than 
 the small retailers, and which, of course, can do so. The price that 
 a department store sells at might be a different price from what the 
 retailer sells at, and that would have to be taken into consideration 
 in fixing a fair and reasonable price. 
 
 The Chairman. If you will pardon me, may I state what I had 
 in view. The department now has certain information furnished 
 by the Federal Trade Commission. Take the packers, for instance. 
 Four meat packers are reported to have increased their profits 
 $121,000,000. The President has had this information for over a 
 year. If he desires to exercise the power of fixing the prices that 
 they and others shall charge, this will give the authority to do so. It is 
 not necessary to build up any large amount of machinery to search 
 for profiteers. 
 
 In the Federal Trade Commission's investigation the millers are 
 reported to have increased their profits on flour from 13^ to 45 
 cents a barrel. 
 
 Attorney General Palmer. Mr. Chairman, you are not passing 
 this act for the purpose of reaching the five big packers alone, surely? 
 
 The Chairman. To carry out the President's recommendations 
 and to reach all profiteers. 
 
 Attorney General Palmer. Wherever they are? 
 
 The Chairman. Yes; wherever they are. 
 
 Attorney General Palmer. You are putting upon the President 
 the burden of fixing the rate of profit for any person. 
 
 The Chairman. Not the burden. We are leaving it to his dis- 
 cretion whether to fix the prices or to proceed against them direct. 
 
 Attorney G,eneral Palmer. Well, we do not want to pick out the 
 five packers alone and attempt to punish them, and leave hundreds 
 of thousands, possibly, of small gougers to go free, and you can not 
 possibly work out that system and make it apply to any except the 
 very few upon whom full investigations have heretofore been had. 
 
 Let me say, since you have put it into the record, about this pack- 
 ers' case, about which you say information was furnished to the 
 department a year or more ago, that the Federal Trade Commission 
 made an investigation of the packers' case, and something more than 
 a year ago they reported to the President in a preliminary and gen- 
 eral way, and finally printed what they called the summary of their 
 report, which was a bare statement of their conclusions, without" dis- 
 closing the evidence upon which they acted. Manifestly, the De- 
 partment of Justice is not going to act, either in a criminal or civil 
 
HIGH COST OF LIVING. 69 
 
 action, upon mere conclusions :found by any agency of the Govern- 
 ment. The responsibility was upon the Department of Justice, and 
 it was necessary for them to examine the evidence upon which the 
 Federal Trade Commission came to those conclusions. 
 
 The Chairman. I beg your pardon. I do not criticize the Depart- 
 ment of Justice. I merely said that j'ou have the information fur- 
 nished by the commission necessary to fix the price for those whom 
 are reported to be profiteers. 
 
 Attorney General Palmer. I am sure you would not unjustly criti- 
 cize the department or anybody else, but I understand that in the 
 last hearings there was the intimation that the department had been 
 sleeping upon its possibilities in this packers' case, and I wanted to 
 call attention to the fact that it was only as late as March last that 
 the larger number of the findings of the Federal Trade Commission, 
 the actual facts which they, developed, were furnished to the public 
 or to the Department of justice, and not all of them have yet been 
 furnished because they are in a process of collation. They printed, 
 first, the summary containing the result of their investigations, and 
 then they printed afterwards at long intervals the actual facts which 
 they developed. When those facts were developed and presented 
 to the Department of Justice the Senate and House committees were 
 investigating this packers' situation also, and it would have been 
 folly for the Department of Justice to undertake action until those 
 records had also been examined. 
 
 When I came into office on the 5th of March I turned over all that 
 mass of evidence which had been collected by the Federal Trade 
 Commission and which had been developed by the hearings which 
 have just been concluded by the committees of the House and Senate, 
 to a body of lawyers to make a critical examination to see what action 
 might be taken under the law. Manifestly, I did not have the oppor- 
 tunity to do it personally. That enormous mass of material was 
 critically examined and was the occasion of a voluminous and care- 
 fully prepared report to the Attorney General, and the day after 
 that report was received, and after I had spent the night in going 
 over it, we made the announcement that we, felt justified in bring- 
 ing action against the packers. There has not been any laches on 
 the part of the Department of Justice in that case. That is a little 
 beside the question, but I bring it in because it has been brought in 
 by others. 
 
 Mr. VoiGT. May I ask is that report public? 
 
 Attorney General Palmer. No ; that is- a report of one of my assist- 
 ants to me. I have not made it public. 
 
 It is a kind of record we make when we begin a laAvsuit, but I do 
 not believe it would be in the interest of the Government to give pub- 
 licity to it. -1, T 1 
 
 Mr. Chairman, I am sincerely hopeful that you will do the easy 
 thing in this matter— the direct and quick thing. 
 
 We ought to have this amendment promptly. I believe that if you 
 report the bill asking only for these slight changes in the law which I 
 have suggested, you will hare no difficulty in getting it through Con- 
 gress promptly. I believe also very firmly that if you report this 
 other measure, you will raise a storm of debate and discussion to the 
 point where we will lose much of the benefit of it when it finally does 
 come And I am perfectly clear that M-e can not make that section 2. 
 
70 HIGH COST OF LIVING. 
 
 workable, without building up an organization that it is impossible 
 to build up during the time that the act is in force. 
 
 Mr. Jones. May I ask you a question at this point ? Do I under- 
 stand you to say that it is your idea that subdivisions (a) and (b) 
 under the exemption provision should remain in the amendment ? 
 
 Attorney General Palmer. Well, I have no very strong views upon 
 that matter, except 
 
 Mr. Jones (interposing). Let me read this article that I saw 
 in the Washington Herald of August 20 : 
 
 At a hearing before the Senate subcommittee, Chairman Ball established the 
 fact that Washingtonians must pay a high price for milk in certain seasons, 
 through an organization known as the Maryland and Virginia Milk Producers' 
 Association. This organization, which has a membership of about 700, the com- 
 mittee learned, fixes the price of milk for a stated time ahead, and they must 
 keep to this price, regardless of conditions which may ensue. W. A. Simpson, of 
 the Walker Hill Dairy, at the request of Chairman Ball, told of his fight against 
 the Maryland and Virginia Milk Producers' Association for the right of selling 
 his milk at 4 cents less on the gallon ; he said he believed this organization 
 kept the prices of milk higher in Washington than they should be. 
 
 Without arguing as to the correctness of that testimony produced 
 by that man before the Senate subcommittee, that condition can exist, 
 can it not ? 
 
 Attorney General Palmer. I suppose so. 
 
 Mr. Jones. Well, if that condition existed, could there be a prose- 
 cution under subdivision (b) ? 
 
 Attorney General Palmer. Very likely not. My views about that 
 exemption are these. I will give them to you tor what they are 
 worth : 
 
 The present food-control act exempts the farmei-s and farmers' 
 associations from the charge of hoarding; and I think that is en- 
 tirely proper. I think the man who raises his own produce ought to 
 be permitted to keep it as long as he pleases; and his purpose in 
 doing so is not a matter of public concern so long as he is not dealing 
 in it, but raises it himself. 
 
 But I doubt if I would impugn the patriotism of the farmer by 
 extending to him an exemption that would free him from the charge 
 of ever selling his product at an unjust and unreasonable rate of 
 profit. I do not think the farmer, by and large, wants to do that, 
 any more than anybody else wants to do it ; and I am certain that if 
 he does do it, the country generally will hold that he is in the same 
 position as anybody else who does it. 
 
 So I would leave the exemptions as they are in the present law, 
 exempting the farmers and the farmers' associations from the op- 
 erations of the hoarding provisions, but not exempting them from the 
 operations of the straight-out profiteering provision. 
 
 And I certainly would not do this, Mr. Chairman, include in the 
 exemption the words "corporation whose membership is composed 
 of such individuals," because when men form a corporation, as dis- 
 tinguished from a mere cooperative, nonprofit-making association, 
 they are going into business for profit, changing their own character 
 into the artificial character of a corporation for the purpose of mak- 
 ing money ; and they ought to be treated, not as individuals, but as 
 corporations who are dealers. 
 
 I have a report to-day, by telegram from a district attorney, stat- 
 ing that there are in storage in a certain part of the country 2,000,000 
 
HIGH COST OF LIVIKG. 71 
 
 sacks of the 1918 crop of beans, owned by <a corporation formed for 
 profit — not by the farmers themselves through an association, but 
 by a corporation formed for profit for the purpose of dealing in that 
 product. 
 
 Mr. McLaughlin of Michigan. That is in California, is it not? 
 
 Attorney General Palmee. That is in California. 
 
 Mr. Jacoway. Is it a corporation or a holding company ? 
 
 Attorney General Palmer. Well, it is described to me as a cor- 
 poration. 
 
 Mr. McLaughlin of Michigan. Did you read in that connection 
 the testimony of the gentleman who represents that association ? 
 
 Mr. Jones. Mr. Turner. 
 
 Mr. McLaughlin of Michigan. Mr. Turner. In that testimony a 
 statement was made before the joint session of the House and Senate 
 committees a few days ago to the effect that a large production of 
 beans was raised following the request of the Government for a large 
 production during the war ; that they made every effort to sell those 
 beans to the Government, but were unable to do business with it; 
 and at the same time the Government bought millions and millions 
 of dollars worth of oriental beans ; they bought from Japan and the 
 Orient; and the beans were shipped through California to eastern 
 ports for the use of the Government without giving the California 
 people an opportunity to bid on those supplies. 
 
 Attorney General Palmer. Well, I am not discussing the merits 
 of the case ; all of that might be very proper to be heard in a libel 
 for condemnation of the goods. I am not undertaldng to discuss 
 that. 
 
 But I am using that as an illustration for the purpose of showing 
 the way in which the hands of the Department of Justice would be 
 tied by any such provision as that. The operations of a corporation 
 for the purpose of increasing the price just because it might be com- 
 posed of men who were engaged in the business of agriculture could 
 not be met at all. 
 
 Mr. McLaughlin of Michigan. Would you apply that to coopera- 
 tive associations of farmers? 
 
 Attorniey General Palmer. The exemption? 
 
 Mr. McLaughlin of Michigan. Yes; would you apply your con- 
 demnation of that to a cooperative association? 
 
 Attornev General Palmer. I would leave the exemptions in the 
 present act alone ; and they exempt that kind of a cooperative asso- 
 ciation. I draw the line at 
 
 The Chairman. This is limited, however, to " any necessary pro- 
 duced or raised by its members upon land owned, leased, or culti- 
 vated by them." 
 
 Attorney General Palmer. Well, who are the members ot a cor- 
 poration, Mr. Chairman? The stockholders. ..,.., 
 
 The Chairman. If so — if a corporation has members — it is limited 
 
 to their own product. „ -r • ^ -n j.i x 
 
 Mr VoiGT. May I interrupt you a moment? Is it not possible that 
 in some States there is not any law for forming cooperative associ- 
 ations, so that the farms there would be compelled to organize a 
 
 corporation? , ., . , ^i . • -ui 
 
 Attorney General Palmer. I do not think that is possible. 
 
72 HIGH COST OF LIVING. 
 
 Mr. VoiGT. Let me ask you this : What is the difference in effect ? 
 Suppose there are a hundred farmers engaged in the bean business; 
 what is the difference whether they organize a cooperative associa- 
 tion, or organize a corporation to do their business ? 
 
 Attornej' General Palmer. Well, the cooperative association is an 
 association of farmers joined together, not for the profit of the as- 
 sociation, but for their several benefit, to market their own product. 
 When they build the artificial structure of a corporation between 
 them- and the market, they must sell their goods to that corporation, 
 and the corporation sells them to the public; so that the corporation 
 becomes a dealer on its own account, while the cooperative associa- 
 tion would be a dealer for account of the persons who were members 
 of the association. 
 
 Mr. McLaughlin of Michigan. I think that is not the way these 
 cooperative associations carry on their business ; it is a sort of sell- 
 ing association ; it does not buy ; it just receives and disposes of the 
 products of the farmer, without title passing to that association. 
 
 Attorney General Palmer. Well, I repeat that, however they may 
 be formed, I can see a good deal of merit in exempting them from 
 the hoarding provision, but I can not see so much merit in exempting 
 them from the straight-out profiteering proposition. 
 
 Mr. McLaughlin of Michigan. Have you thought of this: That 
 the remedy suggested for the high cost of living is increased produc- 
 tion? 
 
 Attorney General Palmer. Yes. 
 
 Mr. McLaughlin of Michigan. And if restrictions were laid upon 
 the farmers and laws were enacted that could reach them and their 
 associations, what do you think would be the effect upon production? 
 
 Attorney General Palmer. Well, I think every restriction, and 
 certainly everything which tends to decrease the price at which the 
 producer may sell, has a tendency to limit production. I also think 
 that, as long as you can assure a just and reasonable profit, the tend- 
 ency to limit production will not become serious in this country. 
 
 Mr. TiNCHER. Those bean growers, that gentleman testified, were 
 associated together in this way: that they had been willing to put 
 their beans on th« market at the cost of production. He testified that 
 they had an investigation in New York in February lasting several 
 days, in which they ascertained that two members of the Grain Cor- 
 poration who had charge of the purchasing of beans for the United 
 States Government had acted in such a way that they were removed ; 
 that the report of those hearings was filed with your department, 
 the Department of Justice, in February, contemplating action; and 
 this gentleman was asked to refrain from disclosing the technical 
 facts concerning those two men. But he spoke very frankly before 
 the committee in the Senate, and explained the bean situation very 
 fully; he said that they had those beans and they had borrowed 
 money on them, and that they were simply trying to get the cost of 
 production for them. 
 
 He also explained that the way the bean situation had been han- 
 dled, there would not be over a half of a crop of beans this year. Am 
 I right in that statement, Mr. McLaughlin ? 
 
 Mr. McLaughlin of Michigan. Yes. 
 
 Attorney General Palmer. All of that would necessarily be taken 
 into consideration by a court in the trial of a condemnation case 
 
HIGH COST OF LIVING. 73 
 
 against the beans — and that is where I think it ought to be, in the 
 courts. 
 
 Mr. TiNCHEE. Another reason for incorporating this exemption — 
 to which I understand that you have no objection — ^is just in line 
 with that newspaper article, is this: The representatives of the 
 dairymen's association appeared before this committee, and they 
 even said that some of the officers of their cooperative association 
 had been put in jail in some State — I do not remember which one 
 
 Mr. Jones (interposing). In Cleveland, Ohio. 
 
 Mr. TiNCHEK. Yes; in Cleveland, Ohio; the district attorney had 
 put them in jail; and here is the extent of their organization 
 
 Attorney General Palmer (interposing). That was not under Fed- 
 eral law, was it ? 
 
 Mr. TiNCHEE. Under State law. The extent of their organization 
 was this, that they organized for the purpose of meeting with the 
 purchasers of their products twice a year for the purpose of agreeing 
 upon the price that they should receive for their product if they sold 
 it to those purchasers ; and they were arrested. They were selling to 
 those people for 7 cents a quart, and the dealer was getting 16 cents 
 a quart, or something like that; and they were arrested and thrown 
 into jail. And the representative of the dairymen asked for this 
 exemption for the reason that such action as that in Ohio has a 
 tendency to discourage those men in the production. 
 
 Attorney General Palmer. They were exempt under the present 
 law, were they not ? 
 
 Mr. TiNCHER. That is what they were arguing. 
 
 Attorney General Palmer. Yes; I think they were exempt; and 
 the fact that the Department of Justice did not proceed against them 
 is pretty good evidence that the department thought they were ex- 
 empt under the present law. 
 
 Mr. Jones. Let me ask you a further question : These exemptions 
 in this confidential committee print exempt the persons, farmers' 
 associations or corporations — or whatever name you want to call 
 them ; they are specifically named in the exemption itself — from the 
 provisions of section 4 oi the act? 
 
 Attorney General Palmer. Yes. 
 
 Mr. Jones. Suppose an association of dairymen or producers 
 combines with an association of dairy dealers, in absolutely viola- 
 tion of the provisions of section 4, is it your opinion that one party 
 to that agreement should be prosecuted and the other party not be 
 amenable to the law ? . n , , . 
 
 Attorney General Palmer. Certainly not; I thmk the law ought 
 to be laid with equal force upon everybody, of course. 
 
 Mr. TiNCHEE. Well, do you think, generally, that the exemption 
 as contained in this confidential print, as pertaining to the farmer 
 or his associations or partnerships or corporations, would hinder the 
 Department of Justice in enforcing the laws against profiteers? 
 
 Attorney General Palmer. Well, I think it might, yes; because 
 it is very easily possible that there would be profiteers even among 
 so excellent a class of people as the farmers of the country. And 
 this whole movement is intended not only to protect the consumer 
 but to protect the honest and fair dealer as well; and I think that 
 the honest farmer is just as anxious that there shall not be gougers 
 
74 HIGH COST OF LIVING. 
 
 amongst his class as is the honest merchant in every town. And I 
 can not see why anybody, no matter what business he is in, if he is 
 an honest, patriotic American citizen, should want to jjrevent sonie 
 amongst his class from being prosecuted for doing a thing which is 
 " unjust " — ^that is the language of the act. 
 
 Mr. TiNCHER. Mr. Ferris, a Member of Congress from Oklahoma, 
 appeared before the committee several days ago, and it was largely 
 upon his testimony as to the conditions prevalent in the agricultural 
 regions that the committee was actuated in placing this exemption 
 in the bill 
 
 Mr. Lee (interposing). Excuse me; the committee did not have 
 anything to do with preparing this bill. 
 
 Mr. Jones. The committee did not have anything to do with it; 
 we do not want the record to show that it did. 
 
 Mr. TiNCHER. I spoke of the committee ; it was the chairman. But 
 Mr. Ferris's testimony was to the effect that the farmer was charged 
 with being responsible for the high cost of living, and that they were 
 seeking a way to get after him, and that that is having a demoraliz- 
 ing effect upon production. 
 
 Attorney General Palmer. Well, that is hardly an accurate state- 
 ment. Of course, Mr. Ferris is sincere about it, and there are doubt- 
 less many farmers who are sincerely of that belief ; but as far as the 
 activities of the Department of Justice are concerned, there is no 
 effort being made, directly or indirectly, to force any reduction of 
 farm products. We are confining ourselves to the law as you gen- 
 tlemen wrote it, to prevent the unjust and unfair charging of rates — 
 which we can not punish until you give us a chance to do so and to 
 prevent the hoarding in vast quantities of foods and other commodi- 
 ties which are necessaries, and which are being hoarded for the pur- 
 pose of enhancing the price or decreasing the supply. 
 
 And all of these problems and difficulties that you suggest, such as 
 treating a man unfairly, or a question of the price which he may get 
 for his crop this year, or which he was prevented from getting last 
 year by governmental action, are proper to be considered by a court 
 in an action for libel for condemnation if it is material that is hoarded. 
 And I think we are on reasonably safe ground if we leave these mat- 
 ters to the courts of justice of the country. 
 
 Mr. Young. With reference to this confidential print that we have 
 been discussing, so far as I am concerned and so far as the members 
 at this end of the table are concerned we do not know who is respon- 
 sible for this document ; it is not a committee action ; we do not know 
 who prepared it or anything about it. 
 
 Mr. TiNCHER. I do not think that is a fair statement' to make. 
 
 Mr. Young. It is, as far as I am concerned. 
 
 The Chairman. Let me correct that statement. The committee 
 ordered it printed. 
 
 Mr. Young. The committee ordered it printed, but you had a type- 
 written copy of it here that somebody prepared who is no doubt re- 
 sponsible for it. 
 
 The Chairman. It is an exact copy of the typewritten copy that I 
 had read before the committee and which the committee ordered 
 printed as a confidential committee print so that they could con- 
 sider it. 
 
HIGH COST OF LIVING. 75 
 
 Mr. YoiTNG. I will ask the chairman who prepared that typewritten 
 copy from which this committee print is printed ? 
 
 The Chairman. I prepared it and submitted it to the committee, 
 and the committee ordered it printed. 
 
 Mr. Young. Well, is it not the preparation of the steering commit- 
 tee, straight from the House? 
 
 The Chairman. No ; the steering committee has never seen a copy 
 of it and know nothing about it. • 
 
 Mr. TiNCHEE. Just a moment. I want the record to show that, 
 while I sit at this end of the table and associate with these gentle- 
 men — I want the record to show that this bill was printed as the re- 
 sult of an order of this committee, without any objection. 
 
 Mr. Young. The committee ordered printed a typewritten docu- 
 ment that the chairman brought here one afternoon. 
 
 Mr. Lee. Without having read it. 
 
 Mr. Heflin. It was printed just for the consideration of the com- 
 mittee. 
 
 Mr. Jacoavay. And the reason the committee ordered it printed 
 was to find out what is in it. 
 
 Mr. Anderson. This discussion ought to be in executive session. 
 
 The Chairman. Before we get away from this exemption feature, 
 section 5 of the act deals with profiteering? 
 
 Attorney General Palmer. Section 4. 
 
 The Chairman. Section 5 of the food-control act. 
 
 Attorney General Palmer. Section 5 is the licensing provision. 
 
 The Chairman. That contains the licensing provision. It deals 
 with profiteering and price-fixing. It exempts the farmers. 
 
 I understood you to say that farmers were only exempted from 
 the hoarding provision. They are exempted "now from the profiteer- 
 ing provision under section 5. It reads: 
 
 " Provided, That this section shall not apply to any farmer, gar- 
 dener, cooperative association of farmers or gardeners, including 
 live-stock farmers, or other persons with respect to the products of 
 any farm, garden, or other land owned, leased, or cultivated by him, 
 nor to any retailer with respect to the retail business actually con- 
 ducted by him." ,. » IT 
 
 Attorney General Palmer. That exempts him from the licensing 
 
 provision. . , ■ n ■ ^i vl ^i 
 
 The Chairman. It also contains the price-fixing authority— the 
 authority that the President has to fix prices. 
 
 Mr Jones. It does not exempt him from section i. 
 
 The Chairman. The President now has authority to fix prices, and 
 there is also a penalty provided for violation of the order. It is 
 proposed now not to exempt farmers as they are m the present law, 
 but to make them liable for everything indicated m section 4. 
 
 Attorney General Palmer. Make them hable for everything in- 
 dicated in section 4? That is your purpose in this new bill? 
 
 The Chairman. No; that is proposed, I understand, by the de- 
 partment. 
 
 Attorney General Palmer. Oh, no. , , ,. . 
 
 The Chairman. You attach a penalty clause to section 4. 
 
 Attorney General Palmer. Yes; but he is already exempt from 
 everything except profiteering. 
 
76 HIGH COST OF LIVING. 
 
 The Chairman. The farmer is at present exempt from profiteer- 
 ing under section 5. He will not remain so if you attach a penalty to 
 section 4, unless you specifically exempt him. 
 
 Attorney General PAiiMER. Well, he surely is exempted from the 
 licensing provisions of the law. 
 
 The Chairman. But you say that has been disbanded? 
 
 Attorney General Palmer. That has been disbanded. 
 
 The Chairman. And now you propose a penalty to section 4? 
 
 Attorney General Palmer. I think he ought to be exempt from the 
 hoarding provision, because he is already exempted by another sec- 
 tion of the act from that. But I do not think — ^this is my opinion,. 
 Mr. Chairman — that he ought to be exempted from the charge of 
 selling at an unreasonable and unjust rate of profit. 
 
 The Chairman. That is the change I suggested. 
 
 Attorney General Palmer. I also think that you ought to seri- 
 ously consider the question of exempting retailers before you put it 
 into the act, if we can not catch the retail profiteer and gouger. 
 
 The Chairman. They are not subject to the profiteering provision 
 under the licensing provisions? 
 
 Attorney General Palmer. No; they are not subject to that, Mr. 
 Chairman. 
 
 The Chairman. They are not under section 5. 
 
 Attorney General Palmer. No, Mr. Chairman. They were ex- 
 empted from the licensing provisions ; but they were punished under 
 the licensing provisions indirectly, through the use of the wholesale 
 license system, for profiteering. And with the licensing system gone 
 we can not reach the wholesaler and we can not reach the retailer. 
 So that if you put those words in you are changing the situation 
 from what it was, in which he could be reached, and creating a 
 situation where it would be impossible to reach him. And I would 
 consider this act waste paper if we can not reach the retail gouger 
 in the cities and towns of America. 
 
 The Chairman. That question that was under consideration 
 
 Mr. Jacowat (interposing). Let me interrupt you for just one 
 question about this confidential print. If I got your idea correctly 
 you want section 2 of this print eliminated entirely ? 
 
 Attorney General Palmer. Clause 2 of section 2. 
 
 Mr. Jacowat. Yes; clause 2 of section 2. 
 
 Attorney General Palmer. Yes. 
 
 Mr. Jacowat. And on page 3, clause 4, commencing in line 22, 
 you also want to eliminate the words commencing with the proposi- 
 tion " to," and down to and including the word " individuals," in 
 line 24? 
 
 Mr. Heflin. Beginning " to any partnership," etc. ? 
 
 Mr. Jacowat. Yes; "to any partnership, corporation, or associa- 
 tion." 
 
 Mr. Lee. Clause (b) of subsection 4. 
 
 Mr. Jacowat. Yes. [Eeading :] 
 
 To any partnership, corporation, or association wliose membersliip is com- 
 posed of sucli individuals — 
 
 Or do you want the balance, in the way it relates back, with respect 
 to " any necessary produced or raised " ? 
 
 Attorney General Palmer. Well, I am not pressing that strongly. 
 If the committee wants to exempt all of these farmers and all of theit 
 
HIGH COST OF LIVING. 77 
 
 associations and corporations, it may not make the act unworkable, 
 
 but 
 
 Mr. Jacoway (interposing) . Well, my idea was to get from you- 
 
 Attorney General Palmer (interposing). But I am going to tell 
 you. If the entire section were left out, then the present law would 
 remain, which exempts farmers and farmers' associations from the 
 hoarding charge, from the combination charge ; but it does not exempt 
 them from the straight-out profiteering charge. 
 
 Mr. Jacoway. Then, just in a word, you want the bill passed as 
 recommended by your department and sent to the committee? 
 
 Attorney General Palmek. I still think that is the most practicable 
 thing to do to get results. 
 
 Mr. Jacoway. Just one other point : There is a little difference be- 
 tween the langTiage of the bill proposed by you and that of this confi- 
 dential print ; you will find it on page 2, line 4. 
 
 Attorney General Palmer. Yes; I have no objection to that change. 
 
 Mr. Jacoway. " Primarily designed or intended for containing." 
 That is all right, is it? 
 
 Attorney General Palmer. Yes ; I do not see that it is important ; 
 it does not change our purpose ; we merely said " containers," and 
 you add " primarily designed or intended for." 
 
 The Chairman. Do you think the provision covers it ? 
 
 Attorney General Palmer. Our language is broader, Mr. Chair- 
 man. 
 
 The Chairman. Do you prefer your language ? 
 
 Attorney General Palmer. I think I would. I think this language 
 of the committee print would make it difficult of proof sometimes. 
 
 Mr. Jacoway. I believe that is all: 
 
 Mr. McLaughlin of Michigan. I should like to ask a question. I 
 missed some of the things you said about the effect if we should put 
 into the law the first part of this section — that it would interfere 
 with your action under the old section 4. The committee is prepared 
 to suggest, I think, that something be put in to the effect that it 
 should not interfere with that in any way. If proper and effective 
 language can be framed so that the first part of the new section 4 
 would not interfere in any way with old section 4, would you still 
 think that the suggested first part of section 4 should be eliminated? 
 My impression is that it would leave section 4 just as it is, with a pen- 
 alty attached— saying nothing about the exemption— and would give 
 additional authority and provide an additional remedy. 
 
 Attorney General Palmer. Well, if you were to reenact section 
 4— put the penalty in and then add your subsection 2 of section 4, as 
 an additional measure, which may, in the discretion of the President 
 be used in lieu of the prosecutions under section 4, that might meet 
 that objection that I raised to it. . 
 
 But I think you and I know perfectly well that putting it in there 
 is ffoinff to give a lawyer a chance to make a fight and delay the pro- 
 ceedings and generally muddy the waters, which will be a bad 
 thine for the enforcement of this kind of a law. 
 
 But it will not obviate the other objection I made. 
 
 Mr. McLaughlin of Michigan. Perhaps I missed that. What 
 was the other objection? 
 
78 HIGH COST OP LIVING. 
 
 Attorney General Palmer. That you can not hope- in my judg- 
 ment, to get a drastic Executive price-fixing scheme passed by Con- 
 gress in time to make it effective. And if it is involved in the bill, 
 even as an alternative, you are going to open the floodgates of de- 
 bates and discussions in Congress until such time as this law would be 
 a dead letter upon the statute books. Now, that is a very practical 
 objection, which arises out of my experience, and which your ex- 
 perience, I think, will substantiate. 
 
 Mr. McLaughlin of Michigan. Up to this time we have not done 
 any of these things. There has been every time decided objection, 
 so far as we know, everywhere, to undertaking a price-fixing plan as 
 to small dealers. 
 
 And when you speak of delay caused by difference of opinion and 
 discussion in the two Houses, it seems to me that, if anything is 
 presented which would authorize a price-fixing proposition all along 
 down the line, reaching the large and small dealers alike, there would 
 be more discussion and more delay than as to this other matter that 
 you refer to. 
 
 Attorney General Palmer. Well, that has not been done; iny 
 proposition does not contemplate price-fixing all down the line on 
 the part of everybody. 
 
 The Chairman. Yes ; section 4. 
 
 Mr. McLaughlin of Michigan. Yes; you take section 4, about the 
 middle part; that it shall be unlawful — 
 
 to engage in any discriminatory and unfair, or any deceptive or ^wasteful prac- 
 tice or device, or to make any unjnst or unreasonable rate or charge, iih handling 
 or dealing ■with any necessaries. 
 
 Attorney General Palmer. Well, that does not contemplate an 
 Executive price-fixing; that contemplates the leaving it to a court 
 and jury to say whether the price charged, under all the circum- 
 stances of the case, is a just and reasonable charge. 
 
 Mr. McLaughlin of Michigan. That really gives the authority to 
 consider the question of rates and charges — and, of course, that 
 means prices and profits — the right to consider it and interfere with 
 business, large and small, as to prices. 
 
 Attorney General Palmer. You do not in section 4 give the Execu- 
 tive the right to consider the fairness or unfairness of such prices. 
 You declare what is unlawful, that is, the charging of unfair and 
 discriminatory, and unjust and unreasonable rates; and that leaves 
 it as a question of fact for the jury. 
 
 Let me tell you how we propose to operate that — and, to my mind, 
 it is the only practicable method. There are two ways by which it 
 could be done, I suppose. One is your suggestion — ^having a price 
 fixed in advance by some governmental agency; you say by the 
 President. That means by some great organization that will sweep 
 the country from one end to the other, and have its accountants and 
 investigators and bookkeepers and workers in every line of indus- 
 try engaged in finding out how much is a fair price. 
 
 I think that is impracticable, because we can not build up that kind 
 of an organization, and if you put it in the statute book, even as an 
 alternative, we will be met by it at every corner road, and we will be 
 criticized for not doing it that way, which will hurt the entire morale 
 of the enforcement of your law. 
 
HIGH COST or LIVING. 79 
 
 The other method is this : When a man makes an unjust and un- 
 reasonable charge, or a discriminatory and unfair price, hale him 
 into court. 
 
 And our method, or our px-oposition, to determine to the satisfac- 
 tion of a jury what is a fair and reasonable price, is this: We have 
 called upon the former State food administrators, not to organize 
 their food administration, but simply to organize in the cities and 
 counties fair-price committees, which we have asked to be composed 
 of a wholesaler, a retailer, a representative of labor, representatives 
 of housewives, and representatives of the general public. 
 
 Mr. Young. Simply voluntary workers? 
 
 Attorney General Palmer. Voluntary workers for the purpose 
 of dealing with the question of what is a just and reasonable profit 
 in that particular community; a decentralized agency for the pur- 
 pose of giving the public knowledge which would be reflected m a 
 jury box when a man is brought before a jury apon the charge of 
 charging an unreasonable or unjust rate. We have already secured 
 the cooperation of 36 of the Federal food administrators, and we will 
 have most of them; some have been delayed in accepting because 
 they are away from home, or something of that kind. 
 
 These fair-price committees are being organized in all the larger 
 cities and counties of the country, and they are making and will 
 make investigations which will apply to that community only. 
 
 Now, their findings are not law ; their findings do not fix the price. 
 Their findings will simply present to us the same opportunity for 
 gathering the evidence to show what is an unjust and unfair price 
 for that article, and if we bring a man into court who has sold at 
 a higher price than they have announced as a fair price we can 
 produce the same evidence that they had to convince a jury that 
 that man is a profiteer, and if a committee of representative citizens 
 of that character says that those men are profiteers they will not 
 sell at that price in that community, or if they do the jury will 
 convict them, because the same kind of sentiment will be represented 
 in that kind of committee that is represented on a jury. 
 
 That is a voluntary organization, decentralized, and working in 
 every State, city, and county in the country where we can get them, 
 which will cost the Government nothing and be immediately op- 
 erative to make this act effective. 
 
 Mr. Young. Eight in that connection: A thing to be crime must 
 be denounced as such, as defined by a statute ; there must be a stat- 
 utory definition of the thing which constitutes the crime. To illus- 
 trate, if a man is charged with a theft your indictment follows the 
 statute of the State, if it is a State law. 
 
 Attorney General Palmer. Yes. 
 
 Mr Young. And the court has to charge m its charge to the jury 
 this statutory definition. Now, the thing that addresses itself to my 
 mind from the legal point of view— I will use a concrete case: Sup- 
 pose in my town, under the statute which we are seeking now to 
 amend by the suggestion that you made, a merchant sells a pair of 
 shoes for $20; it is believed to be an outrageous and profiteering 
 nrice Where is your legal authority? How would you proceed 
 against that particular individual under the law that we have sought 
 to be amended by the suggestion that you have made? 
 
80 
 
 HIGH COST OF LIVING. 
 
 Attorney General Palmer. We would charge him, in the language 
 of the act, with having sold a pair of shoes at an unjust and unrea- 
 sonable rate — following the language of the act — " to wit, the price 
 of $20," and prove to the jury that that was an unjust and unrea- 
 sonable rate. 
 
 Now, what is in your mind is this ; I know what is in your mind 
 
 Mr. Young (interposing). I want to know where the burden of 
 proof would lie. You would have to prove, as the prosecuting 
 authority, would you not? 
 
 Attorney General Palmer. I think so. 
 
 Mr. Young. You would not shift the whole burden back on the 
 individual ? 
 
 Attorney General Palmer. No ; I do not think we would. 
 
 Of course, it has been contended that you can not define as a crime 
 a thing which is so indefinitely stated as the language " unjust and 
 unreasonable" would imply. 
 
 Mr. Young. That is the thing I had in mind. 
 
 Attorney General Palmer. And Judge Brewer held, many years 
 ago, when he was on the circuit bench, flatly to that effect, that a man 
 was entitled to know the exact nature of the offense that he was com- 
 mitting, and that to charge him with doing an unreasonable thing 
 was too indefinite. 
 
 But that was exploded many times since, where statutes which 
 forbid a thing which was against public policy have been enforced 
 in the criminal courts. 
 
 And the Supreme Court of the United States, I take it, in applying 
 the rule of reason to the trust laws effectually disposed of that 
 contention. A thing which is an unreasonable thing may be a crime, 
 but the burden, of course, is upon the Government to show it is 
 unjust and unreasonable. Now, I would accept that burden and 
 undertake to do it by showing the very things that led the repre- 
 sentative committee of citizens, composed of retailers, wholesalers, 
 and so on, that I have described, to come to the conclusion a certain 
 price was unreasonable. And I am pretty certain a jury would 
 follow their reasoning, 
 
 Mr. Young. In reference to the findings of the citizens of the re- 
 spective communities, their findings would only be information 
 available to you; it would not be conclusive evidence in the trial, 
 in the prosecution, but the whole issue would be opened up whether 
 this price of $20, which you alleged, was an exorbitant price ? 
 
 Attorney General Palmer. That is true. 
 
 Mr. YouisTG. You would have to open that whole issue up and then 
 make your showing? 
 
 Attorney General Palmer. That is true. And how it that going 
 to work? That is just as burdensome to the defendant as it is to 
 the Government. The result is already apparent as to how these 
 committees are operating. Representatives of the wholesalers and 
 representatives of the retailers are coming together in the com- 
 munities with the understanding they will agree with the public 
 on these prices and they will keep their prices in line. And I do 
 not believe there will be very many prosecutions of that character, 
 because they are not going to subject themselves to the annoyance, 
 labor, and expense of a long trial of that kind. 
 
HIGH COST OF LIVING. 81 
 
 Mr. Heflik. Or run the risk of having their patrons leave them 
 if they are convicted ? 
 
 Attorney General Palmer. Yes ; or if they are indicted. I would 
 just as leave be convicted as indicted by a Federal grand jury, and 
 most people would. 
 
 Mr. Jacoway. Suppose that should get in the Federal court, would 
 your proceeding be first through a commission or through the Fed- 
 eral court direct? 
 
 Attorney General Palmer. It might be by a court proceeding and 
 most likely would be. 
 
 Mr. PuKNELL. A county is to be the unit under your arrangement? 
 
 Attorney General Palmer. The county is to be the unit. Let me 
 say one other thing I ought to say: Something was said here the 
 other day that seemed to indicate we must be mistaken in saying we 
 could not enforce this profiteering statute, because a court up in 
 Binghamton fined a sugar dealer for selling sugar at a profit of 5 
 cents a pound, I think it was. That section would be a rather slender 
 thread to hang these prosecutions on. 
 
 Mr. McLaughlin of Michigan, Do you know under what section 
 that prosecution was instituted? 
 
 Attorney General Palmer. I think it must have been under sec- 
 tion 4. 
 
 Mr. Anderson. The sugar dealers are still under license ? 
 
 Attorney General Palmer. Certain kinds, where they do a business 
 of over $100,000 annually. This man was a small grocer; he sold 
 a string of patrons at retail at exorbitant prices. I ha,ven't got a 
 full report of the matter yet, but the man was indicted under section 
 4, came in and plead guilty, a fine of $500 was imposed upon him, and 
 he paid it. Of course that kind of a proceeding answers itself. 
 That evidently was based upon the theory that anything which is 
 prohibited, made a crime, must, be, by common law punishable by a 
 penalty. But I would not like to rely upon that theory— that the 
 common-law penalty can be attached to a Federal statute. I would 
 not like that, would you ? 
 
 ■ Mr. Young. Wasn't that same thing run up against when the 
 Food Administration was in actual operation? I recall a number 
 of cases — ^take a sugar case — where a merchant was found to be 
 profiteering in sugar, and the question came up that the only thing 
 to be done under the law was to revoke his license. And in many 
 cases over the country that was thought to be a rather radical rem- 
 edy in certain cases under consideration, and I know they adopted 
 this policy: They said, "Well, you did profiteer here; we haven't 
 any authority to fine you under the law. We do not care to re- 
 voke your license, and you can continue to operate; but you have 
 done an unjust act here. You pay to the Ked Cross $500 for this 
 unjust act and go on, and if you don't do it we will revoke your 
 
 licsnsc 
 
 Attorney General Palmer. We haven't the license system to use 
 now, except in sugar dealers doing a business of over $100,000 a 
 year We had a case like that m New York the other day. We 
 have this fair-price committee working m New York, and they 
 found a case where a man was selling sugar at an exorbitant profit 
 and at a rate which we considered to be unjust and unreas9nable. 
 
 137fi91— ]9 6 
 
82 HIGH COST OF LIVING. 
 
 Our committee went to him and made him disgorge, and he gave 
 up and redistributed amongst the people to whom he had sold sugar 
 the excess above the fair price. That will operate in nearly every 
 case, and especially will it operate if we can go to that man and, 
 without threatening, read the law to him whicix says to him if he 
 charges an iinjust and unreasonable rate of profit he is liable to go 
 to the penitentiary for two years and to pay a fine of $5,000. 
 
 Mr. Young. You think in a great many cases it would not neces- 
 sitate a prosecution in the court; that the very fact they know you 
 have the power to bring a prosecution will relieve the situation? 
 
 Attorney General Palmer. That is my position exactly. 
 
 Mr. McLaughlin of Michigan. But that does not overlook the 
 value and effect of an arrest and prosecution? It won't have the 
 same effect 
 
 Attorney General Palmer. Right there, Mr. McLaughlin ; we have 
 almost stopped the sugar profiteering right now. 
 
 Mr; McLaughlin of Michigan. You have — ^but if the language 
 could be framed so as to prevent the operation of the proposed 
 amendments from interfering in any way with section 4, I can not 
 see how it would be otherwise than helpful. If you will read, begin- 
 ning at the top of page 3, whenever the President finds that any stor- 
 age charge, commission, profit, or practice of any such person is 
 unjust and unreasonable, and so on, he shall order such person, with- 
 in a reasonable time, to discontinue — prevention is the principal thing 
 you are after. You are not eager to prosectjite these menl Although 
 as I say I do not understimate the value of an arrest and conviction, 
 the main thing you are after is prevention ? 
 
 Attorney General Palmer. Yes: 
 
 Mr. McLaughlin of Michigan. The stopping of these disagree- 
 able 
 
 Attorney General Palmer. The only way the President can en- 
 force that is to fix a lower profit in lieu of it. 
 
 Mr. McLaughlin of Michigan. I beg your pardon ; he may order 
 him to discontinue. 
 
 Attorney General Palmer. Yes, I know; but suppose he does not? 
 
 Mr. McLaughlin of Michigan. Then this says that anyone who 
 violates an order of the President shall be liable. 
 
 Attorney General Palmer. Well, now, Mr. McLaughlin, that re- 
 quires one of two things. The President has to put that power in 
 somebody. He can not exercise it himself. That is correct? 
 
 Mr. McLaughlin of Michigan. That is true. 
 
 Attorney General Palmer. He has to do one of two things: In 
 order to do that, he has to rebuild an organization like the Federal 
 Food Administration or 
 
 Mr. McLaughlin of Michigan. Why not this organization you are 
 speaking of, enlisting the services of all the State organizations ? 
 
 Attorney General Palmer. Because if the volunteer who is serv- 
 ing upon a committee knows that he is fixing a price which is prima 
 facie evidence of the guilt of every man who sells beyond that price, 
 we can not get him to serve. He will advise us ; he will fix a price, 
 what he thinks it ought to be, with the understanding that we will 
 take the man into court and try it out there on the same facts as pre- 
 sented to him; but he won't put himself in the position of prose- 
 
HIGH COST OP LIVING. 83 
 
 cutor, trial judge and executioner at the same time. You can not 
 ever get that committee to operate. , You will have to have a central 
 committee here in Washington, appointing and directing them to 
 operate. That can only be done in one of two ways : Either to rebuild 
 the Federal Food Administration or to have the President place that 
 power in the hands of the Department of Justice. And I think it 
 would be an unthinkable thing to expect the Department of Justice, 
 through these committees whidi are now serving, to fix a price, which 
 determines, in advance of a trial, the guilt of any man. Why, I 
 would not take that power, because I am practically saying " you 
 are guilty ; you have to go into court and prove your innocence." 
 
 Mr. Jones. And the retail prices vary in different towns too, and 
 under different conditions? 
 
 Attorney General Palmer. Sure. 
 
 The Chairman. The way the act is drawn it leaves it to the dis- 
 cretion of the department or to the President what course to pursue ; 
 if he does not find the one practicable he can pursue the other. 
 
 Attorney General Palmer. I repeat that even if you put it in here 
 in alternative language, even if you say, "Nothing in this section 
 shall interfere with the penalties imposed for the prohibitions set 
 out in the first section and in section 4," that still in every case you got 
 to the jury it would argue that the defendant had not been treated 
 right in this matter, because the Congress authbrized the machinery 
 to determine what was the reasonable price at which he should sell his 
 goods. We would never get a conviction, never scare anybody with 
 that. . . 
 
 Mr. McLaughlin of Michigan. Then, if those provisions are not 
 put in you will have no regulatory or preventive proposition at all. 
 It is all by way of arrest and prosecution, and there will be nothing 
 regulatory or preventive except the effect of an arrest and a prose- 
 cution. . , , .1 i. T 
 
 Attorney General Palmer. Except this volunteer scheme that i 
 have spoken to you about, which is extralegal, I admit. , ,. . . 
 
 Mr. VoiGT. Wouldn't it be a good thing to have this subdivision 2 
 , of section 2 to apply in specific cases? Suppose you had notice of a 
 certain man who was profiteering, and you then sent a representative 
 to him on the ground that you have found the facts, and then, by 
 direction of the President, served a notice on him as provided m sub- 
 division 2, wouldn't it be a benefit to you ? -J x+„l,„ 
 
 Attorney General Palmer. You would not have the President take 
 
 up each case, would you ? , , , ., , i j- „<.^„„ „4!+v,^ 
 
 Mr. VoiGT. No; I mean it would be done by general direction ot the 
 
 ^ Mtorney General Palmer. You would have the Department of 
 
 '^'MrVwOT.'Let the President create some one who would do it. 
 
 Attornev General Palmer. You would either have to give it to 
 some one of the present agencies or create a new agency. 
 
 Mr VoiGT Suppose you found 100 cases m the country or 50 
 cases where t would be advisable to apply a section of this kind; it 
 would not burden one unduly to be charged with carrying it out ? 
 
 Attornev General Palmer. If it is only a hundred cases, forget the 
 whole business; that would not help us any. 
 
S4 HIGH COST OF LIVING. 
 
 Mr. VoiGT. It looks to me as if you were given by subdivision 2 
 an additional weapon which you might use if you found those cases. 
 
 Attorney General Palmer. I am feaocful that it is a weapon that 
 will be a two-edged sword. We can not get it in iise in time imless 
 the President vests that power in the Department of Justice. And 
 for the Department of Justice to use that, it is for the purpose of 
 giving the department the power to say what is a fair price, and then 
 we would have to say whether the man is guilty or not. 
 
 Mr. VoiGT. Some one has always had that power under section 5, 
 and under subdivision 2 here is practically the language that is in 
 section 5. 
 
 Attorney General Palmer. Except that it was punishable under 
 section 5 by removal of the license so far as the wholesalers are con- 
 cerned, and, indirectly, so far as the retailers are concerned. And 
 now we propose to make it punishable by fine and imprisonment. It 
 is quite a different thing, I take it, for an executive to determine a 
 thing which is prima facie and entitles another officer to take awa^ a 
 license from a dealer, and to determine a prima facie case against him 
 which sends him to the penitentiary. 
 
 Mr. McLaughlin of Michigan. What is added is simply a portion 
 of section 5 which makes it enforcea,ble under regulation, so that 
 the President can use it if he wishes to. 
 
 Attorney General Palmer. Yes. 
 
 Mr. McLatxghlin of Michigan. Because the language — --^ 
 
 Attorney General Palmer. It was section 5 that built up this 
 great Food Administration. 
 
 ; Mr. Anderson. Do you think the President could, under this sec- 
 tion or any other section, legally issue an order to an individual to 
 desist from a certain practice, or from making a certain charge, in 
 the absence of regulations making that particiilar charge or that par- 
 ticular practice unlawful? 
 
 Attorney General Palmer. Oh, he would have to have regulations 
 and he would have to have long investigations and findings as to 
 what was the true practice or the true profit. 
 
 Mr. Anderson, in order to establish the regulation? 
 
 Attorney General Palmer. Certainly. We could not catch John 
 Smith up in Buffalo, for instance, selling at an unconscionable rate 
 of profit, and take his case to the President and say " That fellow is 
 guilty of profiteering " and ask him to say that. 
 
 Mr. Anderson. You could not go out and issue an order against 
 John Jones to desist from a certain practice which you had not in 
 some other manner made unlawful? 
 
 Attorney General Palmer. I think so. 
 
 Mr. "VoiGT. Suppose this section 2 were a law now and you had 
 run across a' case of a man selling sugar at 15 cents a pound, couldn't 
 you, under this subdivision 2, have gotten an order by authority 
 of the President, served upon that man, prohibiting him from selling 
 sugar at exceeding, say, 11 cents a pound ? Wouldn't it have been a 
 very fine thing to have in that case ? 
 
 Attorney General Palmer. I do not contemplate that j'ou mean 
 for us to go to the President for every grocer who sells sugar at 15 
 ents a pound. That would not be a practicable thing to do. 
 
 Mr. VoiGT. My idea is it is done by authority of the President. 
 He places that power in somebody. 
 
 c 
 
HIGH COST OF LIVING. 85 
 
 Attorney General Paljiee. The President -^vould have to issue 
 regulations which fix that price first. He can not do that out of 
 hand. If this' great po-n-er is given hini, he' has to have it investi- 
 gated fully and carefully before he does it. 
 
 Mr. VoiGT. I do not understand the President would have to regu- 
 late prices under this section ; he is not obliged to. 
 
 Attorney General Palmer. He is bound to regulate profits. 
 
 Mr. YoiGT. Suppose he gave your department authority to act 
 under this subdivision 2 and you found a man selling sugar at 15 
 cents a pound. Why couldn't you serve an order under this subdi- 
 vision on that man, by authority of the President, and tell him to 
 sell sugar not to exceed 11 or 12 cents a pound? 
 
 Attorney General Palmer. I could, if the President gave that 
 authority to the Attorney General. 
 
 Mr. VoiGT. Wouldn't it be a good idea ? 
 
 Attorney General Palmer. No; I do not think it would, because 
 the failure of the party to do it would be punishable by fine and 
 imprisonment. I would be depriving him of his right of trial by 
 jury, among other things, if I told him to do that and he failed to 
 do it. 
 
 Mr. McLaughlin of Michigan. If he failed to comply with the 
 order, he would then be tried ? 
 
 Attorney General Palmer. Yes; but you see what the President 
 finds is prima facie evidence of his guilt. 
 
 Mr. VoiGT. If you will look at section 5, which is practically the 
 substance of paragraph 2 here, you will find that it now provides 
 that any person ^s'ho, without a license, or whose license has been 
 revoked, or who wilfully fails and refuses to discontinue any unjust 
 charge, etc., or fails to live up to any regulation, shall be punished 
 by a fine not exceeding $5,000. So those things are punishable now. 
 
 Attorney General Palmer. Yes ; but profiteering is not punishable 
 
 now. . 
 
 Mr. VoiGT. For instance, if a man makes an unfair storage charge 
 or charges an unjust profit or is guilty of an unjust practice, etc., he 
 is subject to a fine of $5,000 now ? 
 
 Attorney General Palmer. No. 
 
 Mr. VoiGT. If you will look at page 
 
 Attorney General Palmer. If he fails to comply with the license. 
 
 Mr. Tin CHER. Give your citation, Mr. Voigt. .,-,-,. 
 
 Attorney General Palmer. If he fails to comply with the license,. 
 
 it is a crime. . _ j • j a 
 
 Mr McLaughlin of Michigan. Or any order issued ? 
 
 Mr Voigt No- if he fails or refuses to discontinue any unjust,. 
 
 unreasonable', discriminatory, or unfair storage charge, commission, 
 
 ^""Attorne^Geieral Palmer. Where do you get that? 
 
 Mr. Voigt. That is at the top of page 3. 
 
 Attorney General Palmer. I have not got your print. From what 
 section are you reading? 
 
 Mr Voigt. I am reading section 5 of the act. 
 
 Mr' KuBEV. He is reading the license section 
 
 Attornev General Palmer. Any person who, without a license- 
 issued pursuant to this section, or whose license shall have been 
 revoked. Icnowingly engages in, etc. 
 
86 HIGH COST OF LIVING. 
 
 Mr. VoiGT. Now, if you will, read on. 
 
 Attorney General Palmer. " Or carries on any business for which 
 a license is required under this section, or willfully fails or refuses 
 to discontinue any unjust, unreasonable, discriminatory, and unfair 
 storage charge, commission, profit, or practice in accordance with the 
 requirement of an order issued under this section, or any regulation 
 prescribed under this section, shall, upon conviction thereof, be pun- 
 ished by a fine not exceeding $5,000, or by imprisonment for not more 
 than two years, or both." Well, I think that that language all covers, 
 " Without a license issued pursuant to this section, or whose license 
 shall have been revoked." It all applies to that. That is the inter- 
 pretation that we place on it. 
 
 Mr. VoiGT. This language applies to any person who is without a 
 license or whose license shall have been revoked. Now, it covers 
 those two classes? 
 
 Attorney General Palmer. Yes. 
 
 Mr. VoiGT. It covers a man without a license and it covers a man 
 who had a license and whose license was revoked. 
 
 Attorney General Palmer. You can control profits if he did have 
 a license or if his license was revoked. 
 
 Mr. VoiGT. If he knowingly engages in any business for which a 
 license is required, and then it goes on and says " or willfully fails 
 or refuses to discontinue any unjust, unreasonable, discriminatory, 
 and unfair storage charge, commission, profit, or practice," etc. That 
 would apply to a man who has a license. 
 
 Mr. TiNCHER. Or one who hasn't, or has had one and it has been 
 revoked, either case. 
 
 Mr. McLaughlin of Michigan. With the exception of retailers; 
 that will apply to only those for whom a license is required. 
 
 The Chairman. It exempts farmers and the retailers doing a busi- 
 ness of less than $100,000 a year. 
 
 Attorney General Palmer. Yes. 
 
 Mr. VoiGHT. In other words, an unjust practice or an unfair 
 profit on the part of anyone, whether without a license or who did 
 have a license, except retailers, was punishable by a fine of $5,000, 
 not exceeding $5,000, if he failed to obey any order made by the 
 President under the present law. 
 
 Attorney General Palmer. I do not know how the Food Admin- 
 istration operated under that section. My recollection is that they 
 tried to enforce it in the way you suggested without success. I 
 know they came to Congress, probably to your committee, did they 
 not, asking you for something along this very line we are now asking 
 while the war was going on? 
 
 Mr. McLaughlin of Michigan. I do not remember any requests 
 for an amendment of this act. 
 
 Attorney General Palmer. It might not have been by way of an 
 amendment, but they asked authority to punish the retail profiteer. 
 
 The Chairman. The history of the food-control act is this : The 
 original food-control bill that first came to this committee from the 
 Department of Agriculture in April, 1917, made it unlawful to 
 profiteer, but provided no penalty. This committee inserted a pen- 
 alty clause. The bill was recalled. It came back without the penalty 
 clause. This committee again provided for the penalty and Con- 
 
HIGH COST OF LIVING. 87 
 
 gress left it in the bill when enacted in August, 1917. Are we 
 trying to get away from something that we already have in the food- 
 control act? 
 
 Attorney General Palmer. Oh, no; if you leave everything you 
 have in the bill and simply add a penalty to section 4, we are cer- 
 tainly not getting away from anything in the bill now. 
 
 The Chairman. It has been stated that you are not going to en- 
 force section 5 because it is too cumbersome. The proposition here is 
 to give you an easier method. You can either proceed direct or 
 imder the suggested amendment in this print. The other question is : 
 Will you penalize the farmer and the small merchant whose gross 
 sales do not exceed $100,000 a year ? That question was thrashed out 
 by the committee and on the floor when the food contrel act was 
 amended. The committee reported the bill exempting the retailer 
 whose gross sales do not exceed $50,000. The House amended it by 
 exempting the retailer whose gross sales do not exceed $100,000. 
 That is the history of the exemption feature. 
 
 I would also like to ask you if you have any objection to striking 
 out sections 8 and 9 ? 
 
 Attorney General Palmer. No; not if you put the penalty in in 
 section 4. 
 
 The Chairman. If we attach the penalty to section 4, it meets with 
 your approval to strike out sections 8 and 9 ? 
 
 Attorney General Palmer. Entirely. 
 
 The Chairman. Also the first sentence of section 5 ? 
 
 Attorney General Palmer. That is right. 
 
 The Chairman. The penalty is provided in section 4. 
 
 Attornev General Palmer. Yes. 
 
 Mr. McLaughlin of Michigan. This matter has been before the 
 committee and it has considered it at some length, but there has 
 been little, if any, expression of opinion. I do not know that I have 
 expressed an opinion, but, as far as I have approved it in my mmd, 
 it was with the idea of adding something— not taking it away; cer- 
 tainly not with the idea that what we add might m any way embar- 
 rass your department. And my idea was, too, if this addition was 
 made, it would be used as a corrective and as a preventive, whereas, 
 if vou proceed under section 4 alone, as it stands now, you have 
 nothing to do but to arrest and prosecute, and that soniething that 
 would help you. by way of a preventive, would be a good thing 
 
 Attorney General Palmer. I am not prepared to go to the extent, 
 even bv way of prevention, of entering upon a field of executive price 
 fixing. I do not believe that gets anywhere. 
 
 M?. McLaughlin of Michigan. Are you entirely consistent in say- 
 ing that you do not want to enter into the field of executive price fix- 
 inf when, at the same time, you ask us to include every retailer, down 
 to the stand on the corner, taking the man into court to determine 
 10 lue bLdiiu w j^g^ j^^g reasonable? 
 
 AvheherornotthepiiceshM ^^^.^^ ^.^ .^^ ^^^^^ ^^ determine 
 
 thS is a'very different thing from having an executive determine it. 
 Mr McLaughlin of Michigan. There is no desire I suppose to 
 shift the responsibility in^this pnce-fixmg proposition from the ad- 
 ministrationjo^the^cour^ts^^^ ^^^^^^ ^ ^^^^^ ^^ ^ ^^^^ ^^^ question of 
 wh the™a^inan violates the law is always for the court, not for the 
 
88 HIGH COST OF LIVING. 
 
 executive. It may be primarily for the executive to prosecute him, 
 but it is for the court to decide. 
 
 Mr. McLaughlin of Michigan. I certainly should not favor any- 
 thing that would be embarrassing at all in the execution of section 
 4 as it stands ; but I was very hopeful that some of these corrective 
 and preventive measures might be used and provided for, and if the 
 language 
 
 Attorney General Palmer. Of course, as you say, Mr. McLaughlin, 
 we still have the licensing system which we can resort to if necessary, 
 
 Mr. McLaughlin of Michigan. Oh, but you tell us you are not 
 going to resort to it. 
 
 Attorney Greneral Palmek. For the same reason I do not think we 
 can resort to this thing, that subsection 2 will be too expensive and 
 slow, and the law would run out before we could get going. 
 
 Mr. McLaughlin of Michigan. In carrying out any provision we 
 enact it would be necessary for the President to employ a vast number 
 of agents ; unquestionably it will require a vast number. 
 
 Attorney General Palmer. I know that. The President has asked 
 the Congress to give to the Federal Trade Commission, the Depart- 
 ment of Labor, and the Department of Agriculture the appropria- 
 tions that they have asked for, for the purpose of making the investi- 
 gation of costs, the basic costs, of the commodities and the publication 
 thereof. They have been compelled to abandon those investigations 
 because their appropriations failed. It is our idea that these three 
 agencies, having already entered upon that field very largely, would 
 be in a position to furnish us with sufficient information to give to our 
 decentralized committees in the country to permit them to find a rea- 
 sonable price as respects their own communities. Of course, we will 
 have to have investigators scouring the country to determine whether 
 the law has been violated. I have asked the Congress to make an 
 additional appropriation for my Bureau of Investigation for that 
 purpose. I have had several things loaded upon the Department of 
 Justice within the last six months or four months that were never 
 there before, but no money has been given me to enforce them. I 
 am doing the best I can. 
 
 Mr. McLaughlin of Michigan. In speaking of the large number 
 of agents and so on that will necessarily be employed, they could 
 be given authority by the President to serve notice on dealers that 
 the prices asked are unreasonable ; and then, later, it could be deter- 
 mined at your leisure whether or not prosecutions should be begun 
 for failure to comply with the order. 
 
 Attorney General Palmer. I apprehend that it would raise a tre- 
 mendous howl if a bureau of investigation agent of the Department 
 of Justice could walk into a store and say, " Your price is unreason- 
 able; you have to stop charging it." 
 
 Mr. McLaughlin of Michigan. But the books are full of laws by 
 which the more or less — ^I do not know what term to use — low down, 
 or men with very little authority, ordinarily, have authority con- 
 ferred upon them to do big things. The books are full of them. 
 What I dislike is to see the disposition to refuse all corrective and 
 preventive measures and to rely on section 4 and go right after them 
 with a warrant, right from the start. That is what I dislike. 
 
HIGH COST OF LIVING. 89 
 
 Attorney General Palmer. Well, if you build up your corrective 
 or preventive machinery, you have to go into a big organization. I 
 am satisfied I could not vs'ork it without a big organization. 
 
 Mr. Heplin. Have you any idea how much it would cost to insti- 
 tute the machinery suggested by Mr. McLaughlin? 
 
 Attorney General Palmee. It cost a million dollars a month dur- 
 ing the war with thousands of volunteers, men you can not get now. 
 You would ha^•e to put it on a pay basis from top to bottom, which 
 would cost you many more millions than that, in my judgment. 
 
 The Chairman. In justice to the retail dealer, isn't he entitled to 
 the information as to what is deemed to be a reasonable profit? 
 
 Attorney General Palmer. We are going to advise him what the 
 judgment of the community is through this representative committee, 
 which we tell him we think we can sustain in the court. But I do 
 not want to be compelled to advise him what is the Executive decree 
 of a fair and reasonable price. 
 
 Mr. McLaughlin of Michigan. That is provided under that para- 
 graph there at the top of page 3, that the President may, in lieu of 
 any unjust, unreasonable, discriminatory, and so on, price charged, 
 find what is reasonable and impose that, or he can issue an order to 
 discontinue an existing charge. 
 
 Attorney General Palmer. That is the same thing as fixing an- 
 other one lower down. 
 
 The Chairman. In speaking of the courts in lieu of the Executive 
 determining the matter, this provides that in any proceeding brought 
 in the courts such order of the President shall be prima facie evi- 
 dence of the facts found, so that the courts would ultimately deter- 
 mine whether the charges were fair or not, would they not? 
 
 Attorney General Palmer. Yes. 
 
 The Chairman. The question has been raised whether a violation 
 of the orders is unlawful. I desire to read from section 5 : 
 
 Any person violating any provision of this section, or any regulation or order 
 issued by the President thereunder, shall, upon conviction thereof, be fined not 
 exceeding $5,000 or imprisoned for not more than two years, or both. 
 
 That would make a violation of an order issued by the President 
 unlawful, would it not? 
 
 Attorney General Palmer. Yes. 
 
 Mr. Anderson. May I ask a question or two there, in order to get 
 my own mind straight as to the legal effect of the provision. I take 
 it that if an executive, in the exercise of the authority conferred by 
 this paragraph, should fix a price that was lower than the retailer 
 or wholesaler or other dealer could sell at, that would be a confis- 
 cation in the sense of the Constitution. If that is true, then it clearly 
 seems to me that a provision of this sort, to be effective and to be 
 constitutional, must set up a machinery for the determination of the 
 question, which amounts to due process of law. Is that sound? 
 
 Attorney General Palmer. I should think so. 
 
 The Chairman. It could be done under the war power? 
 
 Attorney General Palmer. Well, the due-process clause of the 
 Constitution is abrogated by the war power. I guess that is so. 
 
 The Chairman. Practically everything along this line is consti- 
 tutional in war times, is it not? 
 
90 HIGH COST or LIVING. 
 
 Attorney General Palmer. Yes. 
 
 The Chairman. We are proceeding under the war power. 
 
 Attorney General Palmer. Unquestionably. That question might 
 not be raised under the war statute, because it has been distinctly 
 held the due-process clause — although there are many, many law- 
 yers who dispute it — is not enforced against the law of Congress in 
 war times. 
 
 The Chairman. They exercised the right to commandeer under 
 the war power? 
 
 Attorney General Palmer. Yes. 
 
 The Chairman. That is a violation of the due process clause. 
 
 Attorney General Palmer. In the trading-with-the-enemy act the 
 President 'was empowered to determine whetherproperty was enemy 
 owned or not, for instance, and after determination to seize and 
 take such enemy property. And the question was raised Avhether 
 it was not a violation of the due process clause of the Constitution, 
 because it was an Executive act determining the ownership of the 
 property, in depriving a man of property which he alleged to be 
 his, without compensation. The courts held that that was a proper 
 exercise of the war power. 
 
 Mr. Purnell. What would be the objection to allowihg the Presi- 
 dent to declare the price found by the several committees to be the 
 fair and reasonable price for a given community ? 
 
 Attorney General Palmer. He would not do that and could not 
 do that unless he exercised a very close supervisory power over these 
 committees, and that would make this central organization neces- 
 sary. He could not give a blanket approval of everything that those 
 committees in the country might do. 
 
 Mr. Purnell. It seems to me you contemplate the selection of a 
 very high-class committee? 
 
 Attorney General Palmer. We do. 
 
 Mr. Purnell. In each community? 
 
 Attorney General Palmer. We do. But we do not go so far as 
 to say that their findings will be a fixation of price. 
 
 Mr. Purnell. I think the public is just as anxious to serve as 
 volunteers in a movement of this kind as they were during the war. 
 That is my thought about it. 
 
 Attorney General Palmer. I thought so, and I acted upon that in 
 naming these committees, but my mind is a little shaken on it. I 
 have not gotten the response on it that I hoped for, but I think it 
 is going to work out. 
 
 Mr. Purnell. I am sorry to hear that. I know in my section of 
 the country this is the thing that is uppermost in the minds of the 
 people to-day. 
 
 Attorney General Palmer. They might volunteer for the purpose 
 of giving their opinion and advice, but I am afraid we would have 
 trouble in getting volunteers in fixing a price the violation of which 
 would be a criminal act. 
 
 Mr. Purnell. Is this committee which you contemplate to be made 
 public ? 
 
 Attorney General Palmer. Oh, yes. 
 
 Mr. Purnell. And is the personnel of it ? 
 
 Attorney General Palmer. Oh, yes ; yes, indeed. Publicity is after 
 all the best weapon we have in this thing. They have formed in the 
 
HIGH COST or LIVING. 91 
 
 city of New York, for instance, a splendid committee representing 
 all those classes I mentioned, and they are getting their dealers to- 
 gether and agreeing to abide by the prices that this joint committee 
 fixes. That is the way it is going to operate, in fact. 
 
 Mr. McLaughlin of Michigan. This committee is always more 
 than pleased to comply, if it possibly can, with the wishes of the 
 head of a department ; but for our consideration, would you be will- 
 ing to draft a sentence or a paragraph that you think would accom- 
 plish the purpose, to make it clear that what we propose to add to 
 section 4 will not interfere in any way with operations under the old 
 section 4 ? So that if Congress in its wisdom, or otherwise 
 
 Attorney General Palmer. You can draft that just as well as I 
 can, Mr. McLaughlin. I will have it done for you, but I do not ap- 
 prove of it. 
 
 Mr. McLaughlin of Michigan. So that if Congress, in its wisdom 
 or otherwise, felt that those additions should be made to section 4, 
 they could be made safely as far as the suggestions you make are con- 
 cerned. 
 
 Attorney General Palmer. I know, but it would very likely be 
 said it was drafted by the Department of Justice, which would carry 
 with it the implication of our approval, and I do not think I would 
 like to do that. 
 
 Mr. McLaughlin of Michigan. I do not think that anyone on this 
 committee would say you approved of the inclusion of this at all. 
 
 Attorney General Palmer. I know that. 
 
 Mr. McLaughlin of Michigan. But if it should be included, it 
 must be with such and such restrictions. 
 
 Attorney General Palmer. Yes. I can do that for you. 
 
 Mr. McLaughlin of Michigan. You have been a Member of the 
 House, and you know sometimes a measure gets away from the com- 
 mittee. 
 
 Attorney General Palmer. Earely. They do not often get away 
 from the Agriculture Committee, do they? 
 
 Mr. McLaughlin of Michigan. Well, they have been very good 
 
 The Chairman. Do you think this language would aid: "That 
 nothing in this paragraph shall be construed to limit operations under 
 any other paragraph of this section which may be instituted in lieu 
 of the procedure under this section? " a, ■ j. 
 
 Attorney General Palmer. I do not think that would be suflicient 
 to prevent the objection being raised and a fight being made every 
 time we arrested anybody, that we did not pursue the plan outlined m 
 subsection 2 of section 2. I think we would have a fight on our hands 
 every single time we undertook it. ,■.■,. 
 
 The Chairman. We will be pleased to have any suggestions that 
 you may wish to offer that would make it read so that it would not 
 limit the operation of any other paragraph. . . ^ ^ t,i ' 
 
 Attorney General Palmer. My best suggestion is to put a blue 
 pencil through it. That is the best thing that I can think of to make 
 
 ^* Th?CHAKMAN. If it is left to the discretion of the President-or 
 to the Department of Justice— as to which course to pursue i 
 
92 HIGH COST OF LIVING. 
 
 You are speaking of publicity : If it were known by the retailer* 
 that it was in the power of the President to fix prices, would not that 
 in itself force them to do the right thing? 
 
 Attorney General Palmer. Yes, sir. 
 
 Mr. McLatjghun of Michigan. When will we receive that draft 
 from you? 
 
 Attorney General Palmer. I will send it down to you, but you are 
 really asking me to draft something that you can do just as well as 
 I can, or which the clerk of the committee can do. 
 
 Mr. Heelin. Your position is, you would like the committee to 
 include just the amendments suggested by you? 
 
 Attorney General Palmer. Very much. 
 
 Mr. Heflin. You think that is the best plan ? 
 
 Attorney General Palmer. That is exactly my position, after giv- 
 ing to it the best consideration that I could. 
 
 The Chairman. The committee is very grateful to you, Gen. 
 Palmer. 
 
 (The committee thereupon took a recess until 2.30 o'clock p. m. to 
 consider the proposed amendments in executive session.) 
 
 X 
 
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