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Senator WALSH of Montana. No, but under the act. The prosecution, I have suggested, is brought under the Sherman Act, and they answer We are protected by this act." "Yes," the answer will be, "but that gives the protection only to corporations which are organized by persons who are primarily engaged in the production of agricultural products.
Mr. LYMAN. I think that difficulty could be obviated by having it provided in the articles of incorporation, or in the articles of association. I think that the declaration of the character of the members would be prima facie evidence, and would exclude them from any action under the antitrust law.
Senator, that was just my personal suggestion, to be taken for what it was worth, inasmuch as you had raised that question. I thought it was possibly worth considering.
Senator WALSH of Montana. Yes.
Mr. LYMAN. If there are legal difficulties, of course, you will have simply to put it into the discard.
There was just one other matter that I wanted to mention, because I do not think it has been covered very much by any of our own group, and that is that not only our farmers are looking toward better marketing and they are expressing that idea emphaticallybut they also are efficiently producing.
Senator WALSH of Montana. They are what?
Mr. LYMAN. They are efficiently producing. I want it to go into the record that from my own knowledge as a farmer and from my study and travel around the country, and contact with farmers. everywhere, I know that they are applying the teachings of science to their production. They are putting up silos, using modern methods, time-saving machinery, high quality seeds, good live stock, and so on. Senator DILLINGHAM. There has been a very great advance.
Mr. LYMAN. There is no question about that. Sometimes the public may get the idea, because of our emphasizing of this marketing business, that we are sloppy in our methods. Prof. Warren, of Cornell, has made a very careful study of that phase of the subject, and he says that the fact that a farmer's place may, to all appearances, have a run-down look, is not indicative at all of the fact that the farmers in that particular locality have not learned to adjust themselves most economically to the production of their particular crops. You all know of the city men who own farms in the country, and the money they put into them. They are a joy to the heart, as you go by and see these beautiful, well-kept farms, all painted up, and with their hedges, and their pure-bred live stock, and so forth. But very, very few of those farms have ever been made to produce the cost of production. In fact, they are a great loss, as we all know. That is a matter that is familiar to almost everybody.
The average farmer is efficient, and he is becoming more efficient, and he is giving thought to the very best methods of production, his tillage, his feeds; and through his cooperative arrangements he is getting better seed, better adapted to the climate of the locality, free from weed seeds, and so on. He is stressing these matters all along the line; and I want to say in conclusion I do not believe there is any movement going on in this country or in the world to-day-outside, of course, in some religious movements-that means so much to civilization as this cooperative movement; and in that, of course, I include
the consumers' cooperative movement. I do not believe you will find such altruism, take it by and large-of course there may be exceptions to that as you will find in these great cooperative organ
I spent a summer over in Ireland in 1915, and traveled around with the Plunkett house organizers. About 110,000 farmers there are banded together, belonging to many different kinds of associations, and they have a central organization, the Irish Agricultural Organization Society, under the careful supervision of which they are taking the best methods in production and the best in marketing and in purchasing. Now, that is the ideal farmers' organization--probably it is the model oraganization for the world-because in Ireland they go into all types of cooperation, buying, selling, personal credit societies, and so on. I mention this because there are movements on in this country, using that Irish movement as the ideal, to do that same splendid service, not only for the farmers, but for the whole Nation.
I have worked here for three years in Washington as secretary of the National Board of Farm Organizations, and I have never seen a group of men that was more devoted to the cause of good government and the building up of our institutions, and I never have seen men who have held higher ideals, not only just for their farming interests, but they have had this wonderful vision, I think, of what can be accomplished eventually when farmers are properly organized in the production and marketing of their products. Most of these men have a desire to work very closely with the representatives of the consumers, with the women's organizations, and many of them are working with the representatives of the labor organizations, not for any political purpose or political alliance, or to control the government, or anything in that way, but simply that they can interpret to these spokesmen and leaders, of the consuming public, what it means to the welfare of the entire nation to have proper and efficient organization of agriculture.
Senator DILLINGHAM. I think this exhausts all the witnesses who have been mentioned to me.
Senator WALSH of Montana. I think we ought to have the solicitor of the department to explain that letter for us, before we close the hearings, Mr. Chairman.
Senator DILLINGHAM. I think so also. We will arrange for that. Senator WALSH of Montana. Mr. Lyman told us that the prime purpose of this was to relieve farmers from the operation of the Sherman Act, to a certain extent, at least; but the letter sent by the Secretary of Agriculture is to the effect that his solicitor tells him that this bill will not relieve them in any sense from any of the pains and penalties of the Sherman Act. If that is the case-which I do not think is the case, but if it is the case-there would not be any use in passing this legislation. That is the very purpose of it, as I understand.
Senator DILLINGHAM. There are some other matters that have been mentioned that we will have to take up as we go along, but this closes the hearings for to-day.
At 1 o'clock p. m. the subcommittee adjourned, subject to the call of the chairman.
AUTHORIZING ASSOCIATIONS OF PRODUCERS OF AGRICUL·
MONDAY, JUNE 20, 1921.
UNITED STATES SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON THE JUDICIARY,
The subcommittee met, pursuant to the call of the chairman, in the committee room, in the Capitol, at 2 o'clock p. m., Senator William P. Dillingham presiding.
Present: Senators Dillingham (chairman), and Walsh of Montana.
STATEMENTS OF HON. HENRY CANTWELL WALLACE, SECRETARY OF AGRICULTURE, AND MR. R. W. WILLIAMS, SOLICITOR OF THE DEPARTMENT OF AGRICULTURE.
Senator WALSH of Montana. Mr. Secretary, under date of June 4 a letter was sent by you to Senator Norris, chairman of the Committee on Agriculture and Forestry of the Senate, touching the bill which this committee has under consideration, H. R. 2373, in which letter I find the following:
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 antitrust 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.
Then you conclude by saying:
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.
The committee, Mr. Secretary, understood that the very purpose of this legislation was to relieve associations of the character mentioned in the bill from the peril of prosecution under the Sherman act and that that was what the proposers of the bill wanted.
Secretary WALLACE. Do you see any conflict between my statement there and your statement?
Senator WALSH of Montana. If, Mr. Secretary, we can not relieve them, if this bill does not relieve them, from some of the pains and penalties of the Sherman Act, the committee has been unable to see why we should legislate on the subject at all.
Secretary WALLACE. My understanding is that the purpose of the bill is to relieve from the peril of prosecution under the Sherman Act, but not to allow them to create a monopoly or to do anything in restraint of trade.
Senator WALSH of Montana. That is all that the Sherman Act forbids. The first section forbids combinations in restraint of trade, and the second section forbids the creation of or attempt to create a monopoly.
Secretary WALLACE. In the opinion of the solicitor, Mr. Williams, who is here with me-he can answer as to the legal phases of it better than I can
Senator WALSH of Montana. Yes.
Secretary WALLACE (continuing). This bill would not permit them to create a monopoly or to do anything in restraint of trade. I do not mean by that to say that they are now in peril of prosecution under the Sherman Act and that this bill if enacted would not relieve them from that peril; but as I understand the complaint of the farmers and the reason for which they ask for that legislation, they have been unjustly and improperly prosecuted from time to time, especially during the years 1918 and 1919, and while it is true, I think, that in no case have they been convicted, yet they were subjected to harassment by overambitious attorneys, and they want to avoid that sort of thing happening again.
On the legal phases of it, Mr. Williams can answer you very much better than I can.
Senator WALSH of Montana. Yes; but we should like your opinion on a subject on which there has been more or less discussion. So far as I am concerned, I am perfectly willing to relieve the farmers who desire to associate themselves in cooperative organizations for marketing purposes, from any danger of liability under section 1 of the Sherman Act, which forbids combinations and associations in restraint of trade. But you will bear in mind that the Sherman Act goes further and forbids, by section 2, the creation of, or attempt to create, a monopoly. I should like to have your opinion, not as a matter of law but as a matter of policy, as a matter of wisdom, whether we ought to take away from these associations the liability to be prosecuted under section 2 of the Sherman Act. In other words, should we authorize the creation of monopolies; or, rather, should we authorize the creation of associations of this character which would constitute monopolies ?
For the purpose of illustration, take the California Associated Raisin Co., which now controls 93 per cent of the raisin crop of the United States. That may or may not be-I do not undertake to say that it may or may not be-in violation of section 2 of the Sherman Act. But should we authorize the creation of a corporation of that character, and should we exempt it from prosecution under the Sherman Act?
Let me show further. It has been disclosed that complaint has been made in a number of cities of the country that the milk producers within the area supplying the city with milk have organized themselves into one association whieh absolutely controls the milk supply of that city. I do not know that that condition of things exists in Chicago, but ought we to pass a bill which would authorize all those supplying the city of Chicago with milk to organize themselves in one association and establish a monopoly of the milk supply in one of the great cities of the country? What would you say about that?
Secretary WALLACE. Senator, I can not conceive of the establishment of a monopoly in any agricultural crop of any size, whether it