who mentioned overproduction. We thought that with the hot climate we had there and the fertile soil there was only a little land tributary to the city of Fresno that we could raise raisins on, and that we had a natural monopoly; and the man who suggested that some day we might raise raisins enough so that we could not get a good price for them was hooted at. It was easy to sit down with a pencil and paper and figure that there were 100,000,000 people in the United States, and that if the consumption of raisins should be only 2 or 3 pounds per capita the time never would come, with the restricted area that would produce raisins, when there could be an overproduction; and we truly thought, as the Senator said, that we had a natural monopoly there that would make us all rich in the end. For a few years, some three or four years after I came there, this thing continued; but all at once what we thought was impossible to happen did happen, and the price of raisins went down. It went down from 6 cents to 5 cents, from 5 cents to 4 cents, from 4 to 3, and from 3 to 2. That seems far enough, but they did not stop there; they went from 2 to 1 and we were selling on the terms known in California as "cash in the sweat box." The sweat box is a box that holds about 150 pounds of raisins and is the vehicle on which a grower delivers his crop to the packing concern. The packing concern would take the place of your elevators in the wheat business. It is the connecting link between the trade abroad and the grower at home.

"Cash in the sweat box" was the way that we had been selling these raisins, and I think that is the ideal way for any grower to sell. But about this time a minister of the Gospel who had gone into the packing business and had the confidence of the trade told the growers that they were not getting a square deal; that the middlemen were getting too much money. The other packers said it was overproduction and we, as growers, did not know it. We only knew that we were very fast becoming bankrupt. The minister of the Gospel suggested that if we, as growers, or if the growers-I was not a grower at that time would let him handle our goods on consignment, he would cut out the middlemen's profit; he would take our goods and pack them and sell them and charge us the exact cost, plus a small profit for himself, and the grower would get all the rest.

Some of the growers began to do that, and when they began to do it Mr. Chaddock and other packers were forced to do the same thing, and the whole raisin industry went from a "cash in the sweat box" basis to what we knew as a consignment basis. It ran along on this consignment basis for a number of years and actually raisins sold for less than nothing. Many, many times a grower hauled his raisins to these packers, the result of a whole year's work, and when the settlement came he had what we called red ink. They did not bring enough to pay the expenses and there was a bill sent to the grower for the difference. He did not always pay it, because he did not have the money to pay it.

Under these circumstances the raisin business, which was a business that we thought was a natural monopoly, and we thought it was impossible to have an over-production, became bankrupt.

Then the growers took it into their heads that there was something rotten in Denmark, as there probably was, and that if they would take this business into their own hands and do away with the middle

men—that is, of course, a hobby of nearly all farmers, and probably they are mistaken about it but, anyhow, we thought that the middleman was getting the profit, and that if we would do away with the middleman and go into the business for ourselves it would correct the evils. So in every community a number of farmers went together and built a little, cheap packing house, packed their own raisins, and sold them. In Fowler there was a unit; in Selma there was a unit; in Kingsburg there was a unit; and all the different communities had their own units that were packing raisins. Packing raisins is simple, and any community of farmers could do this. that wanted to. The selling of raisins was not difficult. When you sold for any price that somebody would offer you, anybody could sell raisins; so there was no particular trouble in these different units. selling the raisins, and the only difficulty was that all the various units became competitors of each other, and as we thought then there were too many raisins, and one unit was bidding against the other as cooperatives. So the third step in the marketing our raisins was probably not any better than the consignment basis and the packer, and we were still on the toboggan slide, going toward bankruptcy as fast as it was possible for us to go, and most of us were already there.

Vineyards, as I said awhile ago, were worth from $500 to $1,000 an acre. These conditions ran along, I think, for some five or six or seven years, and vineyards went down until you could buy a vineyard for very little. In fact the first vineyard that I bought myself I bought for $50 an acre-a bearing vineyard for $50 an acre-and did not pay a dollar down. The man that owned it said he did not want it, and if I would pay interest and taxes and would agree, some time or other when I could, to pay him for that vineyard, I could have the vineyard. I had nothing and I could not lose anything, and he was willing to trade, and we traded for $50 an aere. Half the vineyards in that district were sold-that, of course, is a statement that may not be exactly true; I do not know whether it was half or 40 per cent or 60 per cent, but a great many of the vineyards in that district. were sold at sheriff's sale, and many a man who came to the San Joaquin Valley with high hopes and the savings of a lifetime walked out of the San Joaquin Valley with absolutely nothing except a roll of blankets and a deficiency.

Senator DILLINGHAM. Just at that point will you tell us, first, what was the difficulty during the time you were shipping the raisins to your ministerial friend that caused the trouble, and what was the difficulty after the growers began packing for themselves?

Mr. GIFFEN. We believed at that time, Senator Dillingham, that it was an overproduction and that there were too many raisins, and each one of these concerns our ministerial friend and the other packers who had gone into the same business-each had a broker in each city. Each one of these firms had a broker in each city. The raisin crop, I might explain, comes in the fall of the year, about September, and is harvested within a month or two then. A farmer needs his money. He has done a whole year's work. He needs his money at that time to pay for his grocery bills and his yearly expenses, his taxes, and his interest. The raisin crop can not be eaten in the same length of time that it is harvested. It takes a year to do it. The result was intense competition between us to sell these raisins, and instead of bidding against each other to get a higher price we

were bidding against each other to get a lower price. That was the result of it.

One concern would wire to its broker in New York offering raisins for 6 cents, f. o. b. Fresno. Another concern would go it one better, and make if 63, and probably take the business for that day, and the next day everybody would be selling for 63, and then some concern that had a few raisins that they were particularly anxious to sell would offer them for an eighth of a cent less.

Senator DILLINGHAM. You were really bidding against the foreign crop, I suppose?

Mr. GIFFEN. Well, the foreign crop at that time was a factor; I do not know just how much of a factor at that time; but as far as our own crop was concerned we were bidding against each other for the sale of the crop, with the price continually going down. The foreign crop is a factor now, and was at that time, but not nearly so much, and I do not know just what the importations were then.

About this time a man by the name of Kearney, who owned a very large amount of land and vineyards just close to Fresno, and who was a very able and a very eccentric man, conceived the idea of doing away with the competition among these various cooperative concerns by organizing the growers into a central selling organization, and he succeeded in doing it. He probably got 80 per cent of the growers at times. It ran along for four or five years, and it ranged all the way from 75 to, they claimed, as high as 90 per cent of the growers. This organization was a pool among the growers without any capital at all, and they made arrangements with the packing concerns that were then in business, the people who had been handling the business up to that time, to do the selling for them; and these packing concerns, though they were paid a high price for doing this business for the growers' organization, and were hired to sell the crop, did not sell it. They sat idly by for the year without making any special effort. They would take what orders came, but there was no effort made to sell the crop. It came to the end of the year; the organization had no money; we had to turn those raisins into money in order to make any kind of a settlement with the growers, and then the packers, after having put in the year under hire to sell the raisins, with their capital and their money would propose that they would buy these raisins, and they did.

That went along year after year, and the association, was helpless because it had no money to work with, and the packers then would buy these raisins at an exceptionally low price, maybe a cent and a half or two cents a pound, and immediately raisins would go up and they would reap their harvest; so that they got a tribute both ways. They got paid by the association rental for their houses, and then got a profit upon the business. Even under these conditions the pool was justified, and the farmers were much better off than they were under the old conditions; but we had not got to a place then where we were educated up to cooperation. There were lots of things wrong with the organization, and lots of things that we felt were wrong that probably were not wrong; but the growers became discontented, and we were told by the packers, who had their scouts out among the growers all the time, that we were not better off because we had an organization, but that all growers were better off; that we had gotten past the hard times, and that other crops were

selling to good advantage, and that raisins would undoubtedly sell to good advantage again if we did not have an organization; so that at the end of about the fourth or the fifth year the growers failed to rally to the organization, and it went to pieces for lack of support, and Mr. Kearney died of a broken heart because the growers failed to carry out the scheme that he had conceived.

The business again went back, but fortunately it never went back to where it was before. It never went back. We had learned one lesson, and that was that the consignment business was absolutely impossible, and it went back on a Icash in the sweat box" basis with these same packers who had been handling it all the time still doing the business, but it never went quite so low as it was before. Raisins probably went as low as a cent and a half a pound, and the cost of production was about 3 cents a pound, and during this period of seven or eight years following the association we saw the highest price for raisins that we ever saw. They went up one year as high as 7 cents, which was the highest.

Senator WALSH of Montana. When was that, Mr. Giffen?

Mr. GIFFEN. That was about 1906, and that was the highest price that we had ever seen for raisins up until the year 1919; and 74 cents then was higher than the price of 1919, considering the relative cost of production, because the cost of production at that time

Senator WALSH of Montana. Let me inquire, if you will pardon me for the interruption there, did you attribute that to the better organization, and so forth?

Mr. GIFFEN. No; I was just going to explain how that was.

I believe that there is an inevitable law that applies even to the raisin industry, Senator Walsh, in spite of the fact that it is restricted in territory a law that is just as sure as the changing of the seasons and that is the law of supply and demand; and that so far as the price of raisins is concerned that law is absolutely sure. times it is harsh; sometimes we do not get the benefit of it; but in the year 1906 we had the shortest crop that we had had for many years.

Some

At the beginning of the season raisins were about 2 cents a pound. We did not realize, until we got into our crop harvest, how short it was. Most of the growers had sold. We sold then before harvest. Lots of the growers had to have money. Not all growers sold before harvest, but many of them would go to a packer in the spring, and the grower would have to have a little money to pay his spring taxes or his cultivating expenses, and he would enter into a contract to sell his crop that year at about 2 cents a pound; so that most of the crop was sold before we knew it was a short crop. In addition to that, the world's crop, the European crop, the Spanish and Smyrna crops, were exceedingly short, so that there were not raisins enough in the world to supply the market; but as far as we growers were concerned, while the law of supply and demand is inevitable and sure, we did not get the benefit of it, because we did not have the knowledge and we did not know how to get the knowledge of the conditions, and we had sold our crop for 2 or 23 cents before the price went up, and the packer or the wholesaler or the jobber in New York got the advantage of that price.

I was

I thought myself that year that I was exceptionally smart. more stubborn than some of the growers, and had gotten by the

spring months without having to sell my crop to raise any money—I do not know how I did it, but I did, some way or other-and I held on and sold for 4 cents, and all my neighbors congratulated me and told me how smart I was, and they told me so often that I actually got so that I believed it myself; but it was not more than a week after I had sold for 4 cents until somebody else that was a little more stubborn or a little smarter than I was sold for 5 cents, and then a little later on they sold for 6, and they went up to 7, and by the time they got to 7 I considered that there was not anybody who knew anything about the raisin business so far as the marketing end of it was concerned.

I mention this to show you that so far as the growers were concerned, the shortest crop that we had had for years sold for less than the cost of production, because the law of supply and demand, though inevitable in the end, was not allowed to work so far as the growers were concerned. Speculation did the trick.

Then the following year, in 1907, the raisin crop, which was the biggest crop that we had ever produced up until that time, sold for the biggest price as a whole that a crop had ever sold for, which simply goes again to show that the law of supply and demand, though in the end it works, did not work so far as the growers were concerned. The crop started in the spring, because it was absolutely cleaned up, and sold for 5 cents up until fall, delivery time. That was the fall of what was known as the Roosevelt panic, I believe. The panic came along, and the price went down in the midst of the harvest season, and we found that the contracts we had made for 5 cents were not worth the paper they were written on, because we could not make a delivery on those contracts; and that was what happened every year. If we sold our crop for 2 cents a pound, and they went to 4, we, as growers, had to deliver. If we sold them for 5 cents a pound and they went to 2, we could not deliver. It was possible that those contracts could have been enforced in law, but I say to you that as a community, as far as a community is concerned, it is impracticable to deliver a whole crop by lawsuit, and the result would be that a grower would take his crop in that he sold for 5 cents, and the packer would say to him: "That is not a merchantable crop; it is damaged; it is sandy, or there has been a little rain on it," or some excuse, and he would not take it; and the grower would go home, and he would haul it over and sell it to a neighboring packer for half a cent less; and that process went on and went on and on until the crop again was down to less than 3 cents a pound.

As an illustration, if you will pardon a personal matter, I sold about that time-I think it was the next year-to one of the most responsible firms there was in the raisin business just a small crop, 15 tons of Sultanas, for 5 cents a pound. I sold them about the first of September, I think. The market was fairly good, and when I came to make a delivery six weeks later Sultanas were not worth over 4 cents a pound. It did not dawn upon me that with a firm like that there would be any welshing for the small sum of $300, and I sent the man in with those raisins, and he telephoned back that they would not receive the raisins. I called up the manager and argued the matter with him. He said they were not merchantable raisins. I told him that I thought I was a judge of raisins, and I was absoluetly sure that they were, but he said they were not, and that he