Effective August 17, 1934, a marketing agreement and license for dried prunes produced in California was established, the hearing having been requested by the United Prune Growers of California, in which the California Prune and Apricot Growers Association participates, and the California Prune Pool. This marketing agreement and license replaced the voluntary industry program of similar character, known as the "United Prune Growers of California", which was in effect during the 1933 marketing season. As in the case of all other marketing agreements and licenses, a control board administered the operations. Membership in this control board was vested in grower members, cooperative packer members, independent packer members and a member at large. Despite the fact that practically all export outlets for prunes were gone, due to various embargoes and trade restrictions imposed by foreign countries, so that only domestic consumption remained to absorb the crop, the operations of the marketing agreement and license enabled the prune industry to maintain its own in price returns to growers. Thus, the average price for the period of 1925-28 was 4.8 cents per pound to growers. In 1932 it had fallen to 2.3 cents per pound to growers. But in 1933 and 1934 it was 4 cents per pound to growers. This price increase and maintenance can be attributed only to the industrialization of the prune industry through the operations of the marketing agreement and license.

In

Corresponding examples may be cited for the beneficial effect of marketing agreements and licenses for the California raisin industry and for the production and marketing of walnuts, grown in California, Oregon, and Washington. the case of the raisin industry, the marketing agreement went into effect May 29, 1934, and the license became effective May 31, 1934. The price increase to growers is represented by an average of 2.8 cents in 1933 as compared to 2 cents in 1932, and 3.4 cents in 1934, in terms of pounds. In the case of the walnuts, and in the face of surplus carry-overs, the marketing agreement and license made it possible for the growers to receive 10.1 cents per pound in 1933, as compared to 9.7 cents per pound in 1932, and 11 cents per pound in_1934. The hearings on agreement and license for the walnut industry of the Pacific coast were requested by the California Walnut Growers Association, the North Pacific Nut Growers Cooperative, and the Oregon Nut Growers, Inc., these three cooperative associations of growers representing approximately 90 percent of the total annual domestic production of walnuts on the Pacific coast, which means the entire American production.

For purposes of the record I herewith summarize the marketing agreements in effect under the Agricultural Adjustment Act, the number of growers involved, and the 1933 and 1934 value of the farm commodities handled under each agreement:

It is the judgment of the group I represent, and I so place it into the record, that the Agricultural Adjustment Act, as now constituted, needs to be strengthened and reinforced so as to protect both grower and processor groups against recalcitrant minorities who, while enjoying the economic benefits of marketing agreements and licenses now in effect, escape their share of responsibility in building for still greater industry-wide control of production and distribution. It is our judgment, based on passed experiences, that the amendments embodied in S. 1807 and its companion measure Ĥ. R. 5585 will clothe the Federal Government with legalized authority to aid agriculture in so organizing itself as to eliminate waste and inefficiency in production and distribution, with resulting benefits to itself and society in general.

Experience has proved the necessity of applying, where necessary, both the spirit and the letter of the market agreement and license provisions, contained in the Adjustment Act and in the amendments proposed, to bring into fruition the basic objectives which Congress had in mind when it enacted the Agricultural Adjustment Act. Philosophy underlying these objectives should be easy to understand. I am assuming that the opponents of the proposed amendments, who are in reality opponents of the Agricultural Adjustment Act itself, understand this philosophy fully as well as do its proponents. Perhaps, it might be in order to say that the opposition to the Adjustment Act and to the proposed amendments has manifested itself in such vigorous proportions because the opponents of the act and the amendments thereto have before them a vivid, mental picture of what the act and the amendments, if enacted, will accomplish.

Bluntly speaking, these accomplishments will bring to agriculture a larger share of the national wealth. Naturally, this additional share of national wealth accruing to agriculture, will have to be subtracted from those particular groups which have been exacting an abnormal toll both from producers and consumers for the service they have rendered. If this were not true, then there would be no opposition to the Adjustment Act and to the proposed amendments. For it must be further assumed that the origin of this opposition cannot be traced to altruism nor does it find its roots in altruistic desires to "save agriculture from pernicious, inimical regimentation which would destroy the mythical independendce of the American farmer." It must be just as true as it is obvious that there can be no independence without economic security: Neither can agriculture, in bringing to itself the additional income which it merits, extract that income from the thin air or from that important group which constitutes the consuming and purchasing power of the country, including farmers themselves. The philosophy underlying the Adjustment Act, and particularly the new amendments relating to marketing agreements and licenses, simply expresses itself in a most determined resolution by agriculture to so industrialize its own operations of production and distribution as to bring to itself and the consuming public the maximum benefits, with the least amount of waste, which arise out of the production of foodstuffs. Surely, it must be taken for granted that this philosophy is in accord with the desires of Congress and the administration to bring to the largest number of American citizens the fairest proportions of wealth and income in terms of economic services rendered. Agriculture does not drop out of the economic picture when it finishes its job of production. The goods which move into distribution fundamentally belong to agriculture. And, out of this field of distribution and from this service of marketing should be developed a system of proportionate returns on services rendered which, without penalizing consumers though excessive charges, should be just as equitable to those who produce as to those who process, manufacture, handle, and distribute.

This philosophy is expressly indicated in the amendments embodied in S. 1807 and H. R. 5585. Under the safeguards thrown around these amendments there can be no distortion of this philosophy. Thus, for example, the Secretary of Agriculture will not effect marketing agreements unless a majority of the producers of a given commodity desire them. I can think of no economy more democratic in spirit and letter than this. Again, it is not contemplated to fix quotas limiting the quantities which may be purchased by handlers of farm products from individual producers, unless two-thirds of the producers affected are in favor of such quotas. Again, any provision of a marketing agreement or license must be automatically terminated when a majority of the producers affected favor such termination. Upon what grounds, except those of a biased or selfish character, in which personal selfishness is placed above the general good of all, can anyone object to the philosophy I have described and to the machinery we request for carrying out the objects of that philosophy?

Why, agriculture asks, have handlers of food products raised such a strenuous objection to that provision in the amendments, embodied in S. 1807 and H. R. 5585, which would authorize the Federal Government, through the Secretary of Agriculture, to examine any books, papers, correspondence, documents, or other memoranda within the control of any party to a marketing agreement, or any licensee, or any subsidiary, or affiliate of such a party, or licensee? I believe it is fair to ask that question. And the burden of the answer remains with those who oppose this provision of the amendment. What agriculture receives for its products, when they leave the farm and are transferred into the hands of handlers, processors, manufacturers, and distributors, is common public knowledge. The farmer's books are as wide open as a front page of any newspaper. If the handlers of foodstuffs direct their operations with reasonable fairness, both to producing and consuming groups, they have nothing to hide. If, on the other hand, malpractices exist in the field of distribution, the sooner they are discovered, the better it will be for the common weal and the common good.

Finally, agriculture has come to the point where it realizes it cannot prosper as an industry, and cannot allocate its prosperity to related industrial groups, whose prosperity is superimposed upon the welfare of agriculture, so long as agriculture permits the existence of internal competition within its own ranks. This type of competition makes administrative prices by agricultural commodity groups impossible of attainment, always works to the disadvantage of any group composed of perons producing the same product, makes for disorderly marketing and distribution to the disadvantage of consuming groups by creating cycles of gluts and famines, and has a most depressing effect upon national welfare.

Through all these years, agriculture has seen what industry has been able to do for itself in the elimination of internal competition, and has witnessed the resulting benefits. Now, with the legislative aid of the Adjustment Act, and particularly with the assistance of the pending amendments, as they are enacted into law, agriculture desires to place itself, as an industry, on an equitable parity, in terms of price relationships, with all other industrial groups, so that its productive efforts can bring the maximum economic benefits both to itself and to the rest of the economic fabric. Organized agriculture asks that the amendments to the Agricultural Adjustment Act, embodied in S. 1807 and H. R. 5585, be enacted into law.

The CHAIRMAN. Without objection, the statement will be placed in the record. Has anyone any questions to ask Mr. Blackburn? If not, we will hear the next witness, Mr. C. E. Hearst, of Iowa.

STATEMENT OF CHARLES E. HEARST, PRESIDENT IOWA FARM BUREAU FEDERATION, AND VICE PRESIDENT AMERICAN FARM BUREAU FEDERATION

The CHAIRMAN. State your name, address, and occupation.

Mr. HEARST. My name is Charles E. Hearst. I am president of the Iowa Farm Bureau Federation and vice president of the American Farm Bureau Federation. I am a farmer. My office is in Des Moines, Iowa.

Gentlemen, I would like to put in the record my approval of the amendments in Senate bill 1807, and House bill 5585, and confine my remarks primarily, Senator Smith, to the amendment which Mr. Earl Smith just discussed with you, and which is contained in committee print of March 7, 1935.

We have watched the operations of the Agricultural Adjustment Act under allotments during the last 2 years in our State. It has been exceedingly helpful to the farmers of Iowa. We are more particularly interested in the matter of livestock than grain or other crops, because we are the largest producers of livestock and corn of any State in the Union.

In going over these emergency programs that we have had in the last 2 years, one consummated now, the other in effect soon, we find

that the farmers, while they have cooperated in the movement nicely, are beginning to feel that, since prices have advanced toward parity because of the drought and the program, there is less concern regarding the future than there has been to the past. In other words, the farmer feels that perhaps his difficulty is over, and that prices have risen to a point where he does not need to give very much further attention to them.

Because of the inequalities and injustices that developed through details of the livestock program in making allotments and quotas some objection is arising constantly to a continuation of that type of program. Those charged with responsibility of developing a more permanent type of program for agriculture have concluded quite generally that it would be best to provide, if possible, a simpler program, with less detail. It is known, as Mr. Smith stated to you very concisely this morning, that where we can control or adjust feed crops to our needs, such a program will, in a way, govern the production of livestock. Such a program could be developed and put into effect with much less difficulty, with much less opposition, and would be a program to which we could subscribe and adjust as our markets developed, and our needs required, producing livestock in the amount we wished to produce and market. Therefore, it has seemed to us that the logical thing to do would be to change our program, or fuse this emergency program into a long-time program for agriculture, simple in its operations, confining ourselves largely to the adjustment of feed grains, which means particularly corn and barley for the Midwest.

This proposed amendment simply permits the Department of Agriculture or the Secretary of Agriculture to spread the processing tax, which has been rather heavy on the hog producer, on the other commodities in the production of which corn is the chief ration.

Senator NORRIS. Mr. Hearst, are you able to tell us if this program is put into effect, what percent well, maybe not percent-but how much will be the resultant reduction of the processing tax on hogs?

Mr. HEARST. The suggestion in this amendment is to lower the processing tax to not more than $1.25 per hundred pounds of pork; that would be the upper limit of the tax.

Senator MURPHY. It is $2.25 a hundred now?

Mr. HEARST. It is $2.25 now.

Senator NORRIS. That reduces it a dollar.

Mr. HEARST. That reduces it a dollar. And that would be the maximum. It would shift over part of the processing tax to beef cattle because they are large consumers of corn, to dairy products because they also are large consumers of corn, and a small portion of the tax would be on the sheep industry.

Senator NORRIS. Is it proposed in this amendment that there will be a processing tax on horses and mules?

Mr. HEARST. No, sir.

Senator NORRIS. That is going to be borne by hogs?

Mr. HEARST. That will have to be borne by some other commodity. Senator NORRIS. So if this program is put into effect, the hog producer will still pay a little bit more than his proportion.

Mr. HEARST. The hog producer will still pay much more than his proportion, but there is very vital objection on the part of the hog producer to bearing so much of the cost of the adjustment program.

Senator NORRIS. What is the normal burden coming from horses and mules? That is about 10 percent, is it not?

Mr. HEARST. About, yes, sir.

Senator NORRIS. That will be the only addition more than his share that he will have to sustain?

Mr. HEARST. It is proposed that hogs, produced so largely on corn, and that corn being a crop where horses and mules are required, should participate in at least part of that cost, and therefore they have allocated that portion of the tax to hogs.

Senator NORRIS. Doesn't that apply to beef cattle, to dairy products as well?

Mr. HEARST. Not quite so generally, because their proportion of the consumption of corn is much smaller than that of hogs.

Senator NORRIS. I understand that, but we are thinking now of the part that could be allocated to horses and mules and putting that on to the hog producer.

Mr. HEARST. Yes.

Senator NORRIS. Why not divide that additional proportion between cattle and dairy products, in proportion to the amount that they benefit?

Mr. HEARST. That will be perfectly satisfactory to the hog men. They are not asking that much. They are willing to absorb that

amount.

Senator NORRIS. But some people object to bearing more than their proportionate share of this burden.

Mr. HEARST. It has been very apparent that some of the other producers have not been willing to bear their part of the processing tax.

Senator NORRIS. I think that is true. That is almost human nature.

The CHAIRMAN. Are these horses and mules-they are not produced for market; they are used in the production of the corn, which in turn is used for market, and unless you are raising horses and mules for the market they ought not to be made to pay any part of this processing tax, because they in turn exert their energy in producing the corn.

Mr. HEARST. They are not a marketable food.

Senator NORRIS. I understand that. I am not objecting to shouldering onto other producers the part that ordinarily would be adjudged against horses and mules, but this amendment shifts the entire thing onto the hog producer.

Mr. HEARST. Perhaps not necessarily, but hog producers use so much more corn than others, that they would naturally carry the heavier part of that burden if it were allocated.

Senator NORRIS. Yes, they would carry the heavier part of it

anyway.

Senator POPE. I suppose the hog producers are for this amendment?

Mr. HEARST. Yes, sir.

The CHAIRMAN. As I understand Senator Norris, his objection is that if the horses and mules consumed an appreciable percent, that consumption ought to be divided pro rata amongst all those benefited, rather than placed on one.

Senator NORRIS. Exactly. I am wondering what reasonable objection there could be to doing that very thing.