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we stated as witnesses here, eight weeks or thereabouts ago, that we would present our ideas how the act should be amended, and then hoped that the committee itself, through its own membership and contacting with the legislating drafting service, would formulate the amendments necessary.

That not having been, evidently, the opinion of the committee, and the opinion coming to us that the organizations should write the bill, we have done so; and are coming to you this morning with a measure, not having been introduced, but to submit it to you, and if the committee desires to act along the lines that this bill outlines, it is our hope and desire that the committee, as a committee bill, will introduce this measure.

Senator THOMAS of Oklahoma. Will you at this time furnish and have placed in the record a copy?

Mr. GRAY. I will at this time, Senator, unless it was done yesterday, put it into the record. My information is, Senator Thomas, that the chairman asked that it go in yesterday, and that it did go in. Senator THOMAS of Oklahoma. Very well.

Mr. GRAY. The bill which you have before you in mimeographed form sets out that it is a part of the agricultural marketing act. It displaces nothing that is in the act at the present time. It will not put into effect anything to make useless any part of the agricultural marketing act now in operation.

The bill is an amendment in three sections, or in three titles, to the agricultural marketing act; the three sections or titles being the equalization fee, the debenture plan, and the so-called allotment plan.

Some have criticized the farm organizations by saying that "You are trying to amend the marketing act by giving too many plans by which the board can handle the surpluses.

Let me say that we view this in agriculture, with no exceptions in these three farm organizations, as being a surplus control instrumentality. I think Congress, when it enacted the agricultural marketing act three years ago, thought that it was to be a surplus control act. Congress had twice passed and had had vetoed a former measure, the McNary-Haugen bill, which was designated surplus control act. And, as I say, Congress thought when it passed the marketing act, that it was a surplus control act. But this title, that is to say, this name, does not disclose such to be true, because the name of the agricultural marketing act, which we commonly call it in usual phraseology, is a Farm Board act. The last section of the agricultural marketing act, so called, denominates it as a Farm Board act. In other words, the Congress, thinking that it was passing a surplus control act, passed a Farm Board act.

The CHAIRMAN. Now, Mr. Gray, pardon me. I think I know something about the condition and state of that legislation. I was on the floor at the time. Nobody was deceived by what was done. I said repeatedly on the floor that it was no control act; it was purely a marketing act.

Mr. GRAY. Well, we in agriculture were not deceived.

The CHAIRMAN. Well, let us put it on the same ground. The President said he wanted this bill. Former President Coolidge had vetoed the McNary-Haugen bill twice. We all knew what was in the bill and all knew its limitations.

Mr. GRAY. I am willing to accept the correction of the chairman, that the Congress knew it was not a control act; but I know that we and the Senate committee knew of the deficiencies in the marketing act. The main deficiencies were that it did not have the mechanism in it which would permit it to be called a surplus control act. Senator BROOKHART. It does mention the control of surpluses as one of its purposes.

Mr. GRAY. It mentions, in section 1, the control of surpluses as being one of the objectives. But the machinery later in the act, to control surpluses, is deficient.

Now, in the farm organizations we come to you after three years of administration of the agricultural marketing act, which we, in the main, have supported, with the amendments to make it what it should be now and what it should have been from the beginning, a surpluscontrol piece of legislation. As I said a while ago, some would say that the farm organizations are at fault because they have not singled out one design, one plan, to be written into the law to make it a surplus-control piece of legislation.

May I observe that the National Grange, for which I speak this morning only in so far as this bill is concerned, has fought for years for the debenture plan. It is a good plan, with its limitations. At the beginning I think the Grange advocated that the debenture plan would be all-sufficient as a surplus-control piece of legislation. I believe and I am subject to correction by a more authoritative representative of the Grange than I am--that at the present time the Grange is willing to say that the debenture plan in every case will not be all-sufficient.

Formerly the American Farm Bureau Federation also, in the McNary-Haugen fight said that the equalization fee plan, if put into the bill, would control the conditions relative to surplus, and no other plan was necessary. I am frank to say, subject to correction by my superior officer who is here this morning, that the American Farm Bureau Federation in the last two years has modified its position to say that other plans than the equalization plan have merits. I think under certain conditions, the equalization fee plan might not be thrown into operation as quickly and orderly as some other plan. Might I say that with a commodity that has a small surplus, like butter, it might be that some other plan could be thrown into operation more expeditiously and be handled in a more expeditious manner than the equalization fee plan could handle that sort of a surplus.

And then, more recently, the allotment plan has been receiving a more careful analysis and consideration than it has ever received at times prior. That plan has some features in it which are also related to the equalization fee and the debenture plan. A characteristic of the allotment plan is that it wants to have the licensing powers of the Federal Government enlarged and extended. I know the policies of the Grange and the American Farm Bureau Federation well enough to say that for years each of those organizations has thought that the warehousing facilities of the Government should be expanded so that there should be more control over the handling of the grain and cotton crops. We have advocated the enlargement of the marketing act so that a farmer, if he has cotton on hand on his farm, might put that cotton crop into a warehouse, or in his local

elevator near him and get warehouse receipts on it, which he can do now only if he ships it to Kansas City, or Buffalo, or Detroit, or some other central place and get it in the warehouse and get a warehouse receipt.

In other words, we advocated before the committee that if you have to handle this surplus you will have to get storage closer home to the point of production than is possible at the present time. We will never be able to store all the surplus in the central points of storage. And we are going to fight on until we get storage in the local communities, so that commodities may be stored there and warehouse receipts can be issued against them; and have that storage closer to the place of production of the crop. So the allotment plan goes into the powers of the warehousing facilities, and we are for that, whether it is applicable to the debenture plan, or the equalization-fee plan, or the allotment plan-and it is applicable to each of those, because you have to have the storage under any plan.

And another feature that runs through each of the three plans is cost of production. Nobody alleges that cost of production is an accurate yardstick to base prices upon. But it is a convenient yardstick to use. In the tariff law, and in the flexible provisions of the tariff law, the cost yardstick is the only one used to make the tariff rates, and in securing elasticity of the tariff rates.

So in presenting the bill to you this morning we allege that the cost of production is a convenient yardstick to indicate what the price of the farmer's product should be. And in the allotment plan, as in the equalization-fee plan and the debenture plan, we should say that if the bureau, like the Federal Farm Board, or the Bureau of Agricultural Economics, should ascertain that the cost of wheat in a certain year was $1.25, that fact is an indication of price below which the product should not move into the markets of this country. The CHAIRMAN. Mr. Gray, let me ask you some questions so that they might, at least for the record, indicate the logic of your position. Mr. GRAY. Surely.

The CHAIRMAN. The proposal you now make has met with the approval of the three major farm organizations?

Mr. GRAY. Yes, sir.

The CHAIRMAN. And it is an amendment of the agricultural marketing act, following section 10, by the insertion of three plans. The first is the equalization-fee plan.

Mr. GRAY. Yes, sir.

The CHAIRMAN. Is that taken bodily from the bill as passed by the Congress on two occasions, and on two occasions vetoed by President Hoover and once by former President Coolidge?

Mr. GRAY. It is, with the latter part stricken out. It is copied verbatim from the old McNary-Haugen bill which was last passed. The CHAIRMAN. Is it optional or mandatory on the board? Mr. GRAY. I will take that right up.

The CHAIRMAN. I wish you would.

Mr. GRAY. There are two options under this plan which the Farm Board can exercise. They are these: The board can decide which one of the three plans it may use under any surplus emergency that might arise. That is the first option.

The second option that the board has is in ascertaining whether it is going to get into the marketing of any crop. The Farm Board

can base its action on any one of the four findings set out in the first part of the bill.

Now there are four findings there. The board shall find, upon application of the advisory committee for any agricultural commodity; upon the application of the general cooperative farm associations or other organizations of any agricultural commodity, or upon its own volition, these four findings

The CHAIRMAN (interposing). Mr. Gray, that is all in the old bill, is it not?

Mr. GRAY. No; there is one additional finding in this, Senator McNary, that was not in the McNary-Haugen bill. The third finding, as you will see in the third paragraph, was not in the McNaryHaugen bill, that relating to the cost of production and the estimated or necessary portion to be used in the home market. That was not designated in the old McNary-Haugen bill.

The CHAIRMAN. Very well. Now, going on to the debenture plan, is this in the form we had it in Congress last year?

Mr. GRAY. The second section of this bill is, with some changes in the definition, the Jones bill on the debenture of this session, introduced by Chairman Jones on the House side, with just enough modification to make it fit into a composite bill for introduction. The CHAIRMAN. I see.

Mr. GRAY. And the allotment plan-and anticipating, perhaps, your next inquiry-has just enough modification of the ThomasSwank bill, which was introduced early in this session, to make it fit into the composite idea.

The CHAIRMAN. How would that third proposal on the allotment plan operate?

Mr. GRAY. It operates through the licensing system, by using the licensing powers of the Federal Government in a way substantially as I was indicating a while ago; with the Federal powers under the warehousing act enlarged so that every person who handles a commodity would be licensed, the requirement would be imposed on that person that a commodity should not be handled at less than the cost of production, ascertained either by the Federal Farm Board or by the Bureau of Agricultural Economics.

Senator BANKHEAD. Do you mean in interstate commerce?
Mr. GRAY. In interstate commerce; surely.

Senator CAPPER. The allotment plan is optional?

Mr. GRAY. The allotment plan, Senator Capper, is one of the two options in the bill. The Federal Farm Board has the option, as it sees an emergency existing, as to which one of those three plans it will put into effect. Sometimes it will go to the debenture plan, sometimes to the equalization plan, and sometimes to the allotment plan, and it might use a combination of the three. That may seem an odd thing, Senator Capper, but you will find at the present time there are two options in the act, the stabilization and the loaning mechanisms; there are two mechanisms for the Farm Board to use right now. And in the Federal Trade Commission act, the Federal Trade Commission has three or four lines of activity in order to control unfair trade. The Interstate Commerce Commission is not obliged to follow one line of activity, but has three or four lines of activity that it may choose from, as emergencies come before it.

The CHAIRMAN. That is what you would suggest should be used in the handling of the surplus under the debenture plan?

Mr. GRAY. Yes; that is characteristic of the debenture plan in handling the surplus, Mr. Chairman.

The CHAIRMAN. What do you do with the surplus under the allotment plan?

Mr. GRAY. That would either be held on the farm, or sold at a price to be determined or governed by the cost of production yardstick.

The CHAIRMAN. In other words, in the world market?

Mr. GRAY. And it would go, presumably, into export.

Under the allotment plan, Senator McNary and gentlemen, if the persons who are licensed by the Federal Government were not privileged to sell the commodities at less than the cost of production for that commodity, ascertained in interstate commerce, then with a segregation of the amount of the commodity which could be sold in the home market at the cost of production figure, then the remaining portion would either have to find one of two outlets-held on the farm, or an export outlet.

The CHAIRMAN. The cost of production would be a general estimate made, or taken by individuals and reaching all over the country?

Mr. GRAY. It would be, as I would understand it, a national composite cost of production estimate.

The CHAIRMAN. So if we take wheat, on the 800,000,000 bushels we raise, you would fix a general average cost applicable to all sections of the country?

Mr. GRAY. Yes. That would be subject, I take it, to the rules and regulations of the Federal Farm Board, but, personally, I do not see how it would work except on a national basis.

Senator BANKHEAD. Let me ask you this: Do you undertake to cover commodities that are produced in a State for consumption in a State?

Mr. GRAY. Yes, sir.

Senator BANKHEAD. How do vou do that under a Federal act?

Mr. GRAY. The old McNary-Haugen bill was written and used the words "interstate and foreign commerce." But it was known by all of us, by court decisions, that it applied to interstate commerce. For instance, a shipment of wheat originating at Peoria, Ill., going into the Chicago market, would be subjected to the equalization fee, even as if it had started at Des Moines, Iowa, and gone across the State line into Illinois.

Senator BANKHEAD. Was that the wheat, or the dealer, that was subject to that?

Mr. GRAY. I can not answer that question. My impression is it was the wheat.

Senator BANKHEAD. Mine is, it was the dealer.

Mr. GRAY. You may be right. But under the McNary-Haugen bill, referring to interstate commerce, it would have been applicable to the grain in intrastate shipments; it would not have been applicable, Senator Bankhead, to the local wheat used for feeding purposes. That would not be, under our understanding, in the nature of commerce. And so with corn. The greater part of the corn crop never entered into interstate commerce; it was consumed in

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