provide for authority to establish trading margins. The Department of Agriculture has already submitted to the Congress its proposals for amending the Commodity Exchange Act, and we hope that these amendments will be adopted. The bills carrying these proposals are H. R. 4685 and S. 1751.

In the second category of statutes are some which safeguard the right of farmers to join together in economic efforts and otherwise add to their economic power.

1. Acts specifically related to antitrust laws:

In each of the following acts, Congress specified certain types of action by individuals which would not be violations of antitrust laws: The Capper-Volstead Act, Agricultural Marketing Agreement Act of 1937, as amended, and the act regulating the marketing of anti-hogcholera serum and hog-cholera virus.

Capper-Volstead Act: Through this law, farmers are assured of the right to protect themselves and the general economy against monopolies and other concentrated power by organizing cooperatives or other associations. Through cooperatives, farmers have access to an organizational structure similar to that enjoyed by corporations.

Once organized, however, their operations are subject to the rules established by the Capper-Volstead Act and also to the restrictions of the antitrust laws.

Agricultural Marketing Agreement Act of 1937, as amended: This empowers the Secretary of Agriculture to enter into marketing agreements with processors, producers, associations of producers, or others engaged in the handling of any agricultural commodity or product. The declared policy is to establish and maintain such orderly marketing conditions for agricultural commodities in interstate commerce as will maintain the purchasing power of farmers from the sale of their commodities, and also to protect the interests of the consumer. The act also authorizes, under certain conditions, the issuance of orders by the Secretary regulating the handling of certain specified agricultural commodities and products, the purpose of such an order being the same as that of the agreement. All parties to any marketing agreement must furnish the Secretary with such information as he may require to enable him to determine the extent to which the declared policy of the act is being effectuated and whether there has been any abuse of exemption from the antitrust laws.

Anti-Hog-Cholera Serum and Hog-Cholera Virus Act: The purpose is to insure the maintenance of an adequate supply of serum and virus by regulating marketing, and to prevent undue and excessive price fluctuations and unfair marketing practices or methods. Regulation is through marketing agreements entered into by the Secretary of Agriculture with manufacturers and others engaged in the handling of anti-hog-cholera serum and hog-cholera virus. Provision is also made for the issuance of an order regulating the handling of serum and virus under certain conditions.

As in programs under the Agricultural Marketing Agreement Act, handlers subject to a marketing agreement or order issued under this act are protected from prosecution under the antitrust laws only with respect to those activities which are specifically authorized by the marketing agreement and order.

2. Other means of coping with problems imposed by concentrations of economic power:

Rural electrification: The history of rural electrification offers an outstanding example of how concentrated economic power can deprive rural people of essential services and what can be done through corrective action.

On January 1, 1935, only 1 out of 10 American farms had centralstation electric service. By January 1, 1949, farm electrification had increased sevenfold. On that date approximately 73 percent of our farms were receiving central-station electric service.

This tremendous improvement must be credited directly to Government intervention in this field. First and foremost, was the establishment of the Rural Electrification Administration in 1935. Through the enactment of legislation, the Congress authorized a self-liquidating lending program which supplied the means by which more than 2,000,000 farms and rural families were enabled to secure for themselves through their own cooperative effort the advantages and conveniences of adequate and dependable electric service.

Besides securing for themselves this service which had previously been withheld from them by the electric utilities, their systems, by virtue of economies in construction and operation, established rate levels substantially lower than those which had previously prevailed. Not only did the consumers from REA-financed, consumer-owned systems realize savings, but hundreds of thousands of consumers from the private electric-utility systems enjoyed the benefits of rate reductions stimulated by the example of the consumer-owned systems. Utility-industry sources indicate that nationally the cost of electric energy on the farm was lowered almost 50 percent between 1934 and 1948.

REA has statutory authority to make loans for generating facilities, and this has made it possible for REA-financed systems to secure power supplies from electric utilities which had previously refused to serve the systems at a reasonable wholesale rate.

The REA program, in fact, introduced for the first time in the tightly knit electric field the element of competition in such a manner as to render valuable service to millions of rural citizens without damage to existing financial interest. The success of the REA program has also indicated how effective the cooperative method can be in combating monopoly.

The second major element in overcoming the inertia of the electric utilities in the field of farm electrification was the accelerated and greatly expanded development of hydroelectric facilities by the Federal Government. Generating capacity at Federal installations increased approximately 1,600 percent from 1935 to 1947, while that controlled by the commercial power companies increased approximately 32 percent.

The Federal expansion made available in certain restricted areas of the country large supplies of low-cost hydroelectric power, the benefits of which were largely passed directly on to the consuming public, in many cases through REA-financed electric distribution systems. These developments made possible the establishment of some REA-financed systems which could not otherwise have come

into existence because of lack of an adequate, reasonably priced supply of power. It is significant that while the average monthly bill for 250 kilowatts residential electric service dropped from $8.91 in 1935 to $6.92 in 1948, the lowest charges occurred in those areas in which Federal power installations were located. For example, the average bill in Tennessee dropped from $7.63 to $5, a decrease which is directly attributable to the TVA development. The average bill in the State of Washington dropped from $6.74 to $4.84, the lowest monthly bill in the Nation. This may be attributed directly to the Bonneville development.

A third element which might be mentioned in this connection is the effect of the enactment by the Congress of the Public Utility Holding Company Act of 1935 which provided, among other things, for the rearrangement of utility systems on the basis of geographical integration. This brought about to a considerable extent independent local management which was in many cases much more attentive to local needs than had been the case under the previous condition of management by remote control.

In 1935, when REA was established, the attitude of the dominant interests in the electric-utility business was that "there are very few farms requiring electricity for major farm operations that are not now served." This was the position taken by a committee representing the industry at the time when less than 11 percent of all the farms in the country had central-station electric service.

Telephone service: Today one of the great needs of the farm families of this Nation is more telephones and improved telephone service. In 1920, farms with telephone service numbered 2,498,493 or 38.7 percent of the total farms. In 1945 there were 1,866,109 farms with telephone service, or 31.8 percent of the total. There has been little progress since 1945. The demand for farm telephone service is urgent, not only for better rural living standards but also for farmers' daily business. Substantial segments of the national farm-telephone plant are in a state of disrepair and furnish entirely unsatisfactory service. Little is being done to bring modern communication service to farmers.

REA has sought, within the limits of its statutory authority, to assist its borrower systems

The CHAIRMAN. Of course, at that point, Mr. Secretary, I wish to state that the House did pass the rural telephone bill the other day, which will be of great help.

Secretary BRANNAN. I do not know that, sir, indeed. We tried to help where we could in it.

REA has sought, within the limits of its statutory authority, to assist its borrower systems in their efforts to secure telephone service for their electric-power consumers. Formal arrangements for joint use of electric and telephone facilities were concluded in 1947 between the REA-financed rural electric systems and the telephone industry. These arrangements involved either the use of the power-line poles for carrying telephone lines or the use of the power line itself as a "carrier" of telephone messages. Approximately 200 joint-use agreements had been entered into as of April of this year. To date REA-financed systems report approximately 12,000 subscriber con

nections, about four-fifths of which were made by a single Bell Company.

The "carrier" type of installation which appears to be a most promising method of solving the farm telephone need in many areas has been proved feasible from the engineering standpoint. However, a tightly controlled price has rendered this type of service economically unfeasible in many instances.

As you know, the House has just passed a bill to amend the Rural Electrification Act to provide for a lending program in the telephone field similar to the rural electrification lending program. This proposal, if adopted by the Congress, should be as effective as was the original Rural Electrification Act in helping rural people obtain necessary service.

Price support: As I mentioned earlier, the ability of industry in times of declining demand to cut production and maintain price leads to great difficulty for farm people, disrupts the national economy at times, and requires the off-setting force of governmental price supports for farm commodities. Between 1929 and the depression low of the early 1930's, here is what happened in certain industries: Agricultural implements-prices declined 14 percent, pay rolls declined 83 percent; iron and steel-prices went down 16 percent, pay rolls went down 75 percent; cement-prices went down 13 percent, pay rolls 72 percent; aluminum-prices went down 21 percent, pay rolls 69 per

cent.

At that same time farm prices went down by two-thirds, and in self-protection many farmers increased their crop acreages.

From 1932 to 1938 industrial production averaged about 25 percent below that of 1929 while farm production averaged approximately the same as in 1929.

Let us look at more up-to-date figures. Since the end of 1947 the prices of farm machinery have gone up 20 percent and other farm equipment and supplies have gone up nearly 10 percent. But prices received by farmers for their commodities have dropped 18 percent.

Of course, even 100 percent enforcement of antitrust laws, would not assure farmers that industry will continuously produce as abundantly as agriculture. As an offset to the economic power which is used to cut production and maintain the prices of goods sold to farmers, we must maintain the strongest possible farm price-support program and provide the means for storing supplies which are not currently needed and for shifting gradually from production of commodities faced with declining demand to others where consumption can be expanded.

Areas of economy requiring study: The interests of both the farmer and the general public require eternal vigilance against monopolistic practices and other improper and undesirable uses of concentrated economic power.

In the remainder of my testimony, I should like to present a few additional facts to indicate areas in which we at least need more information and study of the kind this committee can give.

(1) In the food manufacturing industry, 133 corporations in 1939 had 41 percent of all sales, while 29 of the largest corporations had 31 percent of the total. In 1947 the percentages were the same, although the volume of sales was, of course, much higher.

96347-49-pt. 1- -12

As far as I have been able to learn, no recent detailed figures along this line are available anywhere. I do have some figures that were tabulated quite a while before the war. They show that the three largest retailers of groceries did 22 percent of the total business, the three largest meat packing concerns had 43 percent of the total, the three largest makers of cheese had 63 percent of the business, the three largest flour milling concerns did 38 percent of the business, and the three largest fruit canners had 30 percent. We definitely need an up-to-date break-down of figures of this sort.

(2) Marketing charges in the food industries are holding up while prices are going down. At last July's prices, the annual retail cost of filling the food "market basket" for a family of three average consumers was $708. At prices in April of this year, the comparable figure was $647, a reduction of $61. Yet in April the entire difference in cost to consumers was coming out of the farmer's price-none out of middlemen's margins.

(3) In certain price-making processes, particularly the "openprice" practices prevalent in Wisconsin cheese, New York and Boston poultry and eggs, and Chicago butter, by way of example, sales are priced in terms of a premium or discount on the market quotation which may be established by only a small fraction of total trading. It would be desirable to learn what needs to be done to safeguard against price manipulation as a result of these pricing practices.

(4) Pulpwood prices are usually uniform irrespective of purchaser or location of the timber in relation to processing plants. Small woodlot owners do not always have the advantage of a competitive market for their pulpwood.

(5) The limited number of concerns producing or mining phosphate rock, potash, and nitrogen offer possibilities for limiting competition in the fertilizer industry, especially in view of increasing demands by farmers for fertilizer.

(6) In the field of transportation there are a number of points which require attention. It has been called to my attention, for example, that lessees of buildings owned by railway companies are required to use the railways as well, and that railway control of fruit auction markets limits use of trucks at those markets.

It would be well, in my opinion, for the Congress to review the present regulation of transportation. The States and the Federal Government have enacted laws pursuant to which railroads, water carriers, motor carriers, freight forwarders, and pipe lines are regulated. The Congress has declared that as a matter of national transportation policy each of these agencies of transportation should be regulated in a manner designed to recognize and preserve the inherent advantages of each, to promote efficient service, and to foster sound economic conditions in transportation and among the several carriers. By and large, regulation is serving these ends, but there is danger that the transportation system may become inflexible to the point of being monopolistic.

These observations cover a great many different points and yet reflect only a small part of agriculture's interest in the concentration