graded, sized, washed, packed, and sometimes kept in packing house or local stor age for a while, are as worthless as if never grown. They are perishable and hundreds or even thousands of miles from anyone who will buy them for food. Whether the grower performs these functions on his farm, as many do, with family help, or whether the convenience, economy, because of specialized facilities and labor, he sells the product to a packer or pays him to do it, it is still part of the necessary function of the production of a package of food, which is what the producer grows to sell. If it costs the packer 50 cents to perform all of these functions, including furnishing the package, and he charges 10 cents a package for overhead and profit, making 60 cents altogether, it doesn't matter to the grower whether he pays the packer 60 cents and sells f. o. b. car or sells the commodity to the packer for 60 cents less and the packer sells f. o. b. car or whether the grower builds a packing house, hires the labor or uses hired farm labor, and tries to do the job for less than the packer if he can, if each method costs the same. If, because of specialization, one method is cheaper than the other, all factors considered, he will use that. A packer who would charge $1 when the growers in the area can do the same job for 50 cents a package would go broke for want of business. Commercial production is not a victory garden operation. There is only one point of similarity between a victory garden and commercial production, that is that the produce is grown to be eaten. The victory gardener, dependent somewhat on his success, pulls a tomato off of the vine and takes it in the house to eat. If he could do this all year around for all food he needs, we wouldn't need commercial production.

We would need no packing houses; no agricultural labor; no "area of produetion" labor; no trucking from farm, grove or orchard to the packing shed or to market; no rail or water transportation; we would have no cost of trucking and handling in the wholesale market, no waste or deterioration in either the wholesale market or the retail store, no labor costs at 11⁄2 times regular rate on Saturdays or for overtime or double pay on Sundays or holidays, no middle man. Sounds silly of course, but no more silly than the mouthing of those people, often in high position, elective or appointive, in the Government and in Congress, who are always complaining of the middleman's cost.

Obviously, if the middleman or the grower wasn't forced to pay these costs there would be no point in incurring them but he does have to pay fixed costs, by the wage-hour law, by the railroads, by organized labor, regardless of his yield per acre, his cost of production up to harvest time or the price he receives either per unit or for his crop, whether he makes a profit or takes a loss.

Actually, it is a sound rule of economics, that the labor costs at packing shed, transportation and handling costs up to where he gets his price, are all a part of the cost of production, whether he sells f. o. b. on the basis of the price the commodity will bring at the place where the buyer sells it; whether he incurs the labor and transportation costs and sells delivered to a retail warehouse in the city or whether he ships and sells on consignment through a commission merchant or an auction, or competes with a victory gardener or a local truck farmer who sells direct to the consumer at his farm.

All price studies over the years have shown that with minute variations, the producer gets the same return. It doesn't matter whether one agency handles the produce from farm to consumer, or whether two, three, or four perform specialized functions and split the margin between the farm price and what the consumer will pay in a competitive market. OPA has proven that with price and margin control.

It is our position therefore, that unless Congress is prepared to take over the production and distribution of food, the "area of production" exemption is just as sound and justified as the agricultural labor exemption and the area of production is the entire area from which the agricultural product is drawn, not an artificial boundary concocted by some economist or a limitation on the population or distance from a particular town, whether it be 5, 10, or 50 miles distant or a town of 150, 1,500, 15,000, or 150,000 population by the United States Census of 1930.

Congress should write into the present act a definition of the exemption of the "area of production" as the entire area from which the first packer or processor draws he supplies, whether that packer be a private enterprise, a cooperative or an at packing for the producer on a cost per package basis. This exemp tion simply not the merchandise is loaded on a rail, water, or highway Dorfocansportation.

VII

Finally section 16 (b) in the amendment proposes to impose a 5-year statute of limitations on the employer for violation of any of the intricate bookkeeping requirements of the act.

Reduced to its ridiculous extremity, this means that a common day laborer could prosecute a complaint against an employer 4 years and 51 weeks after he had performed a week's work loading or unloading trucks or refrigerator freight cars during a busy spell, on the issue of whether he had been paid for 2 hours overtime that he knocked off 1 day when the boss had to leave to attend to something else.

It is not sufficient to say that a Government bureau in Washington would not entertain such a frivolous complaint.

They do every day, as the records will prove. Whoever wrote this clause in the amendment must really be an enemy of orderly society although it would certainly assure the agency administering the act a sure job for all time, they think. This is not comparable to the conventional statute of limitations where a prosecutor must prepare a case for presentation to a grand jury or where a plaintiff must risk time, effort, and attorney fees to try a suit for damages. This is a case where anyone of millions of people can, merely by complaint to a court of competent jurisdiction with the help of the Administrator, force an employer to keep minute records for 5 years, subject to the most exact particularity of employment of roving labor, and subject to double penalty for loss of records through fire, flood, storm damage, removal of place of business, or any of several causes that have nothing to do with the scale of living or anything related to normal law observance.

Congress should strike this proviso and if some statutory period of liability is deemed desirable, it should provide a period of time when the details, proof, and recollections of such transactions are fresh, but not over 3 months. A person who doesn't decide he has been underpaid in that time doesn't know whether he has or hasn't and should not be allowed to become a public nuisance by law.

CONCLUSION

We desire to express the hope and to urge Congress to weigh to end results of such proposals as are contained in the amendments under S. 1349. This is not yet a socialist or communist nation, and there are many millions of people who are determined that it will not be. The unorganized majority have been deeply concerned with the trend of recent years, both in politics and in the openly communist and alien teaching in our public schools and many of our universities, where American history is ignored and Freud, Marx, and almost anyone with a foreign name and enough cockeyed theories on what is wrong with our American socitey and economy is must reading. We look to Congress first to reverse this trend. We are fully aware that industry, as it has grown in the last 75 years has committed many wrongs. Millions of aliens brought to this country almost like cattle to build our industrial machine have left us with many social and economic problems. The answer is not to transplant the Government regulated peasant or serf system to this country, and that is the inevitable outcome of regimentation, dictatorship, and bureaucracy at the top, equality of the masses at the bottom, and the elimination of private enterprise, the keystone of American progress in the past.

Respectfully submitted,

EXHIBIT 20

JOHN R. VAN ARNUM, Secretary.

TESTIMONY OF RUSSELL SMITH, LEGISLATIVE SECRETARY, NATIONAL FARMERS UNION TO THE HOUSE LABOR COMMITTEE ON VARIOUS BILLS TO AMEND THE FAIR LABOR STANDARDS ACT OF 1938, NOVEMBER 13, 1945

Almost exactly 1 year ago the delegates to the National Farmers Union's Thirty-ninth Annual Convention adopted a program that is still the guide to Farmers Union national officials in the execution of policy. In that program the delegates declared that "it is time to check and reverse the dispossession of American farm families from the land" and that "fair competition must be established within American agriculture. As the first point of a program

designed to attain that objective, the delegates recommended that the Fair Labor Act be extended “to include all farm wage earners" and that the act be amended "to set a minimum of 60 cents an hour, the least that will sustain parchasing power necessary to meet dietary needs."

It is pursuant to that mandate that I appear here today to urge the adoption of a bill that will not only increase the minimum wage, but that will broadly extend the coverage of the act. The members of our organization believe that every industry that can be covered ought to be covered, and they particularly urge the application of the minimum to hired workers in agriculture.

We regard this legislation as being agricultural legislation as much as nonagriculture, just as we regard measures directed toward the maintenance of continuous full employment as being agricultural legislation.

It is significant that the quotations I have taken from the 1945 program of the Farmers Union are part of the section entitled "Action to save family-type farming." The preamble to that section reads as follows: "For years, farm organizations, legislators, and Government spokesmen have declared that familytype farming must be made the basic pattern of American agriculture, that it is the basis of rural democracy and thus one of the foundation stones of democracy for all Americans. Yet, with few exceptions, no realistic effort has been made to advance this pattern in agriculture."

We are primarily interested in amendment of the Fair Labor Standards Aet then, because we believe that such amendment can be an instrument for the promotion of family-type farming, the basic tenet of our whole agricultural pregram. Almost since the inception of the Farmers Union in 1902, we have believed that in the best and broadest sense the family-owned and operated farm is the most efficient agricultural unit. We have believed that it is far more efficient than the so-called factory farm so far as social and democratic values are concerned. But more pertinent to the legislation under consideration here today we have also believed that for a large part of agriculture the family farm also was the most efficient from the standpoint of cold production cost efficiency. Throughout those years, our members have believed that the most serious handicap with which they contended in trying to improve the efficiency of the family-type farm was the ability of the large farm to hire labor at sweatshop and subsweatshop wages. The payment of such wages in agriculture cheapens the value of all labor in agriculture, and so renders of little worth the work of the independent operator himself.

So far as our members are concerned they are perfectly willing to pay fair wages themselves for such labor as they are required to hire. It is their con viction that in the long run they will be more than compensated for the payment of such wages by the partial restoration of fair competition between large-scale farms and family farms that would be the result if those large operators were compelled to pay moderately good wages. They feel that in effect the factory farms now enjoy a subsidy in the form of human sweat and human energy that enables them to compete unfairly with family farmers.

The belief of our members that the welfare of hired farm labor and of family farmers is closely interwoven has recently received scientific confirmation. In September 1944, the Department of Agriculture published a document entitled "Wages of Agriculture Labor in the United States" prepared by Dr. Louis J. Ducoff in consultation with a committee of seven other social scientists in the Department. This document contains the following passage:

"The welfare of both farmers and their hired workers are closely tied to general economic conditions in the country as a whole.

"Real net farm income rises with increases in the volume of nonagricultural employment. In times of extensive unemployment, farm wage rates are low both because of the pressure of a surplus labor supply and because of reduced farm income. Thus mass unemployment during the depression years (exceeding 13,000,000 persons) carried with it a level of farm wage rates of approxi mately $1.25 a day (in terms of 1940 dollars), and a very low level of real net farm income. Farm income climbed out of the depression and rose to succesSively higher levels with progressive increases in nonagricultural employment The recovery of farm wage rates, however, was much slower, as considerable unemployment still prevailed as recently as 1941. Farm wage rates attained a level of $2.50 a day (in 1940 dollars) only when unemployment was reduced to almost a minimum level. The significance of full employment to both farmers 1 hired farm workers is evident from the relationships shown in figure 23.

ndependence between farmers' income and income received as wages ers means that the two change in the same direction, and overregional figures on farm income and farm wages indicate tha!

this has been the case over the whole period for which information is available. Data are not available to indicate how close the relationship is in the case of those groups of farms which mainly comprise the employing sector. Although there is reason to assume such a relationship, the changes in net income for labor and management on such farms and in annual wage income per worker occur at absolute levels which are greatly different.

"In recognizing the interdependence between the level of farm income and the level of farm wages, it should also be recognized that the comparative economic conditions of farmers who do the bulk of the hiring and of the workers they employ cannot be correctly' appraised from farm-income data based on totals or averages for all farms. The all-farm average farm income reflects the depressed or impoverished conditions of a great mass of people who subsist on farms and who contribute very little to commercial production, but it does not fairly represent that sector of our agricultural economy which furnishes the bulk of our agricultural production where the problems of farm, wages and wage workers are heavily concentrated.

"The fact is that the major share of agricultural production and agricultural income is produced and received by only a fraction of the farms and farmers. In 1929, it is estimated that the upper 10 percent of the Nation's farms produced 47 percent of the marketed products, while in 1939 the upper 10 percent of the farms accounted for 54 percent of the Nation's sales of farm products.

"The concentration of hired workers on a small proportion of the farms is even more marked. In 1939 more than two-thirds (68 percent) of the cash farm wage bill was paid on only 9 percent of the Nation's farms. There are no comprehensive data to show the changes over a period of years in the amount of net farm income of the groups of farmers who are important employers of hired labor. That there is a big spread between the average net income of such farmers and the average for all farms is suggested by available data for 1939. In that year, the estimated net returns for family labor and management of farms with a gross value of production of $4,000 or more, averaged $2,305 per farm as compared with $350 for all farms.

"Because agricultural wage problems affect primarily a special sector of agricultural producers, the essential nature of these problems cannot be brought into sharp focus without disentangling the conditions of farmers who in the main do the hiring of labor from the conditions affecting the mass of low-income farmers. Formulation of sound agricultural wage policy requires such differential analyses in order to fit programs affecting agricultural wages to the problems peculiar to the employing sector of the agricultural industry.

"But national policies with respect to postwar agriculture cannot afford to overlook the pressing problems of low-income farmers, with due recognition of the indirect effects of such problems on wage conditions. These indirect effects arise from two directions. On the one hand, because the demand for agricultural products under given conditions of national income is relatively inelastic, even the small production contributed by the mass of noncommercial farins tends to depress farm prices. On the other hand, the large numbers of underemployed population on farms tend to depress farm wage standards.

"That the conditions of low-income farmers are similar to those of hired farm workers is suggested by the fact that in 1939 the average net returns for family labor and management for all farms, which is heavily weighted with low-income farms, was almost identical with the average wages of the hired man who worked a full 12 months.

"The interdependence of agricultural income with nonagricultural income, as has been mentioned, has implications for postwar policy regarding farm wages. The aspect usually considered in interpreting the relationship between the farm and nonfarm parts of the economy is that the greater purchasing power accompanying higher levels of employment in industry gives rise to an increased demand for farm products and thus produces a rise in agricultural prices and income. Another important aspect of the interrelationship, not always so explicitly realized, is the opportunity that expansion in nonagricultural employment affords the farm population for gainful work and improvement of their economic status, which may occur with or without migration."

I should like to call to the committee's attention the three charts bearing on this subject included in the document from which I have just quoted. If it is appropriate I suggest that the charts be made a part of the record of this hearing.

The National Farmers Union endorses S. 1349 and the companion House bills, H. R. 3914, H. R. 3928, H. R. 4222, H. R. 3844, however, even if they should not be

amended to extend coverage in the manner I have suggested. Again, we adopt this position not from humanitarian considerations, although those obviously are involved, but solely from the standpoint of enlightened self-interest. Even if the question of the prosperity of family farmers were not involved, we believe that any action toward strengthening mass purchasing power for farm prod ucts works to the benefit of agriculture. In the first place agriculture is peculiarly vulnerable to changes in demand for its products. The tendency of all farmers is to produce fully, and ordinarily agricultural production cannot respond except after months of delay to price changes in the market place. The historic difficulty of farmers has been that other parts of the economy could combine to adjust supply to demand, whereas farmers were helpless to do so. This condition was somewhat altered by the system of acreage allotments, production controls, and production goals. But the basic difficulty remains, the difficulty of potential abundance of production on the one hand and of feeble purchasing power on the other.

It is of far more benefit to farmers to be able to rely upon a stable price than it is to rely upon very high prices in some years to offset very low prices in other years. The agricultural operation is not geared to such fluctuation, and stability is perhaps more to be desired in its marketing operation than in those of any other industry. We believe that a steady increase in the minimum wage and a wide extension of coverage to all possible workers provides one of the best assurances of such stable prices and purchasing power for farm products. We are inclined to view minimum wage legislation in the same light as we view the support price program for farm products. Just as the latter is intended to put a floor under farm prices, so the former could be expected to put a floor under buying power for farm products.

In addition to the essential element of stability, we favor such legislation because it means additional money in the hands of those most in need of farm products, particularly food. In other words, so far as the farmer is concerned every dollar that is added to the income of the very low wage groups is a more efficient dollar than those added to the incomes of higher wage and salary groups. The reason is obvious. The lower income groups must spend a far greater proportion of their incomes for food than do higher income groups. Despite the fact that we are the wealthiest nation in the world we know now that millions of our people are undernourished. We discovered the true extent of malnutrition with dramatic force when about 40 percent of our young men were rejected for military service. the greater proportion of them because of physical lacks traceable to inadequate diets. Among the low-income groups where malnutrition is enforced by the iron hand of poverty at least 50 percent of the income goes for products of the farm. as against an average of 40 percent in other income groups. It is among these lowincome groups, therefore, that farmers can look for the greatest expansion of their markets, and for the greatest insurance against the accumulation of so-called surpluses in the years of peace ahead of us.

We believe this market to be of greater significance to American agriculture than any other. We earnestly hope for expanded world trade and for the opening of wider markets abroad for the products of our agriculture, but we do not believe that foreign markets offer an opportunity in any way comparable to those available to us here at home through measures to expand consumption. We are heartily in favor of the subsidization of the diets of low-income citizens and believe that such legislation is desirable and necessary. As do others, however, we would greatly prefer to achieve the same objective without subsidy or with as little subsidy as possible. We believe that minimum wage legislation offers one way of doing exactly that.

Our farmers endorse this legislation for a variety of other reasons into none of which I will go in detail. As parents and citizens they are interested because their children by the thousands annually migrate from farms to cities and they believe that those children ought to be protected against substandard wages in the cities. As taxpayers, our farmers are inclined to think that a minimum wage law results in an economy of public expenditures, because good wages inevitably will reduce the demands upon the public. treasuries of municipalities, of the States, and of the Nation for a variety of relief and works programs. And as consumers our farmers agree with Price Administrator Bowles in his view that more efficient workers will result in the long run from the payment of good wages and that such productive efficiency ultimately will mean lower costs to farmers of the products of industry that they must buy.