dwindled to less than 40 per cent. Canada is fast forging ahead. It is very difficult to get accurate figures from any of those Governments. We of the trade feel that Canada's surplus movement is about 200,000,000 of bushels, and that is almost a third of the total international movement of wheat.

Senator SMOOT. That decreased percentage comes from the fact, does it not, that Japan and China are using a great deal of flour and that they did not at the time you had 68 per cent of the total?

Mr. BELL. I did not take that into consideration in my figures.. There have been no figures compiled of the world movement other than those that Mr. Esterbrook made up quite a number of years ago. I took those figures. They amounted to 28,000,000 barrels a year. I took those figures and applied them back to 1903. There was nothing else to do.

Senator SMOOт. We do know, however, that there has been a wider distribution of flour to the peoples of the world than there was in

1903.

Mr. BELL. Yes; I think we can safely say that. But I took them for the normal prewar years. However, we do know that Canada is going ahead very rapidly, and you can see that since her proportion of the total is so great, what a tremendous effect that has on the prices all over the world. Canada sets the standard of grades and prices. She has had a lower price. Our prices in this country have been higher than the Canadian prices. She has had the benefit of the lower price and other nations have had the benefit of this same privilege of which I have spoken, and so they have put us out of the market.

Senator MCCUMBER. You do not agree to the general proposition that the wheat price in the United States is fixed wholly by the Liverpool price?

Mr. BELL. It goes up and down with the Liverpool prices.
Senator McCUMBER. With the world prices?

Mr. BELL. With the world prices, but it is at a higher level in that up-and-down movement than the Canadian price. There is no question about that. That runs up as high as 70 to 80 cents at times. We bring in cheaper Canadian wheat with which we hope to meet Canada's goods in the world market. We can not use it as 100 per cent. We are asking for the same privileges as the other nations have. We are saying that the American miller must buy 43 per cent of American wheat at the higher American prices and incorporate it with that cheaper priced wheat and meet Canadian competition based on a lower price for wheat. We are willing to take a chance. We believe that we can do it. If we can, it means that we have carried 43 per cent of American wheat into the world as flour at a better price than that wheat would have brought as grain. That is the reason why this is a constructive feature and one which assists in carrying out the purposes of the tariff.

It is true that feed is needed in this country. We do not pay a duty on that, but we use all that we save and a great deal more in buying the higher-priced American wheat and incorporating with it the Canadian wheat.

Senator MCCUMBER. Where do you get the lower grade of Canadian wheat?

Mr. BELL. Senator, there have been no poor grades of wheat. Senator MCCUMBER. You are speaking of a poor grade of wheat, are you not?

Mr. BELL. No. At least I did not mean to say that. I referred to the lower price of Canadian wheat, because the Canadian price is lower than the American price.

Senator LADD. Isn't it true that they paid to the farmer $2.15 in March and April; that they sent a check for 30 cents additional later on, and that in November and December they sent another check for 15 cents, making $2.68 altogether? At the same time the American farmer was receiving from $2.03 to $2.08?

Mr. BELL. That was evidently a subsidy, because the price of the wheat in Winnipeg is given here in my figures. I can read them. Senator MCCUMBER. The Winnipeg price means Port William or Port Arthur?

Mr. BELL. Yes; although Winnipeg is always given.

I want to bring to your attention the fact that under this provision, as we have drawn it, the identity of the wheat is not required. Immediately you are going to raise the point that this permits substitution. Substitution is possible in theory but not in practice. I can not go out and meet competition on goods of set standards, price, and quality and use a lower grade of goods. The identity here is not necessary. If it is attempted to preserve the identity straight through, it robs the business of that elasticity which is so necessary, and that furthermore it puts an added burden upon the manufacturer and upon the commodity which is already laboring under a very considerable handicap by reason of the fact that we have undertaken to incorporate with the wheat 43 per cent of the high-priced American wheat.

Senator SMOOT. Let me ask you a question at this point. It is something that has come up in connection with sugar and other commodities. If that were granted to the millers of the United States, would it not be used by them to break the price of wheat in this country at any time?

Mr. BELL. It could not.

Senator SMOOT. Certainly it could with sugar. I do not know whether it could be with wheat.

Mr. BELL. Perhaps I do not get your point.

Mr. SMOOт. In other words, they might simply go to work, and put so many bushels of wheat in bond. They could substitute wheat for that at any time, and they could break the market with Canadian wheat; that is, they could ship it in here and they could later substitute American wheat for it. While using that in the United States markets they could depress the American prices. I know what they can do with Cuban sugar. I don't know whether you can do the same thing with wheat or not, because of the fact that there is a demand, of course, for nearly all the wheat, and you are an exporter of wheat. That may make a difference; but if you were in the position of depending on Canada for your wheat supply, any provision of that kind would be very detrimental, I believe, to the wheat growers of the United States. However, being an exporter of wheat, I do not know whether it can be done or not.

Mr. BELL. I was one of the unfortunates selected as a member of the sugar board, of which I was treasurer, and I know something about the sugar business in that way, although they put a blacksmith in to do a watchmaker's job. The position, I may say to you, is not analogous in this respect. Under this proposal I must become a buyer in the American market of 43 per cent of the goods that I import. I can not discharge my obligations and I can not get the benefit of this thing unless I do. The sugar does not have to

come.

Senator SMOOT. That is the reason I asked the question. I know that it is a different situation in some respects, at least.

Mr. BELL. It is a different situation. We have to come in, and therefore, instead of depressing the market, we are buyers of 43 per cent of every 100 per cent brought in. So you can see the position is not the same.

Senator SMOOT. I recognize the fact that there is a difference.

Mr. BELL. This is a very important matter, and I hope you will pardon any strong emphasis that I put on this thing. I want to bring it up in its entirety if I can, because, as Senator McCumber will understand, I think we want to do all we can in the Northwest to encourage production there.

Senator McCUMBER. While you are on that subject, I may say that Senator Smoot has anticipated to some extent some of the points that I had in mind, but I want to ask some questions right here in order that I may have more information on this phase of the subject.

Mr. BELL. I shall be very glad to give you any information I am able to.

Senator McCUMBER. What is your estimate of the crop of grain of hard spring wheat in the spring-wheat States from which you get your flour?

Mr. BELL. I suppose our crop would run

Senator MCCUMBER (interposing). I mean, now, outside of macaroni, that being used mostly for special things.

Mr. BELL. I can say that our crops would run somewhere in the neighborhood of 200,000,000, of which at the present time 40 per cent is durum, and therefore unsuited.

Senator McCUMBER. That would be about 160,000,000?

Mr. BELL. That would be an average of this year's crop. The crop will not run 179,000,000—the spring crop.

Senator MCCUMBER. It will be about 179,000,000 of spring wheat? Mr. BELL. That is a pretty long guess.

Senator MCCUMBER. Leaving out the macaroni, I mean.

Mr. BELL. We would expect of the crop in the Northwest somewhere around 160,000,000 bushels.

Senator McCUMBER. That would include Minnesota, South Dakota, and eastern Montana?

Mr. BELL. Yes, sir.

Senator McCUMBER. 160,000,000?

Mr. BELL. On the average; yes, sir.

Senator MCCUMBER. What proportion of that 160,000,000 is ground into flour by the American mills?

Mr. BELL. A very large percentage. All they can get.

Senator MCCUMBER. Practically all of it?

Mr. BELL. Pretty nearly. It is our own fault if it is not.

Senator MCCUMBER. We export practically none of this spring wheat as wheat, do we?

Mr. BELL. I hope not, sir. If we let any get by it is our fault. Senator MCCUMBER. 160,000,000 is a short crop for that section, is it not?

Mr. BELL. 160,000,000 without durum wheat is not such a short crop; no, sir.

Senator MCCUMBER. As a matter of fact, you can grind considerably more than 160,000,000 bushels and find a market for it in the United States?

Mr. BELL. Oh, there is no question about that.

Senator McCUMBER. And abroad.

Mr. BELL. I say, if we let any get by it is our own fault.
Senator MCCUMBER. I understand it. I am glad of it.

Mr. BELL. May I interject this into the situation? We are faced with a pathological condition up there in the Northwest which is very far-reaching in its significance. Unless we eliminate and exterminate this rust, Senator McCumber, the Northwest will cease to grow wheat. I have come here from some meetings that we have been holding.

Senator MCCUMBER. I can mention another danger that is greater than that. Unless they get better prices for their wheat they will cease to grow it.

Mr. BELL. I agree with you thoroughly on that. Prices will be improved through the extermination of this rust. We are raising approximately $200,000 to exterminate rust. We are working toward having a real efficient organization. I believe it will accomplish a great deal. The Government has not come to our assistance, so we have taken the matter up through private subscription. If we can raise $200,000 and have it continue for two or three years so that we can spend $600,000 or $800,000 in our operations I believe that we will succeed.

Senator MCCUMBER. How much of this same kind of grain does Canada raise?

Mr. BELL. Canada is practically in the position of raising all of that kind of grain. I mean that all she raises is that kind of grain. Senator MCCUMBER. She raised for 1921 about how many bushels? Mr. BELL. About 329,000,000 bushels.

Senator MCCUMBER. She will use for home consumption how much? I mean by that what will be ground into flour and used for food and consumed in Canada?

Mr. BELL. I have been trying to get at those figures for a long time, Senator McCumber, and the best estimate I can give you is somewhere along between 140,000,000 and 160,000,000 bushels.

Senator McCUMBER. You think it would be 160,000,000?

Senator CURTIS. I have seen estimates in the newspapers that ran from about 120,000,000 to 140,000,000.

Senator MCCUMBER. I do not know what they would use it for. There is about 10,000,000 population in Canada. They consume a little over a barrel per capita, as I understand it.

Mr. BELL. I have some figures here. The Tariff Commission published these figures. I will say that I was not figuring on the seed.

During the time that we were trying to allocate these wheat allotments Canada brought these figures forward and showed that her consumption was higher than our own.

Senator MCCUMBER. You say that we will raise 160,000,000 bushels and that Canada will raise about 170,000,000 that she is to export. She has to export every bushel in some market, does she not? Mr. BELL. Yes, sir; in some form.

Senator MCCUMBER. Suppose we put 25 or 30 cents a bushel upon the Canadian wheat and we are a little short of the American wheat: If we are short and the millers want that American wheat and it does not come in fast enough to suit them, they necessarily bid the price up a little.

Mr. BELL. A very considerable amount.

Senator MCCUMBER. And the shorter the crop, of course, the greater the price.

Mr. BELL. Yes, sir.

Senator McCUMBER. We will suppose that we are on the deficit side, and at the time at which we need a greater price per bushel because of that deficit, we find Canada on the other side of the line. The American miller then says, "I do not need to look to the American field; I can go across the line to Canada; I can take every bushel there, or as much as the American crop raised in the Northwest, and inasmuch as I am exporting a considerable amount, whenever I want to export I can use the Canadian wheat and thus keep my mills going without the payment of 1 cent per bushel, considering the drawback." For the life of me, I can not see what particular advantage we can get from a protection of 30 cents a bushel if you can reach right over on the other side and tap the Canadian bin and supply your every demand.

Mr. BELL. At 30 cents we could not, unless the American public demanded a certain grade that we were unable to furnish. Then we would have to walk up over the tariff wall, but our American price has been protected to the extent of 30 cents. We can not use it in the United States.

Senator MCCUMBER. If you grind Canadian flour you can keep the mills going. We have to keep the foreign export trade.

Mr. BELL. Yes, sir.

Senator McCUMBER. You have to retain that market and you will retain that market if it is possible, even if you make no profit, rather than lose it. That is proper business.

Mr. BELL. Yes.

Senator MCCUMBER. You will seek in every way, of course, to maintain it without losing, and if the competition on account of the world's crop is so great that the price of wheat is driven down in Canada and throughout the world, but the particular grade that we raise in these Northwestern States as a result of being on the deficit side and standing alone with no competitor is very much higher in price, you are able by the drawback provision to practically nullify the tariff protection entirely, or at least nullify it to a great extent. That has been true, because, while we maintained 25 cents a bushel for years, we have never had 25 cents a bushel better price for our American wheat, even though we had an exceedingly short crop. I think there was only one year in which we had a poor crop, and at that time for months we nearly measured up with the Liverpool price.