got practically nothing for their milk. The prices were too low. And, because the farmer sold it so cheaply, the dealer was able to sell it cheaply to the public. It has always seemed to me that was the one serious trouble. In the past the farmers got practically nothing for their milk, even if they produced it under the most favorable conditions. Mr. STEELE. Is the milk sold to the consumer by the dealers you just referred to the same quality of milk that the producer sells to the dealer? Mr. MILLER. There has been some debate on that, but entering into a discussion of the milk situation, particularly in Greater New York, there are so many factors, not always divorced from politics, that it is difficult to tell. I do believe, however, that the people of New York City are receiving a high quality of milk. Now, I do not give the dealers all the credit for that. They can not deliver any better quality of milk than we deliver to them. Mr. STEELE. Are they delivering the same quality as you deliver? Mr. MILLER. Whether they are doing that in all cases, as to butter fat, I do not know. There have been charges made that some of them are standardizing it by taking out some of the butter fat. The State of New York passed a law a few years ago prohibiting that, and I believe that the reputable dealers, and that means most of them, are obeying that law, but there may be a few that are violating it. Mr. STEELE. In my section of the country we have no such method of delivery as you mention, and there is always the suspicion in the mind of the general public that the milkman crosses several streams with his milk before he gets to town. Mr. MILLER. Now, as to this bill, gentlemen. I think I have wandered from it somewhat, but repeating what I said in the beginning as to the verbiage of the bill, if you find the farmers ought to have the relief which they think they ought to have, the verbiage is not important to us. What we do ask is whatever form this remedial legislation takes that it will make clear the right of the farmer to do everything that is asked for in this bill. Questions were asked yesterday, doubting the wisdom of permitting these associations of farmers to do all the things mentioned in this bill, processing, and so forth. Now, that processing must be done by somebody. It might better be done by those who have the greatest interest in having the finished product reach the consumer at the lowest price, and that is the farmers, and no one else. It is to his interest to stimulate consumption, not to restrict it. It is not so much to the interest of the middleman to stimulate consumption, because if consumption drops they can still keep up their profits by raising the profit per unit, but it is to our interest to keep up consumption, and I submit to you that organized farmers ought to have a clear right, under the law, not only to sell collectively his raw products but he ought to have the right, collectively, to churn his milk into butter, convert it into cheese or condensed milk. The fruit associations ought to have the right, collectively, to grade their fruits, to pack it, to can it, if they want to, because they are the ones interested in having that product reach the consumer at the lowest cost. Mr. MORGAN. I would like to ask some questions. This matter of legislation would really result in creating a monopoly so far as the milk producer is concerned; fundamentally that would be a monopoly in the supply of milk that goes to New York. Mr. MILLER. I believe it would, and because it is a monopoly, we want this amendment that this particular monopoly is not an offensive one, which is what we believe. Mr. MORGAN. Your purpose is clear. That perhaps is true, but, generally speaking, the law is supposed to be opposed to all monopolies in the country. Mr. MILLER. Well, Mr. Morgan, the farmers have a natural monopoly of what they produce anyhow. Either they must be permitted to go to the extent in monopolizing that is involved in collective selling or else they can not collectively sell at all. Just before I close may I read into this record, and I do this because our milk association in New York has been relentlessly attacked as a price-raising association. I would like to read into the record a comparison of the prices paid the farmers in New York and the nation-wide prices paid to farmers. If that would be of any interest to the committee, I will read it. The CHAIRMAN. During what years? Mr. MILLER. This was July, 1918, to June, 1919. At the time I prepared this, June was the last report I had from the Government records as to the nation-wide prices. The result of the 12 months was that the average nation-wide price paid farmers was 8.29 cents per quart; the average price paid in New York was 7.4 cents per quart, or almost one cent a quart less than the average nation-wide price. Mr. STEELE. That would be a difference, according to the figures you gave a little while ago, of over 2 cents a quart to the consumer. I think the figures you gave a little while back indicated that a half a cent a quart would mean 2 cents to the consumer. Mr. MILLER. Yes; that would follow. I thank you, gentlemen. STATEMENT OF MR. R. W. BALDERSTON, PHILADELPHIA, PA., REPRESENTING THE INTERSTATE MILK PRODUCERS' ASSOCIA TION. Mr. BALDERSTON. I am secretary of the Interstate Milk Producers' Association, with headquarters in Philadelphia. By the peculiar geographical position of Philadelphia we have to do business in four States, and when we organized The CHAIRMAN (interposing). You are more likely to get into trouble than anybody else. Mr. BALDERSTON. Yes. When we organized we had to go to Delaware to get our charter, because that seemed to be the only State within those four that gave us an opportunity at all to put into operation the cooperative proposition. I think Mr. Miller has very clearly outlined the farmers' position as it represents the eastern farmer, whose business is diversified largely, but I want to answer just two or three questions which seem to have come up to-day. I think Congressman Husted suggested that the greater productive capacity of the soils of Europe was, perhaps, not due to cooperation. If you gentlemen are acquainted with conditions in Denmark, you know that it was due to the cooperative associations of Denmark marketing their products abroad, which has brought Denmark its present agricultural supremacy. The farmers can keep up their fertility all right, provided they have adequate markets. Around Philadelphia, in our territory, there was one feature that was borne in upon us all when we first started to form our organization, and that was this: The dealers had divided up the country territory and we were faced with the same conditions Mr. Miller suggests. It was so deeply rooted that when a neighbor moved from the territory of one dealer a few miles into the territory of anothertheir territories were then clearly defined-he could not change buyers. He had to drive, perhaps, 4 miles out of his way, because a dealer claimed him as his vassal, and it was not until we had our organization that a farmer could transfer from one dealer to another. As Congressman Husted has said, the public has always looked upon milk as a necessity of life and something the farmer ought to give them regardless of the cost of production, at an automatic fixed price. For years in Philadelphia it was 8 cents, and that in spite of advancing production costs. Of that the dealer got about 4 cents after it reached the city. Our prices are all quoted f. o. b. the city. The farmer got 3 cents and paid the freight, which in the Philadelphia territory, at that time, amounted to about a half a cent a quart. În Philadelphia we have the lowest retail market of any city in the country, and the farmers are getting on a par with any other large city in the country, as Mr. Miller outlined in his statement. Through the cooperation of the producers organization and the Food Administration and our public, which is brought in very closely and made to understand the conditions, the dealers have put more tonnage on the wagons, and the dealers in Philadelphia, although they are firmly intrenched-five big ones controlling 85 per cent of the business have the lowest spread of any in the country. They give Dr. C. L. King, who was connected with the Food Administration, and now is milk arbitrator of the State, monthly statements of their cost and profits and from that he determines, for the benefit of the public, what the average spread shall be as time goes on. Mr. YATES. Is this milk arbitrator a Government official? Mr. BALDERSTON. Yes; he was appointed by the Government, and he was a part of what was the Committee of National Defense, which was a war-time commission we had in Pennsylvania, and he has since been made a more permanent part of the State organization. At the time when he was appointed first, the office was in the Food Administration, but the results were so satisfactory it has since been made a more or less permanent feature, and he has the same position in Pittsburgh as in Philadelphia. The country developed by these dealers was always along the lines of least resistance. They would go into territory where the farmers had no great opportunities for marketing. They would open it up; the railroad would give them the right to put in a siding. They would put up a plant-and half the time on the railroad's property. They always started at a place where they thought they could get milk cheapest, and there was no possible way that these farmers could get the benefits from competition which you men, and ourselves, and everybody, has thought in the past competition brought to the American farmers. When the association came along these men joined it. Then it was possible, if a dealer was not a good business man and could not pay the average market price for milk, or if he was arbitrary and would not pay it, it was perfectly possible to say to a competing buyer, "Wont you come in and put a plant here and our members, for whom we are acting as sales agent, will turn over their milk to you at a figure which is on a par with the milk conditions in that territory.' The CHAIRMAN. How large an organization have you got? Mr. BALDERSTON. We have 10,500 paid-up members. The CHAIRMAN. How much stock have you got? Mr. BALDERSTON. Our average stock subscription per member is about $2.50. The CHAIRMAN. Some of you have more stock than others? Mr. BALDERSTON. The stock is on the basis of 25 cents for each cow. That is when you join, if you should happen to have 8 cows, you get $2 worth of the capital stock. The CHAIRMAN. If anybody drops out, does he retain the stock? Mr. BALDERSTON. If anybody goes out of business, he has the opportunity to sell his stock to the man who takes his farm, or he can simply keep it as a badge of membership. The CHAIRMAN. A souvenir? Mr. BALDERSTON. A Souvenir. That is about all the value it has. The CHAIRMAN. Can anyone but an actual bona fide dairyman own that stock? Mr. BALDERSTON. The other people who have taken that stock at all are those who have the ownership of a farm, or have a personal interest in the business just the same as the tenant. We have a great many absentee landlords in our community and they take a half interest in the proposition with their tenant. The CHAIRMAN. How about the votes? Mr. BALDERSTON. Our votes, because at that time none of the four States had a method by which they could vote personally, was by stock. We would much prefer, and it would be more democratic, to have a personal vote. The CHAIRMAN. You have an organization-board of directors? Mr. BALDERSTON. We have 18 directors, geographically distributed, and they elect 5 members of an executive committee. The CHAIRMAN. Have you any buildings? Mr. BALDERSTON. We have no buildings. We have an office. The CHAIRMAN. Do you employ a man for the purpose of looking after the thing, or do you not employ anyone? Mr. BALDERSTON. I am employed as secretary. We have a vice president who gives all his time to it. He has certain other duties. There is an office force of three or four all the time, and we have two field men whose duty it is to look after the tests of the milkthe Babcock test at the dealers' plants, and to look after troubles of that kind. They look up weights. Often the spigot on a weigh tank leaks and some of the milk will run out before the draft is made. We look up lost cans. We look up claims against the railroad companies and in every way represent these farmers' interests as to the best of our ability. We also have a publicity department to explain the importance of milk as a diet. The CHAIRMAN. And advertise it? Mr. BALDERSTON. And also to educate the farmers along the lines of improved production; to cooperate with all State and Federal institutions in every way. The CHAIRMAN. Do the farmers own their own milk cans? Mr. BALDERSTON. That practice isn't universal. We advise them to. The CHAIRMAN. Some companies own their own cans? Mr. BALDERSTON. Some companies own their own, which is not good practice, we think, from the farmer's point of view, because it makes them more dependent. The CHAIRMAN. In Philadelphia do you deal direct with the firm that distributes it to the ultimate consumer? Mr. BALDERSTON. Our Philadelphia concerns either distribute it direct to the ultimate consumer or to stores, hotels, and restaurants. The small dealers in Philadelphia get their milk from farmers who live near and have it trucked in or send it in by trolleys or train. The CHAIRMAN. Have you ever been threatened with prosecution or investigation by State or Federal authorities? Mr. BALDERSTON. We have had an agent of the United States Department of Justice going all over our records, and we have been endeavoring at all times to keep our operations in such shape that they will not in any way interfere with the Clayton Act, but it has been a very difficult proposition on account of the ambiguous verbiage of that act. Our farmers in Pennsylvania are a very conservative lot. Most of them either have Quaker or Pennsylvania-Dutch blood in them, and some of us have both, and these farmers are very much averse to anything that will give them trouble in the courts. In fact, some of the Mennonite people won't go to the courts to sue anybody, and for that reason it has been doubly difficult for them to feel free to organize under the Clayton Act, because they realized that this threat was hanging over them all the time, and they were dubious about taking a chance. The CHAIRMAN. Especially the officers. Mr. BALDERSTON. Yes. Mr. Chairman, we have certain cooperative associations in our territory that do own their own plants. They have had to issue capital stock, because some of the farmers have more money to put in than others. They are going to have more trouble from the Clayton amendment than even our parent organization, we feel, because they have had to do certain things that we, as a selling organization, have not had to do. They own property, and in many cases a big distributing plant, which takes in all the milk from a small city, like Du Bois, Pa., or Dover, Del., and then distributes it, after processing it and putting it in bottles. This, of course, is more economical than where small dealers have to do it. The CHAIRMAN Is there anyone else that has to go away? STATEMENT OF MR. CHARLES A. LYMAN, SECRETARY OF THE NATIONAL BOARD OF FARM ORGANIZATIONS. Mr. LYMAN. Mr. Chairman, in appearing in support of the Capper-Hersman bill before this committee, I wish to say that I have owned and operated a farm in Wisconsin for the last fifteen years, and during most of that time I have been a member of farmers' cooperative self-help organizations, including the American Society of |