twine and sell it at about the price of last year; and when we get an arbitrary raise of 2 cents a pound, with no assurance, Mr. Mayer, that it is going to stay at that price, we naturally, as a group of farmers, are suspicious that somebody must be getting some of our money that they are not quite entitled to, and we want to know whether we are right.

Mr. MAYER. Suppose it turns out that the farmers of Yucatan prior to this arrangement were able to get for their sisal less than it cost them to produce, and it was only by banding together and forming a cooperative association that they were able to get a living price, would that change your opinion?

Mr. SCHMIDT. If they were producing anything below cost they certainly should get a price according to which they would be able to get something above cost. I quote from the pamphlet: "It has the approval of the henequen farmers because it is the final link in the chain which was welded to rescue them from the clutches of the monopoly." I thought that was a very unfortunate statement, because a chain never rescues, but only binds a person down. However, we will let that go. [Laughter.]

Mr. SPENCER. Might not the effect of a chain be to pull them out of the grasp of the monopoly?

Mr. SCHMIDT [reading]. "It is welcomed by laboring people because the stoppage of the flow of unearned millions into the pockets of the middleman and its diversion to its rightful channel' means that living wages can and will be paid by the farmer."

That is a thing that appealed to me. Apparently there is some controversy regarding the price being all due to the middleman getting it, and they are only going to take that away. Under those conditions, you know, we have done that in the chamber of commerce with wheat and things. We have done that with our shipments of live stock, but we have not raised the price to the consumer thereby. We have cut some fellows' throats that were in the middle; we took it away from them, but you know the producer has been getting a better price and the consumer has been getting the same price or a less price.

Mr. SPENCER. Not on meat.

Mr. SCHMIDT. Yes; but let me tell you you are up against a proposition where you people right in the cities ought to get after your local meat dealers' trust, because they are getting it.

Mr. SPENCER. Do you not suffer from the local binder-twine dealers? Do they not charge a great deal more than 9 cents for their twine on this market?

Mr. SCHMIDT. I do not know anything about it, because our members are buying at cost.

Mr. SPENCER. You are buying large quantities, but I mean the small farmer.

Mr. SCHMIDT. The small farmer is being skinned to the merciful tune of 4 or 5 cents, and it is up to him to get busy just like we are doing. The association handles twine to its members at a cost of one-fourth cent a pound.

Mr. SPENCER. What does it cost a fellow who is outside of this association?

Mr. SCHMIDT. We are not interested in him. I can not give you any record regarding that-that is, as to his business.

Mr. SPENCER. Before you formed this association did not the dealers charge you a great deal more than the quoted price?

Mr. SCHMIDT. Surely they did, and that is why we got after them. Mr. FISHER. But what you are pointing out, Mr. Schmidt, is that this claim they are going to divert the millions absorbed by the middleman somewhat strangely involves not merely diverting those millions, but adding 2 cents or more a pound over and above the price which the middleman formerly got?

Mr. SCHMIDT. That is it exactly. If they get that middleman's business, that is his lookout; but when they are trying to get ours, that is where it pinches.

Mr. FISHER. They are apparently going to get the middleman's millions and also other millions in addition.

Mr. SPENCER. Not if you make the prices you are making now. Mr. FISHER. Oh, yes, at the prices we have made.

Mr. SCHMIDT [reading]. "Its purpose is not to raise the price of henequen arbitrarily, and the best proof of this is witnessed by the fact that notwithstanding the shortage of the Manila hemp crop and the cutting off of the supplies of other hemps in consequence of the European war, the slight advance in the price of henequen is not in proportion to the advance in the market prices of other hemp fibers."

Mr. FISHER. What are you reading from, Mr. Schmidt?

Mr. SCHMIDT. I am reading from this little booklet that was sent to our office. I do not know who issued it.

Mr. FISHER. What is the title?

Mr. SCHMIDT. "Yucatan Farmers Rout Monopoly." I do not know who issued it, but it came to the office.

Mr. FISHER. I do not know whether that particular issue has been put in evidence. If it has not, I would like to have the book got in if Mr. Schmidt can part with it.

The CHAIRMAN. I do not know whether we want to further incumber this record. We have put in an indefinite amount of material. It seems to be very short.

Mr. SCHMIDT. It is a document which has been sent out generally. The CHAIRMAN. You have no idea who issued it.

Mr. FISHER. I think Dr. Rendon or Mr. Meehan will tell us. Was it issued by the Comision Reguladora, Mr. Meehan ?

Mr. MEEHAN. Yes, sir.

The CHAIRMAN. I can not see any necessity for its going in myself. This witness has been on the stand 30 minutes, and unless there is something else

Senator GRONNA. I just want to ask Mr. Schmidt a question.
The CHAIRMAN. Certainly.

Senator GRONNA. Something was said yesterday, I think, or day before yesterday, in reference to the necessity of getting at least the cost for farm produce, and it was also stated that an increased area or acreage indicated that the business was prospering. What would you say about that, Mr. Schmidt, from purely a farmer's standpoint? Mr. SCHMIDT. From purely a farmer's standpoint, Senator, when we increase our acreage on any line we figure we are getting a profit from that produce.

Senator GRONNA. But has the farmer in the United States always received a profit on his product from year to year?

Mr. SCHMIDT. No.

Senator GRONNA. Has it not often happened that he has had to sell his product at a great loss?

Mr. SCHMIDT. Very often.

Senator GRONNA. And still he has continued that business, has he not?

Mr. SCHMIDT. Yes.

Senator GRONNA. Because the farm is his home?

Mr. SCHMIDT. We had to sometimes do that in certain lines. You know, for instance, when we use a rotation crop of oats we have on all we have ever raised always lost money, except by feeding it, but in the rotation of oats we run in the oats in order to keep up our land. But as a rule-for instance, last year we increased our acreage in wheat-and in districts where the winter had not been against them, they have done the same this year, and that was because the people are contemplating making money on account of the prevailing wheat prices.

Senator GRONNA. Have you calculated the cost of raising wheat per bushel?

Mr. SCHMIDT. Yes.

Senator GRONNA. In your judgment, as a farmer, what is a fair cost price for producing wheat?

Mr. SCHMIDT. Well, it costs us to produce wheat, Senator, in our territory-and that is true of Minnesota and the Dakotas generallybetween 60 and 70 cents a bushel. When we consider everything, that is the actual cost of production. Our Government says that in Montana it costs 44 cents, but we do not fully agree with them there. The CHAIRMAN. Have you not known instances, Mr. Schmidt, when a small crop yielded the farmers a great deal more profit than a big crop?

Mr. SCHMIDT. Have we not? I should say, yes. We have frequently had a big crop we were sorry for. Year after year we have had large crops and sold the total of that large crop for less money than a year before, when we had a short crop which gave us more actual cash than the bumper crop did. That was true of this year. The CHAIRMAN. So that increased acreage in the crop does not necessarily mean that the farmers are going to make a profit out of that increased acreage, does it?

Mr. SCHMIDT. No, sir.

Senator WADSWORTH. There is a distinction you can make, Mr. Schmidt. If American farmers increase their acreage in a given crop steadily over a term of years?

Mr. SCHMIDT. Then it is a sign it pays, for instance, on corn. On corn, you will find in our State in particular and in other States also, that from year to year our production has been increasing, because it has paid us to raise corn.

Last year in wheat we had a big increase and it paid us. Two years hence will cut that away down, and it will not pay us when the war is over and the conditions change.

Senator WADSWORTH. Your remarks about short crops sometimes bringing in more money than the big crops are entirely correct. Mr. SCHMIDT. Yes.

Senator WADSWORTH. I have had that experience myself.

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Mr. SCHMIDT. Last year while we were a million pounds short we got more money than the year before, but that was strictly due to the European situation.

Senator WADSWORTH. It has sometimes happened, also, in times of peace?

Mr. SCHMIDT. Yes; with respect to potatoes and apples.

Senator WADSWORTH. Apples, particularly.

The CHAIRMAN. It has happened in cotton several times, that a small crop gave a big profit and a big crop little profit.

Senator WADSWORTH. That observation would not be true if it extended over a long term of years.

The CHAIRMAN. I guess that is true, too.

We are very much obliged to you, Mr. Schmidt.
Mr. SCHMIDT. I am very much obliged to you.

The CHAIRMAN. Who is the next witness.

Mr. BAYLEY. I want to correct one statement in my testimony. I referred to the manipulation of the sisal market in 1896 as by Escalante, Molina, and Donde. I want to omit the name of Donde, as in looking up my record I see he had failed before 1896.

The CHAIRMAN. We are very glad to have had the correction. Mr. BAYLEY. I am much obliged to you.

The CHAIRMAN. Is there another witness ready to proceed?

Mr. MAYER. If it pleases the committee, I would like to have Mr. Browne's testimony heard before the full subcommittee.

The CHAIRMAN. All right, Mr. Browne, we will hear you.

STATEMENT OF MR. LEO CHARLES BROWNE, ASSISTANT SECRETARY OF THE PAN AMERICAN COMMISSION CORPORATION, NEW ORLEANS, LA.

Mr. MAYER. May I examine him, Mr. Chairman, or would the committee prefer to examine him?

The CHAIRMAN. You may examine him.

Mr. MAYER. How old are you, Mr. Browne?

Mr. BROWNE. Thirty-eight.

Mr. MAYER. Are you married?

Mr. BROWNE. Yes, sir.

Mr. MAYER. Is your wife living?

Mr. BROWNE. Yes, sir.

Mr. MAYER. Any family?

Mr. BROWNE. One little boy.

Mr. MAYER. How old is he?

Mr. BROWNE. Seven years.

Mr. MAYER. Where were you born?

Mr. BROWNE. Gainesville, Fla.

Mr. MAYER. Have you lived in South Carolina.?

Mr. BROWNE. Visited; yes. I never lived there.

Mr. MAYER. I understood you to tell me this morning that you had

lived there, otherwise I would not have asked you the question.

Mr. BROWNE. As a child 6 or 7 years old, or something like that,

I spent probably two or three months there with relatives.

Mr. MAYER. Have you ever lived in Washington?

Mr. BROWNE. Yes.

Mr. MAYER. What has been your line of business?

Mr. BROWNE. Transportation-railroads and steamships.
Mr. MAYER. What position did you hold in Washington?

Mr. BROWNE. I was secretary to the general manager of the Norfolk & Washington Steamboat Co.

Mr. MAYER. Are you familiar with Mexico?

Mr. BROWNE. Yes, sir.

Mr. MAYER. Have you lived there?

Mr. BROWNE. About 12 years.

Mr. MAYER. You went there, then, about 1904?

Mr. BROWNE. 1902; more or less.

Mr. MAYER. 1902?

year.

Mr. BROWNE. The latter part of the
Mr. MAYER. From where did you go?

Mr. BROWNE. Pittsburgh.

Mr. MAYER. What were you doing in Pittsburgh?

Mr. BROWNE. Secretary to the general superintendent of the Baltimore & Ohio Railroad.

Mr. MAYER. And how long have you been in a railroad position in the United States prior to 1902?

Mr. BROWNE. Since I left college in 1896.

Mr. MAYER. What college did you leave?

Mr. BROWNE. St. Leo Military College, St. Leo, Fla.

Mr. MAYER. Did you graduate there?

Mr. BROWNE. Yes.

Mr. MAYER. Prior to going with the Baltimore & Ohio, what railroads had you been with?

Mr. BROWNE. I worked in Florida on what was then known as the Plant System, which now forms a part of the Atlantic Coast Line. Mr. MAYER. And then?

Mr. BROWNE. From there I came to Washington, and from Washington I went to Baltimore with the Baltimore & Ohio.

Mr. MAYER. From Baltimore you went to Pittsburgh?

Mr. BROWNE. To Pittsburgh, with the same road.

Mr. MAYER. What position did you fill when you left for Mexico? Mr. BROWNE. Secretary to the general superintendent of the Baltimore & Ohio at Pittsburgh.

Mr. MAYER. What was his name?

Mr. BROWNE. L. G. Haas. Well, no; I was going to correct the name. The last man was I. G. Rown. I worked under three general superintendents is the reason I kind of forget who was there when I left there.

Mr. MAYER. For what purpose did you go from Pittsburgh to Mexico?

Mr. BROWNE. Because I thought the opportunities in the railroad business were good there.

Mr. MAYER. Did you get a railroad position in Mexico?

Mr. BROWNE. I did.

Mr. MAYER. In what year?

Mr. BROWNE. The latter part of 1902. When I went there I had it before I left here. That is, by correspondence.

Mr. MAYER. With what railroad?

Mr. BROWNE. The National Railroad.

Mr. MAYER. What position?