program costs incurred by the FTC but for only a relatively minor
fraction of such costs incurred by the SEC. After 1971, as noted
in the text, the entire responsibility for the QFR will reside
in the FTC.

8/ Securities and Exchange Commission, Form 10-K as amended by Securities Exchange Act of 1934 Release No. 9000, Oct. 21, 1970 (effective Dec. 31, 1970). For an extensive compilation of documents and materials on changes in "line of business" reporting requirements at the SEC, see Hearings, Role of Giant Corporations (full citation in footnote 1, above), part 1A, appendix VII, pp. 757-867. See also Alfred Rappaport and Eugene M. Lerner, A Framework for Financial Reporting by Diversified Companies, NAA Research Study (National Association of Accountants, 1969), Appendix A, "Background of Events and Issues for Financial Reporting by Diversified Companies,'

pp. 45-55.

9/ If you can't wait, you will find the beginnings of a reconciliation of the divergent numbers at page 6 of LTV's 1970 annual report, as quoted in: Staff Report by the staff of the Antitrust Subcommittee of the Committee on the Judiciary, House of Representatives, Investigation of Conglomerate Mergers, House Committee Print, 92nd Congress, 1st Session (June 1, 1970), p. 318. The staff report contains extensive and valuable discussion of and documents on LTV (pp. 316-359, 500-577), as well as other conglomerates.

10/ Federal Trade Commission Securities and Exchange Commission, Quarterly Financial Report for Manufacturing Corporations, First Quarter 1971, pp. 3, 5.

11/ Unregistered corporations of course would not be included in the SEC Directory, and the FTC does not publish a directory of the corporations included in its portion of the sample of all manufacturing corporations on which the QFR tabulations are based. The QFR sample includes 100 percent of manufacturing corporations with assets of $10 million and over and descending percentages of corporations of smaller and smaller asset sizes. See heading, "Composition of the sample" at page 58 in the QFR for the First Quarter 1971.

Senator NELSON. I would like to call to your attention for the record a study that was published more than 20 years ago by the Senate Small Business Committee. That was a study comparing the difference between two communities, one surrounded by corporate farms and one surrounded by individual farms. The study was made in 1946. I just read an excerpt from it. The study is entitled "Small Business and the Community, A Study in Central Valley in California on the Effects of Scale of Farm Operations."

I am now quoting from "The Impact of Corporation Farming on Small Business," a report of the Select Committee on Small Business of the U.S. Senate, December 20, 1969:

"The 1946 report carefully compared the economic and social life of the Central Valley communities of Arvin and Dinuba, one surrounded by independently owned and operated family farms and the other by large corporation farms. Except for the difference in size and makeup of farming enterprises these agricultural communities were nearly identical.

"Despite these basic similarities, the study disclosed some striking economic and social differences. The family farm community supported 20 percent more people at a better standard of living than the corporation farm community. It had nearly twice as many individual establishments with 61 percent more retail trade. In addition, the family farm community had more and better schools, churches, recreation facilities, civic organizations and public services."

The growth of corporate farms in those areas where they are growing, and they are spreading across the country, is destroying the small town without making an offsetting contribution in economy and productivity in the agricultural field. In fact, I think there is good reason to believe that the large corporation farm is less efficient than the optimum size individual family farm. But it is interesting to note that with a huge Department of Agriculture, with thousands and thousands of employees, so far as I can find out to this day they have not made studies to demonstrate the economies in size of operation or the diseconomies in size.

I called the Agricultural Economics Department of the University of Wisconsin, which is one of the oldest and best agricultural economics departments in the country. Interestingly enough, they had not done much in that field of study, either. I asked my economist friend would he get the data that was available. Wouldn't one think that studies would be made in this on food and fiber productivity, effects on agriculture of an accumulation of huge land holdings around the country? But adequate studies have not been made.

I think it is time they are made. One State in the Nation has had the foresight to pass legislation prohibiting corporation agriculture and that is North Dakota. I proposed legislation in my State of Wisconsin in 1968 and it has been vigorously supported by farm groups led by the Farmers Union. It passed one house of our legislature and failed in the other.

I have hopes within the next 2 or 3 years we will be able to pass that legislation in our State.

We begin now to see the ravages of large farming and irrigation in sand country, in my country now, and it is getting very late. I would hope that we can do something at our committee level to stir up some interest in legislation.

I want to commend the chairman of this committee for raising this issue along with the other issues involving agriculture and agricultural labor which your committee is considering.

Thank you, Mr. Chairman.

Senator STEVENSON. Thank you, Senator Nelson, for a very helpful statement. I don't want to intrude upon your time. I would like to take a minute to cite one example that came my way the other day. The case of Tenneco, the Nation's 34th largest industrial corporation, formerly the Tennessee East Gas Transmission Co. It can now, at least in theory, own and control every phase of a food supply system from the farming end of the food chain all the way to the retail grocery store end of the chain. Tenneco owns 1 million acres, so it farms its own acreage. It can plow its fields with its own tractors from its own J. I. Case Tractor Co., which is a fully owned subsidiary. Its tractors can be fueled from its own fuel from Tenneco. It can spray its crops from its own insecticides, and utilize its own food additives. It can process, freeze, and store its food products in its own facilities. It can pack them in its own containers, because the Packaging Corp. of America is a subsidiary. It can then distribute these fruits and vegetables to grocery stores through its own marketing system using its own nationwide label-Sun Giant.

Other giants, Del Monte, for example, are now even acquiring public ... restaurants. This is vertical integration in the food supply business. Now, the justification which you hear for corporate farming where vertical integration has taken place in the food industry is "great efficiency". I think it would be very helpful to us, Senator Nelson, if we could get some comparative figures on the efficiency of the small farmer and the corporate farmer and perhaps also some evidence of what is taking place at every step along the way, every link in that food chain. It is not only the small farmer that is threatened by the vertically integrated conglomerate in the food processing business; the retail grocer is threatened; the consumer is threatened.

You mentioned the consumer. It is not only the price which is controlled at every step along the way in the food chain; it is also quality of the food that we ultimately buy in the retail grocery store.

You mentioned strawberries. Tomatoes are developed not so much for the eating but for picking by machines. When you buy at the grocery store you buy something in the store that does not taste like a tomato any more.

Senator NELSON. When I was a kid we used to be able to throw a tomato at somebody without hurting them. Now, you can't. [Laughter.]

Mr. Chairman, I do agree with you. In the case you mentioned you see developing really classic monopoly cases, where the corporation is engaged in all aspects from the production to the distribution to the retail sales, controlling all prices and profit-taking at all levels and eliminating competition as they go along. That is a development going on in all fields in this country today.

Senator STEVENSON. The first link in the chain, the farmer end, the little farmer or the cooperative farmer-you mentioned the Cooperative Campesino in California that produced food more efficiently, perhaps with better quality, than the corporate farmer can.

Senator NELSON. We had some testimony in 1968 based on some material gathered from real estate, rural real estate operators in Minnesota. Again, I would want to check the record to be accurate on the prices given, but corporate farms were offering substantially more than 69-133 0-72-pt. 2

the going rate for agricultural land, $50 or $100 an acre, and more than the land could return to pay for its purchase."

So, it artificially drives up the price of the land. It drives it up for the individual farmer who would like to buy it because he can't pay an artificial price, he has to make a profit on it.

Then our tax structure has fixed it up so that that corporation can operate at a loss and only lose 50 cents on the dollar and make its profits on its other profitable operations. So, the corporate farmers have a couple of things going.

They are putting up unfair competition by use of the tax structure to an individual family-size farm. The corporations can afford to wait 5 years or 10 years. They are in agriculture but they are also in land speculation. With the growth of population in this country, the corporation can simply hold on, as they will in Central Valley. Those who have 50 and 100 thousand acres are entirely secure. Most of that land, with California growing the way it is, will some day be platted, lined up for industrial development, and the corporations will have had it their way all the distance, in the meantime driving out all the little people without making any offsetting, compensating social contribution to our system.

I think it is a very dangerous business that we have to address ourselves to before it is too late.

Thank you, Mr. Chairman.

Senator STEVENSON. Thank you, sir.

Senator Hughes?

Senator HUGHES. I will not delay Senator Nelson.

Mr. Chairman, both you and the Senator from Wisconsin have pointed out the fact that the quality of life in the rural America is involved and that efficiency is not the only factor we are looking for in America any more. We can prove beyond any reasonable doubt that by driving these millions of people from the farms into the cities that we have destroyed the quality of living and a way of life that has been the great attraction of what America should be and can be.

I am not simply interested in efficiency, in producing a hard tomato that tastes like something we have never known before. I am interested in what happens to the people and where they go as a result of that efficiency.

Senator NELSON. I agree with the distinguished Senator from Iowa. I raise the point because efficiency in productivity is the sole argument the defenders of corporate agriculture have. I don't think that defense even stands up. So I would not tolerate the destruction of this way of life even if it were that efficient, but I happen to think that it is less efficient and there is proof it is.

Senator STEVENSON. I raise that question as the only justification for what seems to be taking place in rural America. It appears, on the basis of evidence that we have, that it is a phony justification.

Thank you very much, Senator Nelson. We will print your entire remarks at this point in the record.

(The information referred to follows:)

1 This testimony is supported by testimony received at the 1968 hearings on corporation farming before the Senate Small Business Subcommittee on Monopoly. See summary in "Impact of Corporation Farming on Small Business," report of the Senate Small Business Committee, S. Rept. 91-628, p. 11 (1969). (Note furnished by Senator Nelson.)

STATEMENT
BEFORE THE

SUBCOMMITTEE ON MIGRATORY LABOR

OF THE

COMMITTEE ON LABOR AND PUBLIC WELFARE, U. S. SENATE

BY

SENATOR GAYLORD NELSON

Washington, D. C., Nov. 5, 1971

Not long ago the proud products of rural America were good food and fiber, free men and women, and healthy children with happy futures. There were of course exceptions. The picture had some ugly blemishes. Still, the ideal and in large measure the attainment were there, to raise all those products on the American land: the food, the fiber, and the strong, free people.

Tragic changes have occured. Today, from the vantage point of many big-city mayors, the most consequential "shipment" from rural to urban America is poor people for the welfare rolls. From the vantage point of small-town mayors, the same "shipments" mean that once prosperous communities face decay and despair.

There are many and complex causes for this American tragedy, which is still building and even accelerating. But the largest cause, I think, is the development of public policies that have equated goodness with bigness, quality with size. These policies have led to the emergence of giant corporations as the dominant force in manufacturing. Unless the policies are dramatically re-evaluated and changed, they will lead to like dominance of agriculture.

As the percentage of everything that is owned by giant corporations goes up, there is no place for the share that is left over for everyone else to go but down.

The figures on the shifts of asset ownership in manufacturing are available and familiar. The 200 largest corporations in the last 20 years have increased their share of all manufacturingcompany assets from under 50 percent to about 60 percent. That means the share of everyone else in that sector has gone down from well over 50 percent to not much over 40 percent.

Now the giant corporations are moving into agriculture and gobbling up the land. There is no way, of course, to make the total supply of land grow, and the ways that are being used to expand the use of lands for agriculture involve ecological and social costs not yet sufficiently calculated and understood. the evidence is growing that economic growth itself is more a problem than a solution.

Indeed,

I return to my first thought: our land should be used to cultivate not just food and fiber but a good culture and a happy, healthy populace. To do that, we must find ways to keep people productively and happily on the land, and reverse the forces that are driving them off. One of those forces is the movement of giant corporations into farming.

The Senate Small Business Subcommittee on Monopoly, which it is my privilege to chair, has been concerned with corporation farming for several years. At least some of the causes for this alarming development were suggested by an interim report (S. Rept. 91-628) issued by the Senate Small Business Committee, following 1968 field hearings by the Subcommittee. I shall mention a few.