cherries, maple sirup, maple sugar, butter, milk, cream, flaxseed, fresh tomatoes, canned tomatoes, tomato paste, onions, peppers, eggs, and egg products.

That shows the wide interest of our people in provisions raising the rates on their commodities; and that same indication is reflected now and was reflected over on the House side weeks ago in raising rates on agricultural products by revision. There are two methods, our membership is well cognizant, of rebuilding rates-the flexible method and the revision method; the first being by the Commission; the second being by Congress.

We must state that the flexible provision as in the act and, to a certain extent, as in the bill, does not allow that ease of changing the rates which we desire. In other words, instead of eliminating the flexible provision we want to make it really true to name-flexible in fact; and to make it flexible would like to have incorporated in the language of the bill that this committee reports, among other things, these ideas or devices

Senator SHORTRIDGE. Addressing yourself to section 336 now? Mr. GRAY. Yes, sir; section 336 which was section 315 in the act. In section 315 of the act, and not so much so in section 336 of the bill, too much dependence in gaining flexibility is put upon cost of production. In other words, to get a flexible change in the rate up or down we have had to prove that the cost of production here and the cost of production abroad differed enough to justify a 50 or a 25 or any other percentage of increase or decrease within the 50 per cent limitation.

The fact of it is that it is difficult sometimes, even in our own country, to get the cost of production, although that is not superlatively difficult; and when we go to foreign countries and try to get their costs of production we are in an almost impossible condition.

We want a flexible provision to be so drawn that competitive conditions here and abroad shall be more of a determining factor whether the rate shall be up or down than merely cost of production. In other words, we want to relegate cost of production very largely down towards the end of the factors determining rates up or down and let competitive conditions be the yardstick as to whether a rate should be increased or should be decreased.

Senator REED. Will you describe what you mean by competitive conditions?

Mr. GRAY. Yes. Just merely to state in the law, Senator Reed, that competitive conditions should be the determinator or the yardstick would put the Tariff Commission and everybody else to interminable difficulty in interpreting that. Competitive conditions should be defined by some such language as is in our brief; and I will summarize it as follows:

When the foreign value plus the duty and transportation costs is lower than the domestic value of a like or similar domestic article plus transportation costs, there is one measure to ascertain whether you have competitive conditions.

Another is this. When the price to producers in the principal competing country plus the duty and transportation cost is lower than the cost to the domestic producers of a like or similar article, plus transportation cost.

A third measure, to answer your question, Senator Reed, is that when the stated price commonly known as the price including cost, insurance, and freight, of the imported article at the principal port of entry plus the duty is lower than the American selling price of a like or similar article plus transportation to that principal port of entry.

And there is a fourth yardstick which will be a determinator if you should incorporate some such language as this in the forthcoming act to show what are the competitive conditions; and that is, when the wholesale selling price of an imported article after payment of the duty is less than the wholesale selling price of a like or similar article in the domestic market at the same period of time.

Senator REED. You would allow the President to use his judgment if any one of those factors were present in regard to raising or lowering the duty?

Mr. GRAY. Any one of those would be an indicator of a competitive condition here and abroad; but not the President so much as the Tariff Commission would use any one, any two, or any three or four of those yardsticks to determine if and when competitive conditions exist.

Senator REED. Have you considered the constitutionality of that? Mr. GRAY. Yes. In what way do you mean, though, Senator? Senator REED. As to whether that is not a delegation of the constitutional power to tax that is given us by the Constitution.

Mr. GRAY. We are not advocating that the Congress of the United States, which by the Constitution is the revenue-raising body, shall surrender any of its constitutional powers; but we are advocating that as in the Interstate Commerce Commission where you have delegated to that commission the freight and passenger rate proposition subject to your review always, that you delegate in this instance the tariff-making rates to the Tariff Commission, subject to your review, the determining body, in each and every instance. Surrender nothing, but delegate an authority and a detail which the Congress of itself can not attend to.

The CHAIRMAN. You would not let the President, then, decide? Mr. GRAY. Our position on the flexible provision is this, Senator Smoot, that instead of giving the President more power-and I will give this explanation now rather than putting it later in my plan as I intended to-rather than giving the President more power under the flexible provision, we would absolutely remove him and let the Tariff Commission be not only a fact-finding body, but the determining body, subject to the Congress, in these rates, just like the Interstate Commerce Commission is with regard to freight and passenger rates; like the Shipping Board is, or the Fleet Corporation, in maritime rates; like other governmental bodies have been in other instances, delegated by Congress as an agent to do a particular thing, subject to review by the determining body; that is, the Congress.

We want to take the President out of this picture absolutely, because it is physically impossible for a President of the United States to review accurately the many things which the Tariff Commission. will lay on his desk if this flexible provision in this detail is carried forward, because the Tariff Commission being continued, as we have reason to expect it will be, in years to come will have many times as

much work under the flexible provision as it has had down to date; and the President can not give his personal attention to those things. The Tariff Commission, if it should be made a determining body subject to review by Congress, of course, as well as a fact-finding body, would have the same powers that these other Federal bodies have in regard to other rates.

Does that answer your question?

Senator SIMMONS. You would give them the sole control over rate-making as is given the Interstate Commerce Commission?

Mr. GRAY. A similar power and authority, yes, Senator Simmons. Senator SIMMONS. Under that control of rates by the Interstate Commerce Commission we have the highest freight rates to-day that we have ever had in our history.

Mr. GRAY. Yes.

Senator SIMMONS. And, in a great many instances, the most unjust. and discriminatory rates that ever were made?

Mr. GRAY. You are right.

Senator SIMMONS. And notwithstanding our experience in that particular, you would have us turn over to this commission the power to fix rates, giving them the same broad power and finality that is given to the Interstate Commerce Commission?

Mr. GRAY. Yes; but if the Tariff Commission, as is the case in your statement relative to the Interstate Commerce Commission, should become too much one-sided in its determinations and that one-sidedness is not corrected, the fault then lies with the determining body, which is the Congress of the United States.

Senator SIMMONS. Let me call your attention to another phase of the proposition. You would authorize them to investigate and determine which one of the several methods of testing competition should be selected, but you would require them always to make that comparison, for the purpose of determining whether competition is there or not, with the selling price in the United States?

Mr. GRAY. I believe that is true according to the summary I gave here a while ago.

Senator SIMMONS. Regardless of whether that selling price is a fair price or an extravagant and confiscatory or trust-controlled rate.

Mr. GRAY. May I offer this explanation before you finish your question, please? The matter of competition in making the American selling price might be our safeguard.

Senator SIMMONS. Do you not make the American selling price, without regard to whether it is a fair or just price to the American people, the absolute standard upon which you are to test this question. of competition?

Mr. GRAY. The brief which we filed, Senator Simmons, in our first appearance before this committee on valuation, brought up this same question which you have in your inquiry of this moment. In that brief we, for the Farm Bureau, took a position in favor of the domestic basis of valuation which is, as defined then, to ascertain value on the domestic wholesale selling price.

Senator SIMMONS. But what I want to ask you is, do you want to give the commission at the same time you give them the power to fix the price of the foreign product, the power to determine whether the domestic price is a fair price?

Mr. GRAY. Yes.

Senator SIMMONS. Does your proposition involve that? They are to determine whether it is a fair and just price to the American people, a standard of price that ought to be maintained by the Government through legislation, price fixing?

Mr. GRAY. Some function of government must have the power, either the Congress itself, which it is now exercising in forming this revision, or some commission like the Tariff Commission must have the power and authority to find what the domestic value is. I do not see how you are going to get away from that in determining rates. Senator SIMMONS. I understand that. You want them to find what the domestic selling price is, and I am insisting that if your proposition be adopted it should also provide that they should ascertain for the purpose of working out a solution of this problem whether the American selling price which they are trying to protect is a fair price to the American consumers. You have not included that in

your statement of a little while ago.

Mr. GRAY. I would expect, Senator Simmons and gentlemen of the committee, that the language along this line, if the committee desires to go the way the Farm Bureau is recommending, would include some such terminology as to describe this American selling price or this domestic value to be a fair selling price or a fair value. Senator SIMMONS. In other words, they should fix the price at which the American product should be sold?

Mr. GRAY. It would be merely an ascertainment of the price after competition fixed it.

Senator SIMMONS. And then it should determine what would be a fair American price?

Mr. GRAY. They should have that power and authority. But it is merely the ascertainment of the price after it has been fixed by competition.

I have referred in answering Senator Reed

Senator SIMMONS. That would be about the broadest power that this Government has ever conferred upon a commission.

Mr. GRAY. No broader, I believe, than you have already conferred upon the Interstate Commerce Commission or upon the Shipping Board.

Senator SIMMONS. I think it is. But go ahead. I do not want to interrupt you too much.

Mr. GRAY. Owing to our two years experience with this flexible provision in many cases before the Tariff Commission, we want as many steps taken out of its flexibility as can be taken out by legislation, and we would, rather go before a commission like the Tariff Commission, knowing that that commission is not only a research body, but a definitive body as well, subject to review by Congress, so that whenever we have made our case or failed to make it, the Tariff Commission has the determination in its own power

Senator SIMMONS. Let me ask you another question.

Mr. GRAY. Let me conclude my thought, Senator.
Senator SIMMONS. Yes; certainly.

Mr. GRAY. Whereas, under the present system, if we have to go before the Tariff Commission, not only agricultural people but industrial as well, feeling that the commission makes recommendation to the President, the President not having time to study the proposition, and giving a determination in most cases identically in line with what

the commission reports, anyhow, it just adds another point of delay and brings in the political element much more than if we could have a non-partisan commission sitting upon these different questions.

Senator SIMMONS. Suppose, then, it be conceded that we would give the commission no broader powers than we have given to the Interstate Commerce Commission, I wish to ask you as a representative of the farmers, has the Interstate Commerce Commission worked out its freight rate proposition to the satisfaction of the farmers of this country?

Mr. GRAY. No.

Senator SIMMONS. In assessing the value of railroads have they made an assessment of value of railroads for the purpose of determining rates that is satisfactory to the farmers of this country?

Mr. GRAY. We are constrained to believe that the valuation of the railroads contains a lot of water-that is, their valuation is too high.

Senator SIMMONS. That is the result of the commission's work in fixing the valuation of railroads.

Now, in fixing the valuation of rates this same thing has happened, has it not, that has been very unsatisfactory to the farmers?

Mr. GRAY. That is very largely incident to the question of valuation.

Senator SIMMONS. But you are evading the question.

Mr. GRAY. No; I do not think so.

Senator SIMMONS. Has not the determination of rates or the fixing of the values upon which rates are to be based by the Interstate Commerce Commission been wholly unsatisfactory to the farming interests of this country?

Mr. GRAY. Not wholly, but to a great extent they have been unsatisfactory.

Senator SIMMONS. I will accept your qualification. To a very large extent?

Mr. GRAY. You are right.

Senator SIMMONS. That is, they are complaining that justice has not been done them, that justice has not been done the people of this country and that that system has not worked satisfactorily at all?

Mr. GRAY. But my query reflecting the thought of our membership as expressed in resolutions from 1922 down to and including 1928, not in rebuttal, but in connection with the discussion now going on, is, How much better would the rates have been handled if the President had been the determining factor and the Interstate Commerce Commission had been compelled to refer its own findings to the President? Would not the result have been the same? In other words, by the Tariff Commission acting under the flexible provision of the act of 1922, with the President being in the picture, has that been any safeguard in any way toward protection of the American people? Would it have been any safeguard in the Interstate Commerce Commission if the President had been the determinator rather than the Interstate Commerce Commission?

We think it would not have been a safeguard any more than to let the commission itself do this work. And then, frankly, as I said a while ago, gentlemen of the committee, if the Interstate Commerce Commission, if the Shipping Board, if the Tariff Commission run out of bounds in their determinations, the authority which created them,