report out in one committee bill, and that is perfectly satisfactory to myself, and I am sure it will be satisfactory to those who are interested in the same bill. What we wish to do is to clarify the situation as to the status of the farmers of this country. This bill was introduced after many conferences with the farm organizations of the East, and we got as nearly as possible the ideas of the cooperative organizations of the West, as the long distance would permit at the time I introduced the bill. Mr. Sapiro, of California, who represents seven or eight of our cooperative associations in California, is here to-day, and in due time he will present to you the particular problems that affect our cooperative associations of the West, that may not be entirely covered by this bill. The chairman has asked him to present his ideas in concrete form upon this matter. I have thought it would probably not be inappropriate for me to make certain observations along the general line of farm associations and then leave the further discussion of these problems to gentlemen who are very much more competent to deal with them in a technical way than I am; there are certain phases of the cooperative problem that particularly impress me-it is not necessary for me to call your attention to the importance of agriculture to the prosperity of this Nation or to any nation. You are all familiar with the history and the cause that brought about the fall of the great empires of the world; able historians attribute their downfall to the decay of their agricultural interest. I take it that a nation's greatness and even its life depends upon having a contented and prosperous rural population. The red flag never waves in a farmer's home. He is part of the nation; he owns his home; he is interested in preserving his possessions. Neither is he a disturbing factor in industry. I can even go so far as to say-and I believe that the greatness of any nation is in that altar erected in every farmer's home to the glory of God and to the preservation of this nation. The farm must produce a surplus of food supplies and it must produce a surplus of healthy men, that this Nation or any other nation may succeed and prosper and live. There are thirty-five to forty millions of our population that are directly interested in farm products and who live on the farm. In reporting out a bill that affects thirty-five or forty million of the people, you certainly have a most serious duty to perform not only to this generation but also to the future generations. I know that these facts are well known to you and that your committee is deeply interested in securing the kind of laws that will more nearly accomplish these general purposes the upbuilding and the preservation of our great agricultural interests. I thought it would not be amiss in just a few words to call your attention to cooperative marketing associations and why they are necessary. Mr. MORGAN. Would it interfere with your line of thought if I would ask you a question right there while it is on my mind? Mr. HERSMAN. No. Mr. MORGAN. Would this bill permit persons who are not farmers to own stock in these selling corporations? Mr. HERSMAN. I am going to ask you to let one of the gentlemen that will follow me bring that our clearly. They have that in mind and they will bring it out more clearly than I can. Mr. MORGAN. Very well. Mr. HERSMAN. I will say that it might not be taking up too much of your time in a few words to sketch the importance of cooperative associations and what they mean. The farmer realized that it was best for himself and the consumer to have the food supply of the Nation out of the hands of the speculator and the gambler. You know as well as I do that the farmer has never, up to the last few years, had a word to say about the price that he should sell his product for. They have been in the hands of the speculator since the foundation of this Government, and they have been in the hands of the gambler in food supplies for all time. The farmer is trying to solve their problem. He is trying to close the gap between the producer and the consumer; he is trying to cut out the tax in transit-that is, the cost between him and the consumer. Statistics show that of every $3 that the consumers of this Nation pay for their food supply, the farmers get $1 and the middleman, the speculator, and the gambler, get $2. The farmer is trying to solve that problem. He had never been able to do it until he learned how to form cooperative associations and to operate through cooperative associations. He is trying to standardize his product and he is trying to advertise those products. He is trying to take his products to the consumer under his own name, greatly to the benefit of the consumer and greatly to his own benefit. He must be organized as a cooperative association or he can not do those things. Individually the farmer has no power of collective bargaining, but he has the power of bargaining when he is organized. In some of our western associations they have spent in three years over $1,500,000 in advertising. And you know, and I know, that every modern business must standardize their product and must advertise their product to be successful. The farmer is trying to solve a few of those fundamental things that I have so hastily sketched to you, and he is doing far more than that; he is increasing production at a tremendous rate. If the farmer is successful, increased acreages at once is the result; the cooperative association has wonderfully increased production. I could go into this subject and show you that as a direct result of the cooperative movement the planted acreage has increased 200 and 300 per cent. Now, I say the farmer, through the cooperative association, is trying to cut this gap. He is trying to come closer to the consumer. He is doing it, and the only way he has ever succeeded in doing it is by this means. Congress has realized that it was necessary in the interest of the public good to allow farmers to do collective bargaining. In the Clayton Act, section 6, they use these words: That the labor of a human being is not a commodity or an article of commerce, and nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural or horticultural organizations instituted for the purpose of mutual help and not having capital stock and not conducted for profit. The Congress tried to help the farmer solve this problem, but they inadvertently used these words "not having capital stock." Congress did not realize that it was as necessary for the farmer to have capital stock as it is for any other business in the world to have capital stock. No business can operate without capital stock, and I take it that unintentionally they tied the hands of the farmer in trying to aid him. Mr. STEELE. Is it your purpose to have capital stock transferred to others outside of farmers? Mr. HERSMAN.. No, sir. You have ever since the passage of this Clayton Act, tried to make temporary laws to protect the farmer in this one fundamental collective bargaining. In a bill (H. R. 8624) introduced and passed by the House and Senate for the distribution and control of food products, fuel, and other things, you make it unlawful for a person willfully to destroy-I am not going to read that whole section, but just a part of it-to willfully destroy any food product, waste any food product, to hoard, monopolize and charge unreasonable rates, conspire or combine, agree or arrange with any other person to restrict the supply; to charge excessive prices-you go on to say that that is unlawful and then immediately you go on and say: Provided, That this section shall not apply to any farmer, gardener, horticulturist, vineyardist, planter, ranchman, dairyman, stockman, or other agriculturist with respect to the farm products produced from lands owned, leased, or cultivated by him: And provided, That nothing in this act shall be construed to forbid or make unlawful collective bargaining by any cooperative association or an association of farmers, dairymen, gardeners, or other producers of farm products with respect to the farm products produced or raised by its members upon land owned, leased, or cultivated by them. You say it shall be unlawful to do all these things; that it is against public interest to do them; but you say that the farmer can do them. You turn right around and say that the farmer has the right to do them. Now, you know, and every man who voted on that bill knows, that the farmer is not going to do any one of them-that he is not going to destroy, that he is not going to waste, that he is not going to hoard, that he is not going to charge unreasonable prices, because he can not. He can not conspire, combine, or agree. You know that, and that is the reason you passed this temporary law. Only a few weeks ago we passed the deficiency appropriation bill appropriating $200,000 for the Attorney General to prosecute violators of the antitrust laws, and you go on and say that no part of this $200,000 shall be used by the Attorney General to prosecute the producers of farm products and associations of farmers who cooperate and organize in an effort and for the purpose of maintaining fair and reasonable prices for their products. You have done everything that you could, when you found that your laws were inadequate to protect the farmers of this Nation, by giving these temporary laws, in the hope that he would not suffer. Now we are coming before you to ask you to clarify the situation of the farmer, so that he will know definitely where he is; so it will not be necessary to write on every bill a rider in order to give proper protection to farm organizations. I have had the opportunity since I have been in Congress to observe how the present law operates. The California Raisin Association has been cited to appear before the Attorney General to show cause why it should not be prosecuted criminally. That association sent three representatives from California, and the department did not do anything. They have recently been cited to appear before the Federal Trade Commission to show cause why they should not be prosecuted. That means another long journey of over 3,000 miles by the Cooperative Farmers' Association, and nothing will be done to them. The farmer is simply asking, and he has the right to ask, that this Congress meet the question fairly-to say whether he has the right to do collective bargaining or whether he is violating the law. Mr. WALSH. The idea of their being permitted to do collective bargaining is so that they may get better prices for their products? Mr. HERSMAN. Yes, sir. Mr. MORGAN. Is that the main proposition, or is it to reduce the cost of transportation and distribution and thus, perhaps, get a less price but more profit, with the object of helping the consumer as well as the farmer? Mr. HERSMAN. I will say this, that a larger increased price to the farmer, which he is entitled to, increases production tremendously, and has already done so. I say further that he must have an increase in price for his product to advertise his goods and to standardize his goods. Mr. MORGAN. You want this organization for the purpose of getting higher prices for the farmers, and the real object is not to cut out the extra cost of distribution? Mr. HERSMAN. The real object of a farmers' association, as I have tried to point out, is this: To cut down the $2 between the farmer and the consumer. There is $2 of the $3 that the consumer pays for his product-two of those dollars go to the middleman, the speculator, and the gambler. Mr. WALSH. How does this proposed bill prevent that? Mr. HERSMAN. It gives the farmer the opportunity, which he has never had before, of handling his own products. If you were as familiar with the situation as I have been-the farmer situation-he never has been able to say what he shall sell his goods for. The speculator comes around and says, "I will give you so and so," and he takes it, the $1, and then the middleman takes $2 to bring it to the consumer, and the consumer pays $3. Cooperative associations have greatly improved the conditions of the farmer, and even under the high prices they have never raised them unduly to the consumer. Mr. MORGAN. Now, do you think that the wheat farmers-most of our farmers are wheat farmers all over the United States ought to be allowed to organize into a corporation and have one single wheat corporation? Do you think that the wheat farmers of the United States ought to be organized into a single corporation, through which and by which the entire wheat product might be distributed and sold? Mr. HERSMAN. I will answer that by referring you to the foodcontrol act. You have said that the farmers have a right to destroy; you have said the farmers have a right to waste; you have said the farmers have a right to hoard by your own laws, because you know he wouldn't do it. Mr. MORGAN. Now, I asked you a straight question. Mr. MORGAN. I am not saying what I am in favor of; I am simply getting your idea of how you think this ought to go. Mr. HERSMAN. I think the farmers of this Nation have a perfect right to organize, but I will point out to you this: That it would be impossible for the farmers to secure a harmful monopoly in that case, because you know as well as I do that the price of wheat is controlled by the world-wide conditions; we are asking that he have the right to do collective bargaining. The minute he abuses this privilege or threatens to restrict commerce our present antitrust laws will come in and prevent him. We are only asking simply and solely that he have a right to do collective bargaining. He can not bargain alone, and we ask you to let him bargain with his fellows for the mutual benefit of himself and of the consumers always. Mr. MORGAN. You place no limitation on it in your bill, as I understand it. All the raisin growers, for example, might be in one association. Mr. HERSMAN. We place a limitation upon him by our very laws, because you say he can not have an unrestrained monopoly to operate his business in restraint of trade. Mr. WALSH. Are the farmers suffering for lack of this legislation? Mr. HERSMAN. The farmers are suffering for the lack of this legislation, Mr. Walsh, because in every bill you realize, and every man in Congress has realized, that they have tried to give him this protection of collective bargaining. Mr. MORGAN. Is that in good faith or just as a compliment to the farmer? Mr. HERSMAN. I wouldn't reflect on the Congress of the United States by saying that it was not done in good faith. Now, Mr. Chairman, there are gentlemen here very much more competent to continue this discussion than I am. I am going to ask that you call on these gentlemen in the following order: Mr. Barbour is here from California and is very much interested in this bill. I would like to have Mr. Barbour say something now if he desires. STATEMENT OF HON. HENRY E. BARBOUR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA. Mr. BARBOUR. Mr. Chairman, there are some things I might say in regard to this bill, but the officers of the California Associated Raisin Growers, which is vitally affected by this legislation, are to appear here in Washington again next month before the Federal Trade Commission, and they have asked for the privilege of being heard by the committee. They were here in September and appeared before the Department of Justice to show cause why they should not be indicted and prosecuted. The Department of Justice has taken no action up to the present time. I was present at those hearings, and I am absolutely satisfied that they made out a convincing case. I never heard a clearer case in any court room, or for that matter anywhere else. The matter has been referred to the Federal Trade Commission, and they are again ordered to come back to Washington from California. They will be here next month. Now, they have got to show cause to the Federal Trade Commission why they should |