LABOR, AGRICULTURAL, DAIRY, AND HORTICULTURAL ORGANIZATIONS. TUESDAY, JANUARY 27, 1920. UNITED STATES SENATE, Washington, D. C. The subcommittee met, pursuant to the call of the chairman, at 10.30 o'clock a. m., Senator George W. Norris presiding. Present: Senators Norris (chairman) and Brandegee. Present also: Senator Arthur Capper, of Kansas; Charles S. Deneen, of Chicago, Ill.; John D. Miller, of New York City; and N. Frederickson, of Guthrie Center, Iowa. The CHAIRMAN. The bill which we are considering is S. 845, to amend section 6 of the act of October 15, 1914, entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes.' The bill is as follows: [S. 845, Sixty-sixth Congress, first session.] A BILL To amend section 6 of the act of October 15, 1914, entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes.' Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 6 of the act of October 15, 1914, entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," be, and the same is hereby, amended to read as follows: "SEC. 6. That the labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, dairy, or horticultural organizations, instituted for the purposes of mutual help and not conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organization, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade or commerce, under the antitrust laws. 'Associations, corporate or otherwise, of farmers, horticulturists, planters, ranchmen, or dairymen engaged in making collective sales for their members or shareholders of farm, orchard, plantation, ranch, or dairy products produced by their members or shareholders, are not contracts, combinations, or conspiracies in restraint of trade or commerce. "Contracts, agreements, arrangements, or combinations made by such associations or the members, officers, or directors thereof in making such collective sales and prescribing the terms and conditions thereof are not contracts, combinations, or conspiracies in restraint of trade or commerce, nor are they combinations or conspiracies to monopolize or to attempt to monopolize any part of trade or commerce. "Nothing contained in this act, in the antitrust or other laws, shall forbid or be construed to forbid the existence and operation of associations, corporate or otherwise, not conducted for profit, of farmers, horticulturists, planters, ranchmen, or dairymen engaged in making for the producers thereof collective sales of farm, orchard, plantation, ranch, or dairy products, or to forbid or restrain individual members, directors, or officers of such organizations from making such collective sales, and prescribing terms and conditions thereof; nor shall such organizations or the members, directors, or officers thereof, so engaged in making such collective sales and prescribing the 3 terms and conditions thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade or commerce under the antitrust laws; nor shall any of the acts specified in this section be construed or held to be violations of any law of the United States. Mr. Miller, you represent the people who are favorable to the passage of this bill, or one faction of them? Mr. MILLER. Yes; and Gov. Deneen does also. Senator BRANDEGEE. Is there opposition to the bill? The CHAIRMAN. I understand not. I understood there was to be, but they do not seem to be here. Do you know, gentlemen, whether the people who are opposed to this bill are going to be here? Mr. DENEEN. No; I do not know anything about it. We simply received notice of the hearing and came down. Senator BRANDEGEE. Do you know whether there is any organized opposition? Mr. DENEEN. I do not know. Mr. Miller would know. Senator CAPPER. I do not believe there is any real opposition to it. Senator BRANDEGEE. If there is and it does not appear, we will not know anything about it. The CHAIRMAN. Who wants to be heard first? STATEMENT OF HON. ARTHUR CAPPER, UNITED STATES SENATOR FROM KANSAS. Senator CAPPER. Mr. Chairman, the amendment to the Clayton Act proposed in Senate bill No. 845, authorizing collective bargaining in farm products, does not change the policy of the Government as already declared by Congress. The purpose of this amendment is to make clear by express language the intent of Congress. This congressional intent was reaffirmed in the special appropriation bill of March 5, 1915, the sundry civil appropriation bill of July 19, 1919, and the deficiency appropriation bill of October 21, 1919, as follows: Provided further, That no part of this appropriation shall be expended for the prosecution of farmers, producers, and associations of farmers who cooperate and work in an effort to and for the purpose of obtaining and maintaining a fair and reasonable price for their products. So far as I have observed a like policy has been declared by such of the State legislatures as have considered the effect of antitrust laws upon farmers' sales organizations. A complete illustration of this may be found in the laws of the State of New York. The executive committee of the Dairymen's League were indicted under the State antitrust statute and under the penal code, which contained like provisions prohibiting combinations in restraint of trade. The organized farmers of that State requested the legislature to enact an amendment clearly permitting such collective sales. Without hesitation the legislature passed such laws, and they received executive approval. They, may be found in the laws of New York for 1918, volume 3, page 1562. Upon their approval by the governor, the district attorney of New York County, where such indictment was found, dismissed it, publicly stating that such amendments made such collective sales lawful. At the same session a law was enacted authorizing the creation of associations with express powers to make such collective sales. This is a voluminous law, and in its general provisions follows the form of an act recommended for State enactments by the Office of Markets and Rural Organization of the United States Department of Agriculture, being Service and Regulatory Announcement No. 20 and dated February 7, 1917. Similar laws have been enacted in California, Colorado, Florida, and New Mexico. It thus appears that so far as the policy of the Federal and State Governments has been determined by legislative acts that such policy is to permit such collective sales. Unfortunately, however, the congressional intent so apparent in section 6 of the Clayton Act is so obscurely expressed that the question of what farm organizations may lawfully do is left uncertain, and the purpose of the proposed amendment is to make clear and certain that which at present is somewhat obscure and uncertain. Section 6 of the Clayton Act excepts only farm organizations "not having capital stock.' In many of the States there is no law authorizing the creation of such associations without capital stock, making it impossible for the farmers of such States to bring their organization within the class mentioned in section 6 of the Clayton Act. I quote again from such section 6: Or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof. It in no way defines or makes clear what are or may be the "legitimate objects" of such associations, and lawyers differ in opinion as to the legal status of farm organizations under this section. Able lawyers argue that the "legitimate objects" of such associations can not be such as are prohibited by the enacting clauses of the Sherman and Clayton Acts. In Illinois the Federal district attorney devoted much time to an investigation of the milk producers' association that operates in the territory tributary to Chicago. The investigation attempted to lay the ground for an indictment charging acts in violation of the Federal antitrust laws, but failed to establish a case. A number of dairymen in Ohio were dragged out of their farm homes after midnight by United States marshals, hurried off to Cleveland, kept in jail until they could send for bondsmen, and compelled to stand the expense of a trial, though the Government had no case against them. Many of the producers' associations of the country do business in more than one State, and therefore come within the scope and are subject to-the provisions of Federal laws. Senator BRANDEGEE. What has been the determination of the highest court which has considered the question as to the interpretation of the present law? Senator CAPPER. There has been no court that has passed on that question at all. Senator BRANDEGEE. You spoke about those men who were arrested and then discharged. Was there any trial of them? Mr. DENEEN. There was a trial and acquittal in Ohio. Mr. MILLER. Under the State law. Senator BRANDEGEE. But not under this United States statute? Mr. MILLER. No. Senator BRANDEGEE. Were these other proceedings under the State statute? Mr. DENEEN. All under the State statute. Senator CAPPER. In Minneapolis and Chicago? Senator BRANDEGEE. Is this just an apprehension that they may be prosecuted under the United States statute? Mr. DENEEN. So that there can not be any question about it. Senator CAPPER. The uncertainties of the situation are preventing farmers from successfully cooperating. They desire to proceed but hesitate because of such uncertainties. This is not from timidity, but from a wholesome respect for law. Nearly all the national farm organizations and many State and local agricultural bodies have indorsed this measure and are urging its immediate passage. The farm organizations are not asking for "class" legislation. They do not want any special favors from Congress, but they have a right to insist that the law which now is indefinite and uncertain should be made definite and certain. The proposed amendment only places organized farmers upon the same plane as organized labor. By section 20 of the Clayton Act laborers are clearly permitted to make collective sales of the products of their labor. Individually, farmers are powerless to cope with the great organizations with whom they must deal. They must either bargain collectively or not bargain at all. They must either have the right to bargain collectively or they must accept the prices offered them individually by the middlemen engaged in processing and distributing. These middlemen while comparatively few in number, by reason of their affiliated and interlocking interests, their superb organizations, their ability to command the service of the best brains of the country, and their far-flung financial connections, exercise an influence greater than is warranted by their number, by their investments, or by the character of the service they perform. Organized farmers with the undoubted right to bargain collectively would still be at a disadvatange in dealing with these powerful organizations of middlemen. But the right and the clear right to bargain collectively should be given them, else they can not operate successfully, and therefore can not survive. This right is vital to all farm organizations. At present, however, conditions seem most serious with the organized dairymen. Those selling fluid milk for city consumption must of necessity sell upon credit, contract in advance, and make daily deliveries. Before the dairymen organized dealers dictated prices. The evidence taken by the Federal milk commission for the Chicago district shows that the method of the dealers in fixing prices there was to ascertain if dairy farmers were apparently prosperous and to fix prices at the lowest figure possible that would not cause open revolt. In the New York district the evidence taken by the Wicks legislative committee shows that the method there adopted was to first fix a price to consumers, subtract therefrom the dealers' costs and profits, and give the farmer what was left. In all cases costs of production and the law of supply and demand were absolutely ignored. At present the dealers of the entire country are receiving more for distributing milk than are the farmers who produce it. In Chicago the farmers received for the month of May, 1919, 5.2 cents per quart, while consumers paid 14 cents. In New York farmers received 6.1 cents per quart while consumers paid 15 cents per quart. Losses to farmers from selling to insolvent dealers are frequent. Organized dairymen with liberty of action under the law can protect themselves from such losses in a large measure, thus reducing the cost of and encouraging production. As to the constitutionality of this proposition and the legal questions involved, of course, I am not prepared to discuss them, and I should like to have Gov. Deneen or Mr. Miller and others here present that phase of it. The CHAIRMAN. Senator Brandegee, do you want to ask Senator Capper any questions? Senator BRANDEGEE. No. The CHAIRMAN. Gov. Deneen, we will be glad to hear from you. STATEMENT OF MR. CHARLES S. DENEEN, OF CHICAGO, ILL. Mr. DENEEN. Mr. Chairman, I appear here for the Milk Producers' Cooperative Marketing Co. of Chicago. Mr. Miller is the general counsel of the national organization. I appear for the local organi zation. First I will make a very brief statement of the facts as they apply to the Chicago district. In December, 1915, the cooperative marketing organization was effected. We have now about 12,000 members. It is in the district that supplies Chicago with milk. It is entirely a cooperative company, organized under the cooperative law of our State. It has a turnover of about $2,000,000 a month now. The overhead expense is about 1 per cent on the gross cost. That organization is the outgrowth of a long series of acts that I think should appear here. The Chicago district comprises a territory of about 125 miles north into Wisconsin, about the same distance west into Illinois, and nearly the same distance into Indiana. These States serve our city with milk. The method of conducting the business is as follows: They have about 230 milk shipping stations, one station for each village or town, each station serving from 75 to 400 farms. For a long period of time preceding 1909, the men who owned the processing plants fixed the prices which they would pay for milk, without consultation with the farmers. The matter has been referred to by Senator Capper. In 1909 the farmers of that district formed an organization called the Milk Producers' Protective Association, and endeavored to create conditions which would enable them to meet the dealers on a plane of equality in reference to fixing prices. The struggle went on until 1916 without any change in the situation. In March, 1916, the farmers were able to fix a price at about $2 a hundred pounds. They fix prices twice a year. In October, 1916, they fixed the price and again they fixed the price in April, 1917. The price, however, was agreed on in 1917 probably three weeks before the 1st of April, when it became effective. It was not fixed on war conditions. |