Mr. WEBB. Yes; that is what we want to know. Mr. MILLER. It illustrates, gentlemen, the necessity for this bill. The milk producers of Chicago are now on trial, under indictment found in the latter part of the year 1917. Mr. WEBB. That is, in the Federal court? Mr. MILLER. No; in the State court. Mr. STEELE. Is that under Federal or State law? Mr. MILLER. Under State law. Now, immediately after that indictment was found, that very farm organization was called to the assistance of Mr. Hoover in order to carry out his war work. He and his representatives met with them and helped them fix prices-in many cases they determined the prices. Well, of course, the Chicago authorities saw that it would be somewhat ironical to try these farmers in one building in Chicago for committing an act, when at the time of the trial they in another building were doing the same things in cooperation with and at the request of the Federal food administrator. So, the prosecution of that indictment was postponed until after the war. It was thought, however, that it was coming on for trial last April. I will not weary you with this, but I think when I get through with it you will see its bearing on this question. I am going to ask you to characterize the acts of the employees of the Federal Department of Justice there, and I am going to try to tell you the story without passion. At the time when it was thought that this trial was to come on in March, by a system which seems largely peculiar to Chicago and New York, the newspapers began to have inspired interviews, explaining the inquities of these accused men. All this, of course, so that the prospective bureaus might be fully informed and be prepared to do them exact justice. By what, I am sure, must have been a coincidence, just at that strategic time the Federal district attorney got busy, and this is what he did. Now, Mr. Chairman, I don't believeI have no knowledge one way or the other-but I don't believe that that able lawyer and upright man, the Attorney General of the United States, ever approved or had any knowledge of what was done there; this was done through the district attorney's office. At the same hour, on the same day, say, at 10 o'clock in the forenoon, two sleuths, intelligence officers, detectives, appeared in the office of the secretary of that organization with a subpoena duces tecum, to proceed forthwith before the Federal grand jury, bringing all the papers and records. A like subpoena was served on the president in his adjoining office by two others; and at the same hour, about, of the same day, at about 30 or 35 other points over that big territory, running out 100 miles or more, that supplies Chicago with milk, other sleuths entered the residences of the officers of the local farm organizations subordinate to the parent one, with a like subpœna. Now, those farmers out through the country were intelligent men, selected for their officers, because they were intelligent and trustworthy, but of course they were not lawyers, and they did not distinguish between a subpoena duces tecum, requiring their appearance forthwith, because they were told by the detectives that they must go with them to Chicago on the train, and they did not distinguish between that paper and a warrant of arrest; and so, all over that territory, the telephones were humming with the information that the Federal district attorney had thrown out a dragnet and sent out warrants for the arrest of 35 or 40 farmers whose only offense was that they met and combined to make joint sales of their products. I want to tell you what took place with one of them. When one of these men-this information, of course, was given to me by others, but I think it can be verified if the committee at any time cares to investigate it-one of those men when they reached Chicago was taken into an upper room with two of the detectives, seated by a desk, they questioning him. By and by one of the detectives, with some ostentation, put his hand into his pocket and drew out a revolver and laid it on the desk with a significant look at the farmer. They went on asking questions, he answering them as best he could, and by and by the detective picked up the revolver again and twirled the cylinder or twirled the revolver, and with another significant look at the farmer, said, "Does this make you nervous? Those men were not accused of bomb-throwing or arson. Now, we think, gentlemen Mr. WEBB (interposing). Do you know the name of that detective who did that? Mr. MILLER. I do not, sir. Mr. WEBB. You want to find it out and have him kicked out of the service. That is what you ought to do. Mr. MILLER. Rather, if I may be permitted to say, I think the law should be so clear that if any ambitious district attorney challenges this right, that we may all know that they are doing it for some purpose other than that of vindicating the majesty of the law. Mr. MORGAN. Now, may I ask you-I asked this question of Mr. Barbour-you take the wheat farmer-and the farmers in my district are wheat farmers, corn farmers, too, and they have considerable stock-do you think that under this law the wheat farmers of the United States could organize into one selling corporation and sell collectively-all the wheat farmers of the United States? Mr. MILLER. I believe they could, and I believe it would be a great boon to both the farmers and the consumers if they could do it. I don't believe they ever would do it, because there are so many of them and they are too widely separated. Mr. MORGAN. You know this is a wonderful age, and all that is necessary to do that would be for a few intelligent men to go to work and organize a corporation covering the entire Nation. It could be done, unquestionably. Now, then, these organizations of course we assume that the farmers of the Nation would be as good as the average of other people, but is there some danger that the farmers, who are more or less selfish like the rest of us, might be inclined to want a little more for their wheat than people in the towns and cities believe they ought to have? Is there any danger in permitting the farmers absolute, complete, unlimited, and unrestricted authority and power and the right to organize to sell what they produce in a collective way? Now, is there any danger? Mr. MILLER. I don't think there is; and if I should be mistaken, and later it should be made to appear that these organizations are abusing that power, Congress will have complete power to regulate them. What we are asking-don't assume in advance that we are going to do it, and so embarrass us in the work that we are only just starting. Mr. WEBB. Now, what has been the result of other Federal investigations? You haven't told us that. What has happened in these other investigations? You say the Federal department has made them. Mr. MILLER. In New York the investigation-and permit me to say here that it was carried on in a very gentlemanly, courteous manner; there were no circumstances of oppression or intimidationand I think there was not in Philadelphia, but we do not know-it was only two or three weeks ago that they were investigated, and what the result will be we don't know. Mr. YATES. Were there any results of this investigation carried on by the United States district attorney's office in Chicago, who sent out these detectives-vou said these detectives were sent out by the district attorney, did you not? Mr. MILLER. Yes, sir. Mr. YATES. That is Mr. Kline. Mr. MILLER. I believe that is his name. They started out from his office. Mr. YATES. What followed? Any action at all? Mr. MILLER. No indictments. Mr. YATES. Any action by the Federal authorities? Mr. MILLER. I have been told by a gentleman who has attended the trial, the present trial under the State law, that the Federal district attorney or his deputy is sitting there watching it closely day by day, and the farmers there, I understand, are expecting to be indicted. Taking up again the question, Mr. Morgan, of the advisability or the danger of the wheat growers, may I suggest to you that, as Mr. Hersman so well stated, that if every wheat-growing farmer in this country was organized into one great association, they must still sell their wheat subject to world-wide competition. Mr. MORGAN. Right there-that is true, but suppose this Nation has 250,000,000 bushels of surplus wheat for export. Now, if you centralize the selling interest-that is the one organization that controls the sale of that 250,000,000 bushels of wheat on the world's market-don't you believe, that they could sell it at a better price than they could if it was in the hands solely of grain dealers and ordinary commercial organizations? Mr. MILLER. I believe the farmers would get a better price; and if they did not, their leaders would not know their business.. But that better price would be beneficial to both the farmers and consumers alike, for this reason Mr. MORGAN (interposing). It would seem to me that one great difficulty about the wheat farmers is that when their wheat is thrashed, a good percentage of them have to sell it immediately or want to sell it immediately. Their business demands it. The grain buyers buy it and very naturally the grain buyers like to start the market low. The dealers naturally make more money if they buy at a low price and the market keeps on growing. By and by the big dealers have a large percentage of this surplus wheat in their control, and then they put the price up, and they sell it at the best price they can. So I think it would be of immense advantage to the wheat farmers if they could organize in some way so that they could have something to say about what they would sell their wheat for. I believe in that; but there is another responsibility, we do not want to create organizations that might be unjust to the people who live in the towns and cities. Mr. MILLER. Absolutely not. Mr. MORGAN. I have given a good deal of thought in my own mind to trying to provide some plan, to think out some theory of my own, some machinery by which that could be done, and I am still studying on the subject; so I am really getting information. Mr. MILLER. In your statement you have suggested a thought that was in my own mind, and that is that the crop of wheat as it is garnered is more than three hundred times as much as will be consumed in a day. Somebody must hold it. The vice of present conditions is that the farmer is compelled to sell. He doesn't have the facilities for holding it; some of them don't have the finances to hold it, and they are forced, one by one, to sell that wheat to the middleman, who does hold it; and after the great bumper crop has been garnered into the elevators of the middleman then the price begins to soar,. and that is penalizing and discouraging production. May I just read into the record one thought on that Mr. MORGAN (interposing). Not only that, but it is defrauding the farmers. Mr. MILLER. Yes, sir. Now, may I read into the record one thought which appears in a statement filed by the farmers' representative at the industrial conference? The early dissolution of that conference left this resolution to go with that of many other groups, of course not acted upon, but this discussed the question of bumper crops and low prices, showing how large production now is penalized and underproduction encouraged because of the very conditions of which you have spoken and which farm organizations with liberty of action under the law could correct. [Reading:] In 1910 we produced over 11,000,000 bales of cotton; in 1911 we produced 15,000,000 bales, and yet received $60,000,000 less for the 1911 crop. In 1915 we produced 1,025,000,000 bushels of wheat and received $942,000,000 for it. In 1916 we produced 640,000,000 bushels and received $1,020,000,000 for it. In both cases society had the benefit of those great increases in production; but as to cotton, the farmer received $60,000,000 less than nothing for the additional cotton that he produced. Mr. MORGAN. Now, I don't want to take up the time; but do you think there is any danger of the farmers reducing production? Now, you know in the South there has been agitation to reduce the production of cotton, and is there danger now that if this unlimited authority was given the farmers would take advantage of that principle and say, "We will curtail the production of wheat, and that will make less surplus to sell abroad on the world's market, and we can get a bigger price"? Now, is there danger of that? Mr. MILLER. I can't bring my mind to the thought that there is any grave danger of that, because of the economic and industrial conditions under which the farmer operates. Mr. MORGAN. You know that agitation exists in the South. Mr. MILLER. But what I do say, and say with all the emphasis possible, is that the farmer ought to have the right to survey his prospective demand as best he can, the same as any other producer and manufacturer, and then not produce so much that he must sell it at a loss. Mr. MORGAN. That is all right if it is not an entire, complete monopoly. Then there might be danger, it seems to me. The CHAIRMAN. Mr. Miller, if you will suspend now, we will take a recess until 2.30 this afternoon, as there is something coming up in the House that requires our attendance. (Whereupon, at 12.20 o'clock p. m., the committee recessed until 2.30 o'clock p. m. this day.) COMMITTEE ON THE JUDICIARY, The committee this day met, Hon. Andrew J. Volstead (chairman) presiding. The CHAIRMAN. The committee will be in order. We are ready to proceed, Mr. Sapiro. STATEMENT OF MR. AARON SAPIRO, ATTORNEY AT LAW, SAN FRANCISCO, CALIF. Mr. SAPIRO. Mr. Chairman, I am here as attorney for the California Prune & Apricot Growers (Inc.), the California Bean Growers' Association, the Poultry Producers of Central California (Inc.), the Central California Berry Growers' Association, the California Pear Growers' Association, the California Associated Olive Growers, the California Tomato Growers' Association, the Cooperative Seed Growers' Association, the Growers' Packing & Warehousing Association, and as organizing counsel for the Oregon Growers' Cooperative Association and the Oregon Growers' Packing Corporation. All of these associations or corporations are purely cooperative marketing associations of producers, actually operating and doing business in the State of California or in the State of Oregon. The California Prune & Apricot Growers, for example, has 7,400 different members or stockholders. All of them are prune or apricot growers, marketing their crops through the association. The total of the associations here mentioned are handling in 1919 approximately $60,000,000 worth of products, all of which are handled cooperatively. The committee, as I understand, is now considering the question of the exemptions of cooperative marketing associations of farmers under the antitrust laws of the United States. In California, probably more than in any other portion of the country, they have had to meet the problems of associations organized for the purpose of collective marketing, and problems of collective credit and collective financing and purchasing of supplies, and, therefore, the California associations or organizations have met these Federal problems, and desire to have their attitude explained in detail to this committee prior to action on the antitrust law amendment. In the first place, in paragraph 6 of the Clayton Act, as we now have it, there is an exemption for farmers' cooperative associations. The exemption is in these terms: Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural or horticultural organizations in |