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DEVELOPMENT OF TERMINAL MARKETING FACILITIES
throughout the country, all of whom are apprehensive of the trend; yes, sir.
The CHAIRMAN. Well, you do not maintain that the marketing facilities in some of the cities cannot be improved and made more efficient and less wasteful, do you? Mr. Johnson. Oh, I think that if you mean "Are we opposing
. , improvement of market facilities in these cities?”', we are not.
The CHAIRMAN. Well, you do not oppose it, but you do oppose the method which has been suggested; that is, by aid from the Federal Government?
Mr. Johnson. I maintain that if they are financially sound, American business and free enterprise will find the way to make them so.
The CHAIRMAN. Well, that same argument, of course, was submitted by all of the opponents of the rural electrification program. They said that the power companies of the country could meet all of the necessary and reasonable requirements for electric light and power. But the Federal Government did not agree with that, and we put through the REA program, which has been a success.
Mr. Johnson. Mr. Cooley, you are speaking of something with which you are entirely familiar and I don't know a thing about.
The CHAIRMAN. Well, they have done that in many instances. There is the Federal Housing Administration. We have the Farmers Home Administration, which has financed and encouraged the purchasing of homes or the building of homes in farm areas.
Mr. Johnson. If I were in the home business or in the power business I would possibly have a complete answer for it. But I am not. And in the cold-storage business, I am associated with market interests, and I can speak, I believe, intelligently on that subject. And I certainly fear the impact of the Federal Government, the power behind the Federal Government, in promoting or providing the finances to construct these markets.
Mr. ChristOPHER. Mr. Chairman, may I be permitted to speak at this point?
The CHAIRMAN. Yes, Mr. Christopher.
Mr. CHRISTOPHER. The Federal land bank was subjected to the same criticism that the gentlemen is proposing as to this bill at the present time. It set up a lending agency that gave to the farmer agricultural credit and forced the loan companies of the United States to lend money on good agricultural security at 4-percent interest on 20 to 32 years' time, when they had been lending money at 7-percent interest and a 5-percent commission, on 5 year's time. The same objections were brought up to the Federal land bank that the gentleman is voicing today. The same objections were brought up in regard to the Production Credit Association, which took care of the farmers' short-term credit. And the cry of socialism has been raised against all those things. It is still being raised today. And if it was not valid against these other things, why is it valid against the bill we have under consideration at the present time?
I am asking the gentleman.
Again you are speaking of a subject about which I know nothing, you understand. Will you tell me what date this particular legisla
tion was passed? And was it passed in an emergency? Or in times like these?
Mr. CHRISTOPHER. Well, I consider that it was passed in a time of emergency. And I would like to ask you: Can you justify the spread between the price that the producer receives for food today and the price the consumer pays? Do you think it is too much? Do you think it is too little? Or do you think it is about right?
Mr. Johnson. Well, you are asking me a question there
Mr. Johnson. No, I say this, that in the general trend I think that the farmers of this country certainly are far better off than a lot of the segments of the population. As to where they get their funds from, understand, and where their money comes from, and whether it comes from sales to the Government or whether it comes from sales to people, you understand, I don't know. But there is one thing that you must bear in mind, and that is that in the sales of farm commodities transportation is a large item. Now, the farmer in California may receive a price for his commodity. He has to be able to transport it here. The people of the country today are looking for a fancy package. As was remarked by one of the witnesses here, they wish a cellophane package. The sales are governed by various rules that have been laid down. And I am not quarreling with the reason for those rules. We have transportation taxes which have never been removed, which are included in that cost. So as to the spread between the two, I don't think that that is the figure that we are looking for. The farmer, in receiving what he gets for his product, if he is making a fair living, certainly is not concerned with what that product sells for.
Mr. CHRISTOPHER. I am also concerned with what the consumer has to pay, because he is my customer.
Mr. JOHNSON. That is right. But I have pointed out in here that the increase in these costs of living is not affected by the markets.
Mr. CHRISTOPHER. Would you attempt to justify the fact that the grade A eggs in Missouri bring 25 cents a dozen, and I have to pay upward of 50 cents a dozen in Washington, D. C., for the very same eggs? Is it worth more to transport a dozen of eggs from Missouri to Washington and put them on the market than it is for me to own the farm and buy the feed and pay the taxes on my lay-out?
Mr. Johnson. Mr. Christopher, using the same argument, there, if you had one of these mailing boxes that the parcel post have, you could possibly buy your eggs in Missouri for 25 cents and pay 25 cents postage to get them here, and pay 50 cents for them.
Mr. CHRISTOPHER. And add to the deficit of the Post Office Department at the same time?
Mr. JOHNSON. Well, if the deficit of the Post Office Department was connected by increased postal rates, you would pay more than the 50 cents in Washington.
Mr. CHRISTOPHER. All right. Mr. Johnson. You still haven't proved your point. Mr. CHRISTOPHER. Well, do you think that the distribution and sale of farm products in our urban centers can be improved? Or do you think that it is better the way it is?
Mr. JOHNSON. I base my answers solely upon the answer I made you a few moments ago, that in my opinion the farmers of this country are not suffering. They do not appear to be suffering to me. They seem to be living a very happy life, much better than a lot of city dwellers.
Mr. CHRISTOPHER. I would just suggest that the gentleman go and live on a farm for a few years, and then perhaps he would be better able to answer a question of that description.
Mr. Johnson. Well, I was raised on a farm right up in Gaithersburg, Md. And I have worked on a farm.
The CHAIRMAN. Are there any further questions?
The CHAIRMAN. I should like to inquire how many of those who are here to testify will not be able to come back in the morning?
(Mr. M. Oldham Lewis responded.)
STATEMENT OF M. OLDHAM LEWIS, SECRETARY, WHOLESALE
PERISHABLE MARKET IMPROVEMENT LEAGUE OF BALTIMORE
sort of way.
Mr. Lewis. Yes, sir, I hope my statement will not irritate you unduly, because I have been up since 2 o'clock this morning, and I happen to be one of those racketeers that you referred to earlier, in the produce business.
The CHAIRMAN. You admit that you are one of the racketeers?
Mr. LEWIS. As referred to in your statement, Mr. Cooley. Not that I am a racketeer, at all, but you seem to classify them in a general
The CHAIRMAN. No, I do not think all of the people in the produce business are racketters.
Mr. LEWIS. I hope not, sir.
The CHAIRMAN. I think the people who are charging enormous rates, according to the information this committee has received, are in that category. But what is your name, sir?
Mr. LEWIS. M. Oldham Lewis.
The CHAIRMAN. Mr. Lewis, how long would it take you to make your statement?
Mr. LEWIS. I shouldn't think it would take over 10 minutes.
Mr. LEWIS. That is, provided you don't ask too many critical questions. You can elongate the period if you like to.
The CHAIRMAN. All right.
Mr. LEWIS. I represent the Wholesale Perishable Market Improvement League of Baltimore, many members of which own property which they have adapted and improved to fit their needs in the wholesale distribution of farm products, some with refrigeration, banana and tomato ripening rooms, buildings of three or more floors with elevator service, offices and storage in most instances on upper floors.
It has been suggested that we abandon these facilities, centrally located, and take space in a proposed market on the outskirts of the city in a so-called model market that would only serve to consolidate services if all distributors availed themselves of space in central market,
which we know they will not do. This was suggested by Department of Agriculture after a survey they made in 1949. The model and plan of market was the same as that proposed in other cities in which surveys were made. Changes, of course, were made as to size of market and population served, but plan and principles were the same that the Department of Agriculture have talked up for many years.
Surveys of State of Maryland Marketing Service recommended in several instances improving market at its present central location, but United States Department in 1949 survey recommended that market be moved to area away from city. Although they, at one time a few years ago, said it would be a mistake to change location and that it had not worked satisfactorily where changes of location of previous market had been tried. We can only judge the bill, H. R. 8320, by the recommendation made for Baltimore, and using the plan as presented here, it would increase the cost of distribution rather than lower same.
The theories advanced as to waste, deterioration, spoilage, losses, et cetera, as indicated in Baltimore and other reports were drawn from imagination and had no foundation in fact, because common sense would show since there was no model market for comparison; at least
one market improved as suggested in earlier efforts of United States Department of Agriculture is now regarded as obsolescent or nearly so, although this improvement was made less than 25 years ago. It can readily be understood that promoters would find it difficult to secure capital for such a venture because on the surface the investment would be neither sound nor secure.
It is not "obsolete facilities" that causes spread between producer and consumer; there are many factors such as transportation, packaging-frequently poor packages that have to be reconditioned to make presentable—top icing, just a few of expenses to get to wholesale distributors. The retailers have a highly perishable commodity, which frequently is packaged in a larger quantity than he can market promptly, which will result in some waste, collecting and delivery services, in some instances credit risk all out of proportion with profits. These are evils that if they cause consumer higher cost certainly the consumer is responsible for the imposition.
A concentration of available supply would only serve good purpose when supply was light, we who market farm products, at a net profit of 2 percent or thereabouts, know the supply must be kept out of sight as much as possible if fair prices are to be secured for producer. In this
age when large business is trying so desperately to decentralize we are asked to centralize without congestion, and while this sounds fine to the inexperienced we know that congestion is the stimulant on which activity feeds, the more evident activity the better the market.
Speaking of market research, does this mean "methods of operation" would be controlled by Department of Agriculture along with design, plans, location? If so, it will result in regimentation of producer as well as distributor. This reasoning definitely is socialistic and could only result finally in disorderly, unorganized distribution at great loss to both producer and distributor, possibly consumer might benefit temporarily;
Congress is asked for $50,000,000 and insurance fund of $25,000,000, also right to issue notes to Treasury Department for other moneys as needed; the interest charges to be 4 percent plus one-half percent
DEVELOPMENT OF TERMINAL MARKETING FACILITIES
for insurance. This indicates the doubtful character of this venture; even the proponents are leaving themselves plenty of ground to backtrack over a 40-year period.
When there is need for expansion private funds have always been available. New York has properly fed about 10,000,000 people well, even with present facilities; would they do better after spending from $75,000,000 to $125,000,000 for so-called improved facilities? With this investment rentals would have to be very high for sufficient space. No plan that we have seen would be adequate, one floor 22 feet by 80 feet. Some receivers would require five such spaces with cost of at least five times present rentals. To make market definite improvement 100 percent occupancy would be necessary; this, we know, would be impossible. The loss would settle down to taxpayer who is the consumer, this would leave his saving by "improved facilities” as very questionable. Seeming low interest rates and long term to pay seem alluring, but the day of payment must come.
The United States Department of Agriculture asks that loan be restricted to single market and bill introduced in Maryland and other legislatures asked monopoly of wholesale produce market. All State bills were of same general pattern. This is form of controlled or planned economy that has reduced England to its present deplorable socialized state, which except for aid of planned economist here would be definitely worse. Only 35 persons in all England have income after taxes of $24,000 a year. Our farmers here now are told what to plant or suffer consequences, and with this we will be told what to sell and where we can locate to sell it. Free enterprise that has made the United States of America the wonder of the world will be so circumscribed by rules and regulations that venture capital will not exist.
In the case of bill H. R. 8320, the United States Department of Agriculture because of money aid will controlthe distribution of farm products if this bill passes Congress, and the marketing will be regulated by inexperienced theorists. This is not the American way of life. In view of our experience and knowing full well the pitfalls of this measure, we ask that the committee bring in an unfavorable report on H. R. bill 8320.
The CHAIRMAN. Thank you very much, Mr. Lewis.
Mr. LEWIS. I understand, Mr. Cooley, that I will have the right to file a brief within 10 days. I think Mr. Parker telegraphed me to that effect.
The CHAIRMAN. That is all right, sir.
Mr. Richard Wirt? I am advised that Mr. Wirt said that he could not be here and would like to file a statement later, and the same is true of Mr. Wilson.
The others who have not been heard, I understand, live here in Washington.
We will recess until tomorrow morning at 10 o'clock.
(Whereupon, at 4:40 p. m., the committee recessed to reconvene Friday, June 9, 1950, at 10 a. m.)