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Mr. HOLMAN. May I call the witness's attention to the fact that the bill does not give the Secretary of Agriculture any power whatever to fix prices. It is only by definition, when the Secretary says a price is unreasonable.

Senator Walsh of Montana. What power does it give to the Secretary?

Mr. HOLMAN. In my opinion, the bill authorizes the Secretary, upon complaint or upon his own initiative, to cite an organization to come before him and to determine the question as to whether a price is unreasonable. The Secretary has the power to say that a price is unreasonable, but he does not under this bill have the power to say what the price shall be.

Senator Walsh of Montana. Then the price is fixed on raisins at 15 cents a pound, and the Secretary finds that that is unreasonable and enjoins them from charging that price; and then they fix a price of 141 cents a pound, and then anybody may complain that that is unreasonable, and have another hearing; and then finally they get down to 12 cents a pound, and the Secretary now finds that that is not unreasonable. Then has he not fixed 12 cents as the price that is reasonable?

Mr. Holman. Yes; by making it a definition.

Senator WALSH of Montana. So, what is the difference? It means that there is going to be a series of hearings until a reasonable price is arrived at. We have had that experience with the Interstate Commerce Commission. That was the way it worked there. They were originally given power, not to fix a reasonable rate, but to determine that rates were unreasonable, and they determined that the rates were unreasonable and new rates were fixed and then complaint was made that the new rates were unreasonable, and so it went on, indefinitely, until it was found impossible to determine it, and they found they could not get around that difficulty, so they gave the Interstate Commerce Commission the power to fix the rate.

Really, in effect, what is the difference between giving them the power to say that a certain rate is unreasonable, and giving them the power to say what rate is reasonable? By a series of hearings they can reach that result.

Mr. HOLMAN. The analogy hardly applies in the case of a cooperative association, because of the fact that our organizations are so much smaller, and we are very desirous of avoiding unnecessary expenses such as are incurred in litigation.

Senator Walsh of Montana. But you are apt to have repeated expenses

in one case. You may have not only one trial, but you may be brought up a half a dozen times on the same case; whereas under the other condition you are brought up only once. So far as the item of expense is concerned, it would be less expensive to give to the Secretary the power to determine the price than to determine that the price fixed by you is unreasonable.

Mr. HOLMAN. That might be true in one instance, but to give the Secretary the power to fix the price on any product handled by any cooperative, would entail a price-fixing power to the Government on eventually every farm product. There would be no end to it. Consequently, we are of the opinion that the Government must take somewhat upon trust the desire of the cooperatives of the country to act fairly, and we believe that one reprimand will be quite suffi

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cient to cause any cooperative to change its ways, if it were going wrong

Mr. LINDSAY. May I be permitted one word along that line, Senator

Senator WALSH of Montana. Yes. Mr. LINDSAY. I heard the discussion the other day when Judge Miller was testifying. Assuming that the bill does not give to the Secretary of Agriculture the right to fix prices—which I am not prepared to concede, but assuming that that is true then theoretically think that your argument is unanswerable.

But, practically, I do not think it is of very great importance. Take, for instance, our company, the California Associated Raisin Co., as an example. We are under the bill and are subject to its provisions, and the Secretary of Agriculture determines that a hearing should be had as to whether or not we are charging too high a price for raisins. He holds that hearing and comes to the conclusion that

Assuming that he has no right to fix a price at which we shall sell raisins, undoubtedly he does have the right to make an order which restrains us from doing that which brings about that condition. There can be no question about that at all. He can make his findings in that regard; and he finds that because we have, under contracts with the growers in the San Joaquin Valley, obtained 93 per cent of the raisin crop, we have arrived at that monopolistic stage when we not only can enhance but have undoubtedly enhanced the price of raisins.

Now, logically, what is his order going to be on those findings? His order is going to be that the conditions which prevail, which bring about this fixing of high prices, shall cease, and the only logical order that he could make would be to restrain us from further carrying on our contracts. Is that true?

Senator Walsh of Montana. Suppose you have an organization under which everyone agrees to turn in his crops. Everyone is a member. He simply agrees with you to turn them in and let you handle them. In other words, the guaranteed price you make in your contract is not a feature of it at all. Now, what is he going to do?

Mr. LINDSAY. That agreement in itself is a contract. It is contractual in its nature.

Senator WALSH of Montana. That would not be a dissolution of the corporation.

Senator DILLINGHAM. How many interests desire to be heard by this subcommittee?

Mr. HOLMAN. Mr. Chairman, I understand that there are four or five large farm organizations who have representatives here who desire to be heard.

The CHAIRMAN., How much time will they require ?

Mr. HOLMAN. I think that one session would be enough to cover them all, for them to state what they desire.

Senator DILLINGHAM. Then we will take a recess until to-morrow for that purpose.

I offer for the record a letter received by Senator Nelson from Senator McNary, in regard to an amendment to the bill S. 983.

I also hand to the reporter, at the request of Senator Norris, a letter received by him from Hon. Henry C. Wallace, Secretary of Agriculture, in regard to H. R. 2373.


(The letters referred to are here printed in full in the record, as follows:)


June 8, 1921. The Hon. KNUTE NELSON,

Chairman Judi iary Committee, United States Senate. MY DEAR SENATOR: The Wholesale Grocers' Association of Oregon has asked me to call to your attention its desire that the following amendment be made to S. 983:

“This act shall not be construed to exempt such assoriations or their members for violations of any statute of the United States nor to deprive the Attorney General of authority thereunder." Very truly, yours,



Washington, June 4, 1921. Hon. G. W. NORRIS, Chairman Committee on Agriculture and Forestry

United States Senate. DEAR SENATOR NORRIS: I have your letter of recent date in which you bring to my attention a copy of H. R. 2373, which has passed the House of Representatives, and ask for my views on this bill in particular, and, in general, upon the subject which it covers. Apparently, this is about essentially the same measure as S. 983, concerning which I wrote you at your request on April 30 last. I asked the solicitor of the department to give me his opinion on the legal questions covered by the bill. He advises me that he does not find anything in this bill that will permit agricultural associations to do any of those acts forbidden by the anti-trust laws and that, apparently, the only purpose of the bill is to free cooperative associations from the implied restrictions contained in section 6 of the Clayton Act and by thus freeing them putting them upon the same basis as corporations and associations engaged in any other line of business.

As the bill passed the House, it would not authorize an association of agricultural producers to engage in unlawful restraints upon trade or to form monopolies or to do any other things forbidden by the anti-trust laws. It simply permits farmers to form cooperative associations, with or without capital stock, for the purpose of collectively processing, preparing for market, handling and marketing in interstate and foreign commerce their agricultural products, and it authorizes such associations to have a common marketing agency,

The propriety and desirability of removing any restrictions which stand in the way of farmers organizing such cooperative associations must be apparent to any one who has made even a superficial study of our present systems of marketing farm crops. While many intemperate statements have been made as to excessive arges between the producer and the consumer, it is evident that our present system of distributing farm crops is more costly than it should be, and it is to the interest of both the producer and the consumer that unnecessary costs be eliminated. The organization of truly cooperative agricultural associations should result in more efficient methods of marketing and should, therefore, not only be permitted but encouraged. The fear which some people seem to entertain that such legislation as this might enable farmers to create a monopoly or unfairly advance prices of farm products is groundless, in my opinion. Any effort which even promises to result in the creation of monopoly or in the establishment of an unfairly high price would break down of its own weight through the inevitable stimulation of production beyond the point of normal consumption.

It seems to me, therefore, that the enactment of some such legislation as this is highly desirable and will result in benefit to consumers as well as producers. Very truly, yours,


Secretary. (Thereupon, at 1 o'clock p. m., the subcommittee adjourned until to-morrow, Friday, June 10, 1921, at 10.30 o'clock a. m.)

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FRIDAY JUNE 10, 1921.


Washington, D. C. The subcommittee met pursuant to adjournment, at 10.30 o'clock a. m., Senator William P. Dillingham presiding:

Present: Senators Dillingham (chairman) and Walsh of Montana.



Mr. SILVER. Mr. Chairman and Senators: I am speaking to this bill. I wish to say that this cooperative marketing measure is most important and very vital to the agriculture of the Nation; and when I say "to the agriculture" I think not only of the production but of the distribution and the carrying to the consumer at a reasonable price of the products of the farm.

The method of distribution has gotten to the place that the farmer is unable to produce and sell at a cost that will enable him to stay in business. Unless there is some remedy of present conditions, the result will be most unhappy to the Nation.

The records show at this time that many carloads of agricultural products are going through the old method of marketing on the principal markets of the country, principally New York, and selling for less than the railway freights. That kind of distribution makes very unhappy situations.

You have had testimony here as to the details of the bill and the practical application of it, so I want just to say that the American Farm Bureau Federation—and that means all the groups. of our organization, the county organizations, the State organizations, and the Federal organization--are wholeheartedly behind the passage of this bill, earnestly asking Congress that they do, without an unreasonable delay, pass this measure, and that when passed it be passed without harmful amendments. We were most unhappy last winter when it died in conference, owing to amendments which we believed would be nullifying; and we will ask you now not to do the things to the bill that will prevent it from being the useful thing that we hope to use it for, namely, cooperative marketing.

Senator DILLINGHAM. Now you come to the crux of the question. It would be a great accommodation to this committee if you would take up the disputed points in this bill, those that have been under

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