AGRICULTURAL RELIEF MONDAY APRIL 5, 1926 UNITED STATES SENATE, COMMITTEE ON AGRICULTURE AND FORESTRY, Washington, D. C. The committee met, pursuant to adjournment, at 10.30 o'clock a. m., in room 326, Senate Office Building, Senator George W. Norris presiding. Present: Senators Norris (chairman), Deneen, Sackett, Smith, Ransdell, Heflin, and Ferris. The CHAIRMAN. The committee will come to order. Mr. Stealey is the first witness this morning. STATEMENT OF C. L. STEALEY, GENERAL MANAGER OKLAHOMA COTTON GROWERS' ASSOCIATION, OKLAHOMA CITY, OKLA. Mr. STEALEY. My name is C. L. Stealey. For five and one-half years I have been general manager of the Oklahoma Cotton Growers' Association, a cooperative organization of Oklahoma cotton farmers. This association during last year handled something over 206,000 bales of cotton. The legislation which we are proposing to Congress was framed by the executive committee of the American Cotton Growers' Exchange, an organization formed by the 12 cooperative cotton marketing associations of the States of North Carolina, South Carolina, Georgia, Alabama, Mississippi, Louisiana, Tennessee, Arkansas, Missouri, Texas, Arizona, and Oklahoma, these organizations all being formed on the same general plan and for the same purpose. They handle jointly something over a million bales of cotton a year. In attempting to frame this legislation we were simply trying, through the experience that we had gained, to handle the one important agricultural commodity of the South, and work out in the light of that experience the policies that have been laid down by the Government, by the dominant political parties of the Government, in order that service might be rendered as desired by the stabilization of agriculture in line with modern developments of business. In doing this we had first in mind the advantages that would come to agriculture and society in the increase in markets that might be brought about if we could get the agricultural commodities distributed in an orderly way at a stabilized price, with responsibility for the ownership and the development of these markets in the hands of intelligent and responsible powers. We believe that manufacturers of cotton products would be able to greatly increase their output if they could be assured of a normal supply at a normal price, and that this alone would not only increase the returns and the prosperity of the farmer, but would greatly increase consumption, thereby taking care of, in a practical way, a large part of what has hitherto been regarded as surplus. We have also tried to keep in mind the facts that have been so clearly developed, that there are enormous wastes now taking place in connection with the handling of cotton from the farmer to the producer, and have tried to encourage organization and legislation that would make practical the elimination of this waste which, we are told by those best qualified to speak, amounts to something like 25 per cent of the total price paid by consumers of raw cotton. In considering the whole agricultural problem I am not prepared, nor are my associates in the American Cotton Growers' Exchange, to speak with reference to details of crops other than crops. In attempting to suggest legislation by which these purposes, as proclaimed by the Government and the two political parties as being fundamental, we have first provided for a form of control of the handling of the surplus or temporarily unneeded crop, so that it would be responsive to the interests of the producer. You have before you this tentative draft of a proposed bill. It provides first for the formation of a Federal farm council which would be an advisory council only to assist and encourage the assembling of information and to see that this information is properly distributed to the public. This council would be created by the responsible farm organizations in the 12 Federal land bank districts, five members of the council selected from each district, four of whom only have been selected by the farm organizations, the fifth one from each district to be appointed by the Secretary of Agriculture to represent the interest of society in general. So that agriculture, if it were to become dominant, would not be in a position to outrage the rest of society. This council would serve without salary compensation, meeting twice a year at the call of the Secretary, and drawing a per diem for the time given to the work of the council. The chief work of the council would be the nominating of men to be appointed by the President, with the approval of the Senate, to act as a Federal farm board, three men to be nominated from each one of the Federal land bank districts, one of whom would be appointed by the Preisdent. This Federal farm board would have power to administer the law that would be passed, would have power to determine the existence or prospective existence of an excess supply of any agricultural commodity over the likely immediate needs, and after a period of three years, with reference to corn and cotton, to declare an operation period, and to set up an equalization fee, so that the cost of stabilizing the price and the cost of the merchandizing of the temporarily unneeded part of the crop would be borne by the producers of the commodity itself. The bill sets up how the board may assess this fee and how it may be collected. Because of the immediate difficulties in connection with putting this system in operation, the bill would provide that for three years from the date of passage an equalization fee would not be applied to cotton or corn. Senator HEFLIN. That is an amendment that is to be offered? Mr. STEALEY. That is an amendment that is to be offered. It would provide, with reference to wheat and livestock, that an equalization fee might be applied at any time after the creation of the board. This fee will be determined by the board in the light of the present or prospective excess of supply and collected under regulations laid down by the board on the first sale or processing of the commodity. I think it is generally agreed, in the case of wheat and livestock products, that the fee would be collected at the packing plant or at the mill. With reference to cotton, which would not be applied for three years, the first processing is at the gin, and if and when the fee is collected on cotton it would probably be done at the gin or at the first sale. That is because of the difficulty in working out the detail of the plan; because it is a new policy it was thought that three years had best be given for the study of the plan, perfecting the machinery for carrying into effect and for consideration of the program by the farmers and others interested before it would be applied at all. With reference to corn, I am not prepared to speak except to call your attention to the fact that only a comparatively small part of the corn actually goes into commerce as corn, and it is likely that the stabilization of livestock markets would, in the long run, take care of most of the difficulties in connection with the marketing of corn. The bill provides that when the board has determined that there is necessity for the stabilizing work of the board, and it has declared its operation period, it shall set up an equalization fund, into which the moneys collected from one of the major agricultural commodities on which an operation period had been declared shall go, and the commodity shall be operated, so far as funds are concerned, absolutely independent of the other commodities, any losses or profits suffered or gained in each case being suffered or enjoyed by the individual commodity. The bill also provides that after the board has determined that the equalization fund for any commodity has reached the point where the commodity is properly financed for orderly marketing and distribution of the whole of the supply according to demand, and that the further collections on that commodity are likely to take care of the further needs, the board may, in its discretion, retire—it first provides that the board may issue participating receipts at the collection of this equalization fund, of serial numbers, and then it may, when it has determined that the requirements of the board are properly financed for that commodity, it may, in its discretion, provide for the return to those holding the receipts of a percentage of what has been paid in, that percentage to be determined by the value of the assets of the equalization fund for that commodity as compared with the total payments in the equalization fund for that commodity, these participating receipts to be retired under this percentage rule in the order of a serial number. The CHAIRMAN. Is there any provision made, in case the board does issue participating receipts, that the person to whom they are given shall in turn divide them up among those who have produced the commodity? For instance, you issue a participating receipt to a miller who has bought a lot of wheat, and has originally, when he bought the wheat from the farmer, deducted the amount fixed by the board, and you would give him back a part of that money which |