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efficient, the more effective we get our milk-marketing organizations, the bigger is the volume of milk that we have to deal with; and the factor of the farmer, instead of selling his heifer, letting her come on into his own herd, is the factor that is going to affect the policy of an organization such as you speak of. It simply resolves itself down to this that when an organization gets to that point, it finds that in its own interest, the interest of the producers and the interest of the consumers, the price of milk or any other product must not go any higher than the point where it will move freely into consumption. Senator WALSH of Montana. But is not that the case with every monopoly?
Mr. HOLMAN. Yes, sir.
Senator WALSH of Montana. Is not every monopoly restrained by considerations of the expansion or the contraction of the volume of its business?
Mr. HOLMAN. That is true in some commodities.
Senator WALSH of Montana. Let us take shoes, for instance. us suppose, now, that some one gets a monopoly of the production of shoes in the United States, so that the merchants in this town can buy shoes from only one manufacturer. Would you regard that as a wise thing?
Mr. HOLMAN. Mr. Miller answered that, I think, very clearly when. he pointed out the fact that the farmer's plant must go along, while the shoe plant can shut down.
Senator WALSH of Montana. Let us take the raisin growers' association out there in Fresno, Calif. Suppose that includes every raisin grower in California; that it brings such results to its members the advantage to the members is so great-that everybody is. glad to get into it. Would you regard that as a desirable condition? Mr. HOLMAN. That would depend entirely upon the total sum of the social effect of its operations.
Senator WALSH of Montana. That is to say, if they were actuated by a wise, prudent, generous, fair policy, the public would not suffer? Mr. HOLMAN. The public would benefit.
Senator WALSH of Montana. But if they allowed their usual selfish impulse to govern them, to get every dollar out of it that was possible, the public would suffer?
Mr. HOLMAN. The public would suffer; and the raisin people would suffer.
Senator WALSH of Montana. Exactly.
Mr. HOLMAN. I think that you cover that in this bill, as it stands. It is not a perfect measure. It is a good deal less than we asked for when we started this legislation.
Mr. Chairman, if Senator Walsh has no further questions, Mr. Lyman wished to make a statement.
Senator DILLINGHAM. Yes, we will hear Mr. Lyman.
STATEMENT OF MR. CHARLES A. LYMAN,
OF THE NATIONAL BOARD OF FARM ORGANIZATIONS, WASHINGTON, D. C.
Mr. LYMAN. Mr. Chairman, no one has appeared for our organization at this session, although a number of the witnesses who have been here in the past few days are members of our organization. They have spoken for their own organizations but not for the board
itself. Among those who have appeared who belong to our National Board of Farm Organizations are Mr. J. D. Miller, Mr. Milo D. Campbell, and Mr. Charles W. Holman.
My purpose in appearing this morning is to show you the deep interest which the farmers generally throughout the United States have in this bill. The desire for this permissive legislation is deep rooted, and the reasons are deep seated.
Back in the fall of 1918 the organization representatives of the National Board of Farm Organizations met here in Washington, about 200 representative farm leaders from nearly 40 states, and asked for legislation of this sort. I would like to read you one paragraph of the resolutions adopted at that time. [Reading:]
Producers and consumers are bound together by economic laws which they did not make, and which they can not repeal. Between these two are powerful agencies whose only interest it is to take such toll as they may, as products are passing from producer to consumer. These agencies, by reason of their financial strength, their perfect organization and their far-flung financial connections, exercise an influence far greater than is warranted by their numbers or the service they perform. We therefore urge upon Congress the necessity of such an amendment to the anti-trust laws as will clearly permit farmers' organizations to make collective sales of the farm, ranch, and dairy products produced by their members. Such organizations, with liberty of action, can insist that the agencies engaged in processing and distributing sell such products at prices as low as may be consistent with the cost of production and distribution.
That is the first crystallization by the farmers, nationally, of the desire to have legislation of this sort.
Repeatedly after that time, at the various conferences which were held by the member organizations of the National Board of Farm Organizations, similar resolutions were adopted, and supporting resolutions have been passed by all of the farm organizations belonging to our board throughout the length and breadth of the country. That includes the farmers' unions and the equity societies. The organized milk producers have taken, in this whole matter, an outstanding part, by reason of the peculiar difficulties which they have had to face and which they have referred to in the hearings here.
Senator Walsh has asked several times what groups outside of the milk producers would need legislation of this sort, and he has referred to the farmers' grain elevators out in Montana.
Senator WALSH. No, Mr. Lyman, you must have misunderstood me; not that they need legislation of this character, because I think thay all need it.
Mr. LYMAN. I understood you to ask that question.
Senator WALSH of Montana. No, no; what kind of products outside of these two would like to have the right to organize a monopoly? Mr. LYMAN. I misunderstood you, Senator.
The question of monopoly, of course, is very technical, and I ought to keep off of that as far as possible; but here are many groups of producers throughout the country who feel that they should have the right to start machinery which will give them more adequately the profits which they think they are entitled to.
In some localities a relatively small group of producers are charged with being a monopoly. I know of cases where the live-stock shipping association is charged with being a monopoly. Of course it is an unfounded charge; but certain local dealers, where these cooperative live-stock shipping associations have enlisted the majority of the
farmers in their surrounding territory, have so charged. I know of a case in Iowa where a certain live-stock shipping association which attempted to enforce some so-called penalty clause, such as is being enforced in many States under cooperative laws, was brought before the court. I do not recall the result. There are many groups that are being charged with monopoly at the present time.
If I were asked the question as to whether I would approve of monopoly, I would say I would, with the understanding that it grew up naturally, with bona fide producers, with the public understanding the way in which they were organized, that they were bona fide in their activities, and with such methods constantly employed that the public had an understanding that the farmers were asking only a fair and reasonable price; that they were laying their cards on the table and were submitting their costs of production.
As a matter of fact, take the case of the milk men. They have publicised their costs of production, and I think thay can show, in the case of the New York Dairymen's League, if not in all of the other milk organizations, that they have not averaged even an actual cost of production of their milk in the majority of the months in which they have met with this New York Milk Conference Board.
If asked about this monopoly feature, I would say that I did not want to see the monopoly, in itself, except as it would naturally develop and be considered in the public interest. I think it is going to be many, many years before that could work out, even if it were permissive and allowable.
There was one phase that was not touched this morning, and that is that there is a large school of cooperators who believe that the producers and consumers should belong to the same organization. There have been organizations where both the city consumers, the housewives, and the farmers themselves have belonged to and owned stock in the cooperative marketing organization. That has been worked out, I think, although I do not know how satisfactorily, in Portland, Me. But there is always that possibility.
There is also the boycott by the housewives, which has not been discussed, in case the farmers' cooperatives should take over the functions of the milk distributors and prove unreasonable in their demands.
In our effort to secure this legislation we have been confronted with the most terrific arraignment. There has been a most insistent propaganda carried on to make it appear that we were asking for class legislation. I confess that I can not see why it is class legislation to ask for the status given in this bill.
In February there was an article appeared in the Atlantic Monthly by Mr. George W. Alger, called "The Menace of New Privileges." Mr. George W. Alger is the attorney for the New York Milk Conference Board, the organization of distributors which for years has been doing everything that it could to crush the cooperative movement. Inadvertently, undoubtedly, the Atlantic Monthly, in its Who's Who column, failed to mention that Mr. Alger was the attorney for this milk distributors' group. They state in that column that Mr. Alger is "a well-known New York attorney, with an insistent interest in public questions," and let it go at that. That certainly was an introduction calculated to impress favorably the readers of the Atlantic Monthly.
Mr. Alger also failed to state that he was the attorney of the New York milk distributors.
That article has stirred up a great deal of comment, and has been answered in part by an article appearing in the June issue of the Atlantic Monthly, by Mr. John D. Willard, director of the extension of the State Agricultural College of Massachusetts. I think it is an excellent answer, and I want to read at this time one or two paragraphs, if I may, from his answer. [Reading:]
The statement will hardly be challenged, that antitrust legislation came as a result of abuses. Business groups were able to control sufficient amounts of certain commodities to create artificial price levels. In some cases this was accomplished by the formation of overhead corporations, syndicates, or trusts; in others by the informal agreement of those in control of like enterprises. To curb this evil, the legislation directed against restraint of trade was developed.
That the evil existed, and that some correction was needed, requires no argument. It is necessary, however, to discover whether the resulting laws, and the Sherman Antitrust Act in particular, are of such a nature that they can be equally enforced upon all; or whether in the enforcement certain groups are effectually curbed, while others may practice clandestine evasion with impunity. To the jurist the application of the law is a sacred duty; to the citizen who, in the last analysis, is the sanction for the law, the all-important matter is whether the law is accomplishing, or is even capable of accomplishing, the purpose for which it was enacted.
The exempting clause of the Clayton Amendment first declares that labor is not a commodity within the intent of the law. Popular interpretation of the matter is that laborers and farmers have joined hands to secure special privilege. Analysis will discover a common reason for the exception of both from the restraints of antitrust legislation.
If exemption were not granted to labor, could the statute be enforced equally upon all? The relatively small number of employers has always made conference possiblenot to say conspiracy-as to wages to be offered, while the extremely large number of laborers, together with their usual lack of means and education, has made secret agreement and conspiracy impossible for this group. The ordinary business offers adequate opportunity for a group of employers to reach agreement as to wages; in fact, a conspiracy by employers in restraint for the purchase of labor could be made by telephone, and with only the most remote probability of detection. The existence of business men's clubs and associations often limited to those interested in a single type of industry, is too obvious to need more than passing comment. It must be recognized that such associations are vitally necessary, and serve a constructive purpose in the welfare of industry. The only matter pertinent to this discussion is that the Sherman Antitrust Act, without the specific exemption of labor, could do no more than create an effective weapon to be used against those who sell their labor, while remaining quite ine fective against those who buy it. Equality of restraint could not exist in fact, although existent in statute. Under present conditions the specific exemption of labor from classification as a commodity enables equality both in law and in fact. Either group is able to achieve its ends only as an over supply or under supply of labor gives advantage through the interplay of demand and supply; the antitrust act restrains neither party in the bargaining process.
Likewise, it would be impossible to enforce the Sherman antitrust legislation equally in the case of buyers and producers of farm products. The number of wholesale buyers of all our larger crops is very small compared with the number of growers. Buyers are of necessity in touch with one another; conspiracy could not be effectively stopped. The growers are always widely scattered, and any collective effort could not escape detection. The geographical dispersion of farmers makes frequent getting together impossible and effectively precludes clandestine agreements.
For instance, the greater part of the milk used in the city of Boston is distributed by three large corporations, and comes from thousands of farms scattered through more than 40,000 square miles of territory. Can it be maintained for a moment that the law, without the exemption of farmers, can be made equally effective in checking possible restraint of trade on the part of both buyers and sellers? Instead of creating a privileged class the exemption of farmers insures equality of opportunity.
That embodies the ideas which I have always had in mind and which I think are shared by all of the farmers.
Senator DILLINGHAM. Will you leave both of those articles with us?
Mr. LYMAN. Yes, sir; I will be very glad to leave them. Of course I have read only a portion of the argument.
With reference to the bill itself I can see the construction which Senator Walsh has placed on the first paragraph as possibly giving an opportunity for a group of packers owning farms in the vicinity of Chicago to organize an association. Mr. Holman has pointed out some of the difficulties they would meet, because there is a limitation on the amount of capital stock which any member of a cooperative association may own; but it seems to me that the first paragraph of the bill could be amended if there were danger such as the Senator fears something in this way, substituting this, beginning in line 3, for the present language:
That persons whose primary or principal occupation is the production of agricultural products,
and then go on as it is. That would throw the emphasis on farming as the principal sustaining occupation.
It seems to me this committee would not have any difficulty in defining it in such a way that there would be neither possibility nor desirability of anyone, outside of actual farmers, organizing under this act.
Senator WALSH of Montana. You see, Mr. Lyman, we have got to think rather accurately about these things. Here is a man who does some farming, and he does some business in the city. A good many lawyers are in that situation. John Sharp Williams, for instance, is a lawyer, and he is a cotton grower. Senator Simmons is a lawyer, and is engaged in the cultivation of tobacco: The question as to what is his primary business, farming or practicing law, is a matter of more or less question.
Well, there is another man goes into a corporation with him who is in pretty much the same fix, and they unite with half a dozen other gentlemen who have no business except farming-who are outand-out farmers-and they organize an association. Now, will that association get the immunities and privileges under this act; and who is going to tell, who is going to determine, whether their business is primarily that or not?
Mr. LYMAN. I can see the difficulty in regard to any one man, such as one of the people you have named, where they probably have a large income both from farming and from their legal practice, and so forth. But I was not going to have that suggestion apply just to the individual. I would have it apply to the sum total of the organization, so that under those circumstances the provisions would apply, and if there are certain planters in the South with large plantations, probably with a number of tenants on their places, who want to belong to these marketing associations, I think that those owners should come under this, providing that the general trend of the marketing is
Senator WALSH of Montana. Exactly; but how are we going to determine that? Some one begins a prosecution against them under the Sherman Act, and they claim exemption under this law.
Mr. LYMAN. I suppose that the Secretary of Agriculture might be able to determine it.
Senator WALSH of Montana. But he has not any authority.