volume of consumption is not so great. Consequently, we have in the present system a tendency to retard volume distribution, and a further tendency to maintain high prices in respect to the particular clientele that is purchasing these commodities, from the interests mentioned.

I would like at this point, in order to save the time of the committee, to introduce a very brief statement which I prepared for another purpose, of the progress of the farmers' cooperative societies in meeting just this problem:

From coast to coast the cooperative movement is surging; it is in fact an agrarian revolution. Its progress registers a general discontent of farmers with the antiquated system of distribution. It reflects their efforts to devise more efficient plans of pumping commodities through the arteries of trade.

This "revolution" differs profoundly from the political revolt in the Dakotas. That revolt had its springs of inspiration in the thought that the State can do much for farmers in the way of marketing and manufacturing their products. Not so with the cooperation revolution. It carries the doctrines of self-initiative, or democratic control over their own affairs, and of thrift. "Let us do it ourselves," is the slogan of every cooperative movement, whether it be in Ireland, Siberia, or America.

For 15 years I have been watching the growth of cooperative movements among the farmers of the United States. I have seen them. creep along simultaneously in different sections of this country. I have noted that although the visible form of cooperation may differ, the fundamental principles have been present in every successful enterprise.

In 1889, when Sir Horace Plunkett was organizing creameries and credit societies in the Emerald Isle, citrus growers around Riverside and Pomona in California were making pioneer attempts to found a cooperative movement. A few years later farmers of the Middle West began their fight to gain the local ownership of the elevators that handled their grain. About the same time came the drive to establish farmer-owned creameries and cheese factories. In later years growers of various districts formed marketing associations to handle fresh deciduous fruits and canned fruits, vegetables, cheese, and fluid milk.

In those early days farmers called their associations "cooperative," but they were not really cooperative as the purist knows the cooperative principles. They were joint stock companies, in which farmers owned the stock, or nearly all of the stock. Until 1911 there was no legal basis for Rochdale cooperation. In that year Wisconsin led off with a law devised by the late Dr. Charles McCarthy and modeled after the cooperative acts of Great Britain. Under its terms the word "cooperative" was denied to a corporation unless it were organized on the one-man-one-vote basis, and complied with certain provisions to safeguard its membership. These provisions included limitations as to the amount of capital stock that could be used for promotion purposes, the building up of a reserve, the division of profits on the basis of patronage after allowing an interest dividend on capital stock and publicity as to its balance sheet.

A number of States have followed Winconsin's lead and thousands of farmers' companies have transformed themselves into genuine coop

eratives. Other thousands are preparing to do this. Meantime the need of efficient marketing had forced farmers to band themselves together around a single commodity. Thus cooperation stepped out. of its community stage of development. Our citrus fruit friends pioneered the grouping of local associations into a central selling agency. They formed the California Fruit Growers' Exchange and established distributing agencies in various parts of the nation. Later they extended their distribution to cover some foreign countries.

This move at once brought them up against the Federal restrictions, the Sherman antitrust act and the Clayton amendment, and worked a serious hardship on cooperative associations. The reason for this is that farmers must begin at the bottom and put their units together, while a large corporation may do the reverse by establishing branches and still be within the law.

To meet the technical difficulties produced by this cumbersome legislation a new type of cooperative organization was advanced and first used in California. It is called the nonprofit corporation. In its essentials it does not differ materially from the Wisconsin or Rochdale type of cooperative, but it does very materially as to form. Instead of a farmer owning stock, he possesses a membership certificate, although the value of his certificate may vary, let us say, according to the number of orange trees in his grove. Still the certificate of membership does not draw interest or pay a stock dividend. The nonstock corporation, after deducting its costs of operations, pays back to its member growers every cent received for the produce sold.

And in this section, also, there first started in America the custom of pooling products for a common price. The growers agree on a certain period over which a pool operates. It may be a month or it may be a season. During that time each grower will receive the same average price for his products by grade and class, modified only by freight differentials. The custom is rapidly spreading to other parts of the country and in time may embrace nearly every commodity that farmers decide to handle cooperatively. It has been adopted by some of the northwestern apple associations, by the reorganized milk association at Portland, Oreg., and the newly formed wheat growers' corporation in Washington State, by the Michigan Potato Growers' Exchange in a modified way, and it will be incorporated on a voluntary basis in the new wheat selling agency which the Farmers' Committee of Seventeen has advanced. This agency, which is known as the United States Wheat Growers' Incorporated, will attempt to serve as a central selling agency for the nearly five thousand local farmers' elevators of the nation. The pooling principle has been put into practice by the Milk Producers' Association of the Chicago District and was started on a large scale by the Dairymen's League of New York State on May 1, with nearly sixty thousand farmers signing the contracts and the pooling agreements.

Still the status of agricultural cooperation is by no means clear. The legal mind judges acts only in an arbitrary relationship to statutes. It makes small allowance for the attendant circumstances of economic necessity. The popular mind has some difficulty in distinguishing between an agricultural monopoly and an industrial monopoly. The average consumer has had instilled into him a fear of a farmers' trust. He does not realize that farmers can

never maintain a monopoly. Acute problems facing the California Raisin and Prune Growers' Associations graphically illustrate this truth. Profitable prices for several years have resulted in a phenomenal increase of acreage in those sections. That acreage is now so large that the nation may soon reach the point of "prune and raisin saturation." In other words, farmers' associations have no way of controlling production. This increased acreage throws additional burdens upon the distributing agencies. The greater the volume to be handled, the harder it is to secure profitable prices, and the more pronounced the tendency for prices to fall.

Of course, if net returns to growers should fall below their cost of production in a series of years, they will automatically change to other crops. But they will also become dissatisfied with their sales agency. Hence the problem facing the management of such an association is to bring about an even flow of its goods into every city and hamlet so that the public will consume readily at prices which will move the products freely. That signifies a reduced margin between producer and consumer.

In this class belong almonds, English walnuts, dates, grapes for beverage purposes, and citrus fruits. They constitute crops which can not be produced in every part of the Nation. Yet we see how difficult it is for their cooperatives to maintain price control. It is even more difficult when we consider the great staple products where world influences determine price. Such products are wheat, corn, rye, oats, barley, milk, butter, cheese, and cotton. Price control is indeed impossible. Yet the popular mind is full of wild fancies of a farmers' trust, and prosecutions of farmers' organizations have been attempted in several States and even in the Federal courts.

Efforts of fluid milk producers to market their products cooperatively in metropolitan centers have met with greater resistance than any other movement. This has been because of some sentimental ideas in regard to milk. It is of course the most essential article of diet, especially for children. But its high food value has often been lost sight of in agitation over the shifting of the price per quart. City consumers have rarely known the truth about milk farmers' problems. The loyal trade unionist, for example, who gets sore because the milkman advances his price a cent a quart, would be surprised to know that farmers have been working on an organization problem identical with that which he faces in his union. Until a few years ago, and even now in some cities, the farmer had individual dealings with the city distributor. He made his contract in person or shipped his milk according to the price announced from time to time by the dealer or the condensory or the cheese and butter factory in that district. This gave the dealer a favorable position in price determination; and often the dealer made the most of his opportunities. In many communities the prices they offered farmers for milk were so low that producers had only two choices if they remained in business; either they must sell their cows or they must organize to narrow the spread which the dealer absorbed in distribution.

Around the metropolitan areas farmers chose to organize. They began as collective bargaining organizations. They selected committees to sell the milk for them to the dealers. Sometimes they incorporated their associations. Sometimes they did not. The dealers resisted this move. Resistance brought with it the famous.

milk wars. New York, Boston, Chicago, Cincinnati and other great cities at times have had their milk supply temporarily curtailed. These milk wars happily are over in most parts of the country. Their occurrence marked a phase of necessary organization; they were unpleasant, but the organization of producers saved the cities from a more serious problem, namely, a permanent shortage of milk supply.

These primitive collective bargaining associations quickly underwent radical changes to insure permanency. They incorporated, generally on the nonstock basis. They enlarged their purposes to include operation of manufacturing plants and even to retail distribution of bottled milk. Some of them consider that the best way to avoid future troubles is gradually to take over the plants and wagons of the dealers to whom they now sell and split with consumer whatever margin of profit the dealers are taking and the great saving that can be expected in distribution.

Perhaps the most interesting development in this field is the application of the pooling plan to organization sales. It is a much more difficult proposition to pool the milk of a large territory like that which the Dairymen's League of New York State serves, than to pool potatoes or citrus fruits. The reason for this is that farmers in that area must sell their milk not only for city consumption but also for manufacturing purpose. Now the price of milk for butter and cheese or for condensing is made as a result of many influences other than those which determine the price of bottled milk. As a rule the price of the latter is a little higher. But the pooling theory, adopted by Portland, Chicago, and New York dairymen is that "milk is milk.” They ascribe an interrelation and dependency of interests among farmers, irrespective of whether one farmer's milk goes to a bottling plant while another's goes into the making of tinned milk. In New York territory they began this pooling May 1. It will affect more than 80,000 producers. Already nearly 60,000 have signed contracts to enter the pool.

In their program of organization the dairymen especially have been subjected to prosecutions. They have been indicted both in State courts and in Federal courts, but in every case the good sense of the judge or jury has gained them victories. But costs and troubles incident to such prosecutions have caused farmers everywhere to demand that the Congress pass a constructive act to authorize the formation of agricultural cooperative associations to do an interstate business, and to provide a procedure whereby they can be given a chance to mend their ways prior to criminal prosecutions should they in some way transgress the law.

Organized fluid milk producers now number over 300,000. Twenty-one of these organizations in the last year separately marketed over $400,000,000 of products for their members.

Leaders of the National Farmers' Union estimate that their membership are interested in buying and selling organizations which did a combined turnover of $2,000,000,000 last year.

The Farmers' Union Livestock Commission Co. at its Omaha, Sioux City, and St. Joseph offices in 1920 sold for its patrons 6,913 cars of livestock valued at $16,026,547. The Denver house of this organization sold 1,474 carloads valued at $1,968,955.35. Various authorities estimate that the combined turnover of farmers' cooperatives in Kansas last year was around $200,000,000.

There is need for accurate information as to the progress of this movement. Unfortunately the Bureau of Markets of the United States Department of Agriculture has not given the attention to this subject which it deserves.

The California Fruit Growers' Exchange in the year ending October 20, 1920, marketed 34,461 carloads of citrus fruit valued at $60,000,000 to the growers and $81,200,000 on eastern markets. In the past 17 years that exchange has handled $376,000,000 worth of sales. It did this at a cost of 6.65 cents per box or 1.35 per cent of the delivered value. Its purchasing department bought for the members almost $8,750,000 in supplies. The operating cost for this department was $1.34 per each $100 of supplies purchased.

The Michigan Potato Growers' Exchange in 1919 marketed 2,118 carloads of potatoes for its members besides many cars of other products. This represented 20.6 per cent of the State crop and represented a value of $1,808,946.74 as shown by deposits in the bank.

The Wisconsin Cheese Producers' Federation, consisting of 175 locals in the eastern part of that State, in 1919 marketed 14,098,021 pounds of cheese worth $4,243,938.56 at a cost of 1.4 cents in the dollar of sale.

In 1918, 643 of Minnesota's cooperative creameries made 132,874,546 pounds, valued at $63,467,652.77.

No one knows the number of local cooperative societies in the United States. Any estimate would be a grand guess. There are probably 20,000. Of these, there are between 4,300 and 5,000 cooperative elevator companies, nearly 1,375 creameries, 4,000 cooperative live-stock shipping associations, and a multitude of local societies of a miscellaneous character handling fruit, vegetables, and doing a purchasing business.

Local cooperatives are forming faster than any governmental statistical bureau is now keeping track of. These locals are anxious to take the next step and federate for central selling purposes. Within the past year a number of district wool pools have been formed. In other districts the tobacco growers have been perfecting their organizations. Down in the south peanut growers are forming around the factories. And from the cotton sections comes word of a new effort in organization. There several States have organized to form State selling agencies and to establish warehouses.

The really significant fact about it all is that the pressure of economic conditions and the need of farmers to increase the consumptive demand for their products is causing them to strike out into new fields. There will be failures and there will be successes. In the end cooperative effort will become standardized and we will accept it as an integral part of the common life.

It will not, in my judgment, dislocate the business world. Rather will it increase the turnover of merchants and manufacturers. For successful marketing will mean, without doubt, an increased purchasing power for the farmers wherever they do succeed. The future will find among us very many of the "one-vote" fellows who believe in democracy. But this necessitates a clearly defined legal basis for such activities as may be needful and proper.

In their effort to solve this problem of obtaining the widest possible distribution of their commodities at a reasonable price it has been necessary for our people to devise a type of organization which until