Mr. SIMPSON. I figure, sir, on Government money, the kind that Andrew Jackson fought for, that Thomas Jefferson said was the only kind of money that ought to exist, the kind that Lincoln used to save the Union. That is the kind of money I want. I do not want any bankers' money.

Senator BANKHEAD. That would take us off the gold standard, would it not?

Mr. SIMPSON. Yes, sir. The gold standard brought us to where we are now. If you like it, why, fine. But I do not like it. And I am not depressed, Senator. I am one fortunate fellow in that I think I have had an understanding of this thing for 40 years. I never let a calamity hurt me financially. This calamity has made me money, because I think I understand what happens in these kind of times.

The CHAIRMAN. Let us have that formula right now.

Mr. SIMPSON. I am glad to give it to you, Senator. All war is for profit. And during the war manufacturers make the profit. After the war those who hold the obligations of the Government and of the people make the profit. And always it means through restriction of credits after the war is over a deflation of the currency. And all you have to do to make money is right after the war is overturn everything over to money and just hang on to your money. That is all you have to do. I was just as sure when we declared the World War that the manufacturers and the big moneyed interests were the ones that were back of it as I was that there is night and day. And I framed my policies along those lines and I am not depressed.

Senator BANKHEAD. Did you find the bank in which you kept your money a safe place to keep it?

Mr. SIMPSON. So far I am all safe in the bank. I have been in the banking business, and I can understand a bank statement pretty well,

too.

Senator BANKHEAD. Mr. Simpson, which plan do you regard as of more real value to the farmer: To extend his credit under a 40 or 50 year mortgage, or to go about increasing the price of his products so that he can really pay off his mortgage?

Mr. SIMPSON. You just can not do without either. You must increase the price of his products. He is ruined. He can not pay operating expenses on present prices.

Senator BANKHEAD. I am in full accord with you on that, but the point I am asking you to give us your judgment on, is, which is better for the farmer to have his friends concentrate on: To go about and enact legislation that will increase or inflate the price of his commodities back to a normal level above the cost of production, which would put him in a position to pay his interest and repay his principal installments, or simply carry him along on long-time credits at a low rate of interest?

Mr. SIMPSON. I think you ought to give us both the bills. Give us cost of production and refinancing.

Senator BANKHEAD. I understand that you would like to have us enact both the bills into law, but which do you think is of more importance and will be more helpful to the farmer, if the friends of the farmer would concentrate on it, and try to get it through Congress, assuming they could not get both of them through?

Mr. SIMPSON. Well, as we three farm organizations have absolutely tied our reputations and our hopes and our desires to this proposed measure [holding up the bill presented by the farm organizations], I will say we will take this one first.

Senator BANKHEAD. Is that your judgment or is it a matter of agreement and pride of opinion that you would take that first? Is it your judgment that that would be the better, if you could not get both?

Mr. SIMPSON. I expect there is a fraction of difference in favor of saying that if we have to have one or the other that we ought to have this. That would be my judgment.

Senator BANKHEAD. That would be your judgment?

Mr. SIMPSON. Although I am absolutely certain that fundamen tally we are never going to remedy the farmers' condition entirely without a refinancing on a lower rate of interest.

The CHAIRMAN. Are there any further questions?

Senator CAPPER. Have you seen any indication that you can get that in any other way than by the plan suggested here?

Mr. SIMPSON. Do you mean get cost of production any other way? Senator CAPPER. No; refinancing?

Mr. SIMPSON. Refinancing at a lower rate of interest?

Senator CAPPER. The prices have been steadily falling. Have you seen any evidence that it is possible to get money to carry on in any other way?

Mr. SIMPSON. Of course, involved in the Frazier bill is an inflation of money. Inflation is absolutely necessary, and everybody says it now. Even William Randolph Hearst says we have to have inflation. So we all agree on that. It is like we farm organizations agreeing on that we have to have cost of production. We all agree that we have to have inflation. That means that money will have to get cheaper. A dollar will have to get where it won't buy so much. That will bring down the rate of interest, because that means that you have got to have a bigger volume of money. More money will be seeking investment.

Senator BANKHEAD. Mr. Simpson

Mr. SIMPSON. Let me finish, please, Senator.
Senator BANKHAED. Yes.

Mr. SIMPSON. The only difference is that I don't like the method of inflation-although I would rather have it than not to have it at all-of more money that bankers control that they can bring in and destroy at any time that they want to like they can Federal reserve notes. I prefer the money that the Government puts out, that no banker has control of, and that does not require the taxpayers to pay interest on it.

Senator BANKHEAD. Let me submit this to you. I believe that every member of this committee is a real friend of the farmer. Mr. SIMPSON. I do, too.

Senator BANKHEAD. And is anxious about the situation, and wants to do anything that is possible to do to relieve the situation. Well, now, as practical men you have got to deal with the problem in a practical way. I think that every member of this committee knows and you doubtless realize it will be impossible to pass any legislation and put it on the statute books to inflate the currency $10,000,000,000

and go off the gold standard. I do not think there is any chance on earth to do that in this Congress.

So the question then comes down to this: Is there any practical way that we can do something and give him relief, rather than to stand on some theoretical views of government and financing? We want to pass something, to get up something, if we can—at least I do, speaking solely for myself-that we have got some reasonable prospect of passing both houses of Congress and the President approving it, so that we can get something for the farmer. Not just play a game. We want to get something for him if we can. real relief. My thought is that we ought to get down to something that we have got some reasonable assurance that we can pass and that the President will approve. If not, we are just wasting time.

Some

Mr. SIMPSON. We have got to get something that will at least give the farmer a hope.

Senator BANKHEAD. You need more than a hope now.

Mr. SIMPSON. What I mean is this: I mean he has lost hope, and you can not tell what is going to happen in this country.

Senator BANKHEAD. I know he is distressed. That is the reason that I want something now.

Mr. SIMPSON. Yes.

Senator BANKHEAD. That is the reason I am not content with a mere hope.

Mr. SIMPSON. Yes.

Senator BANKHEAD. I want quick relief. I am an inflationist, I will say that now. I came here with the idea of arguing for it, for some reasonable control of the expansion of the currency.

Mr. SIMPSON. When I say he has not a hope, I mean he has to have something that will give him a hope. This bill will do something for him to hope with.

Senator BANKHEAD. I am not talking about that. I am talking about the $10,000,000,000 proposition.

Mr. SIMPSON. If you leave it to a vote of the people whether the Government issue ten billions to refinance the farmer, it will carry 9 out of 10 votes.

Senator BANKHEAD. But you can not do that.

Senator THOMAS of Oklahoma (presiding). Have you any further recommendations or suggestions, Mr. Simpson?

Mr. SIMPSON. That is all.

Senator THOMAS of Oklahoma (presiding). Mr. O'Neal, will you tell us what you think we should do?

STATEMENT OF EDWARD A. O'NEAL, PRESIDENT AMERICAN FARM BUREAU FEDERATION

Mr. O'NEAL. Mr. Chairman and gentlemen, I heartily indorse this bill. I think this, very frankly-and I am glad to see that I am not alone in the thought-that not only the farm organizations but other men in our Nation have concluded this, that everything we have done may be helpful, but unless we restore values in agricultural commodities the most that we are undertaking to do or which has been done will be of no avail.

I do not know whether you men really realize-I know you do; I know you are friends of agriculture. My distinguished Senator

from Alabama, I was delighted to hear what he did say-you do not realize that 60 per cent of the people of this Nation are directly dependent on agriculture.

When things that we have worked for and stood for since the history of man have lost their value, when lands and the products of land, and of forests and of mines go to such a price that there is no confidence, there is black despair in the hearts of 60 per cent of the people in this Nation.

Senators, I have here a couple of letters from two men whom I consider great thinkers and great friends of the American farmer and of American agriculture. I want to read one letter in its entirety and the other letter in part, if you please, sir; and would like to have them go on record.

One of the letters is from Gov. Frank O. Lowden, of Illinois, who has been a great champion of American agriculture for many years. I asked the governor to give me his thoughts as to the situation, a man familiar with finance as well as agriculture, familiar with American conditions, held in high regard by the American people, and this is his statement as contained in a letter dated April 23 [reading]:

There seems to be a pretty general agreement that farmers' cooperative organizations offer the largest promise for an improved economic status for the farm population. With other industries organized and with labor organized, farmers' cooperatives would seem to be the natural development if agriculture is to take its proper place in an organized world.

Farm commodity cooperative enterprises have made decided progress in the United States. They have quite generally, however, encountered a very serious obstacle. In their efforts for more orderly marketing, they are compelled from time to time to remove a surplus from the market, and this, of course, imposed upon the cooperatives some expense. Especially is this true if the commodity is protected by tariff and where the surplus must be sold abroad in order to make the tariff effective upon domestic consumption. Now, under present conditions, this expense must be borne entirely by the cooperatives, though nonmembers share the full benefits. In other words, the nonmembers fare better than do the members themselves. It is impossible to maintain the morale of the cooperative organization under these conditions.

In a report upon the agricultural situation by a special committee of the Association of Land Grant Colleges and Universities, made in November, 1927, there is a very full discussion of agricultural cooperation. The general principle is heartily approved. After enumerating other obstacles to the growth of cooperation, with which all are familiar, the committee stresses the "difficulty of distributing to members and nonmembers alike the cost of cooperative enterprise in accordance with the benefits received as a result of such enterprise." The committee adds that provision must be made to overcome this obstacle "if cooperation is to grow to meet the needs of the farming business."

Some way must be found to make the nonmembers of the cooperative bear their fair share of the cost to the cooperative involved in its handling of the commodity. The absence of any such method at present seems to be the chief obstacle to successful cooperative marketing.

The equalization fee was designed to accomplish this very purpose. In all the voluminous literature upon the subject—and I have followed it closely-I have seen no method proposed with this purpose in view as promising as this. In this connection I wish to quote from Prof. I. G. Tugwell, of Columbia University. In discussing the McNary-Haugen bill of 1928, he said: "I should like to have seen it tried as a beginning. Indeed the more I study the bill of 1928 the deeper my admiration becomes. As a piece of social legislation it surpasses anything an American Congress ever framed."

Senator BANKHEAD. When was that written?
Mr. O'NEAL. On April 23.

Senator BANKHEAD. This year?
Mr. O'NEAL. Yes.

This other gentleman has been a great friend of American agriculture, a man who is equally prominent in American finance, Mr. Barney Baruch, of New York. I would like to read in part from his letter to me of April 14. [Reading:]

In this depression the decline in commodity prices has doubled, and in some cases trebled, the burdens of debts, and this inequity is the chief threat to the return to prosperity.

If the existing situation were not so tragic it would be amusing. The need for things in this country is very great. All the facilities for supplying that need are here, including plenty of money, and yet business stagnates and prices are impossibly low. The cause is doubt and uncertainty about the future of money. If that doubt were removed, it is my opinion that activity would begin at once and prices in general would start to rise.

The crux of the farm crisis is, of course, price. The farmer's income derives from two classes of prices which are in absolutely different categories and respond to different forces. The first category comprises great export crops. In this, as you well know, price depends upon world conditions, and unless the tariff can be made effective to protect domestic consumption, the farmer is completely dependent on the depressed markets of the world for the price of each of these crops.

The equalization-fee plan has already passed the Congress twice. There is no honest economic objection that can properly be made against the principle involved. The issue is clear cut and more and more people understand that plan every year. It seems to me that agriculture would do well to concentrate on adherence to that plan, and I believe that in the broadening recognition of the necessity for the application of that principle to export crops, action might possibly be had even in this session of Congress and before the elections. In order to get a practical demonstration of that principle on relatively certain grounds, I would make my first try on wheat alone.

Now, Mr. Chairman, that gives you the point of view of two wellknown and competent men.

Senator BANKHEAD. What is his expression there about the general uneasiness as to money?

Mr. O'NEAL. I do not know, Mr. Bankhead, just exactly what he means there, except this: That I find from my contacts that practically everyone shows no confidence in anything.

Senator BANKHEAD. Does he object to the expansion of currency? Mr. O'NEAL. I don't think he does. The reason he wrote me this letter is this: I ran into him in the station down here. He had been, I believe, before the Banking and Currency Committee of the Senate testifying on the Wheeler bill, the silver bill. I think he had. been down here for that purpose, and in this discussion-he always has been a great friend of American agriculture-he brought this up. Now, Mr. Chairman, we of the American Farm Bureau, the Grange, and the Farmers Union, made our appearance and made a fight over in the House before the Banking and Currency Committee, over there, as a result of which a bill came out of the committee by unanimous consent. We think this Goldsborough bill is a very broad bill. It says here:

It is hereby declared to be the policy of the United States that the average purchasing power of the dollar as ascertained by the Department of Labor in the wholesale commodity markets for the period covering the years in 1921 to 1929, inclusive, shall be restored and maintained by the control of the volume of credit and currency.

In other words, Congress demands that the Federal Reserve Board do this. I think that will be helpful.

Senator BANK HEAD. Mr. O'Neal, is that the complete bill or the original?