46 3. Page 4 (b), lines 11 and 12, strike out the word "recommendations" and insert the word "suggestions." Line 12, strike out the word "best. 4. Page 5, line 7, strike out the words "publish such statements" and substitute the words "to make report to the membership upon the findings." 5. On page 6, line 5, after the word "act" insert the words " of the Department of Agriculture which so may recommend after agreement with upon concurrence producers representing at least 60 per cent of the production in any year and such commercial standards and grades shall be applicable only for the season for which they are established and for the area and production for which such notice may be taken. 6. Page 6, line 23, strike out entire section (j), starting line 23 and continuing to page 7, line 7, and substitute in lieu thereof the following: "Upon application by any agricultural industry through its cooperative marketing organization to consider and advise upon the problems confronting such industry in any phases of production, distribution, transportation, financing, or upon any other matter which such an agricultural industry may ask for guidance, and, furthermore to call upon any governmental body having jurisdiction over such matters for the necessary study of special problems, the furnishing of statistics and for other appropriate action, and in conference with the cooperative marketing association to formulate practical solutions of the various problems that may be presented." 7. Page 9, line 4, after the word "State" insert a comma so as to read, "of a State, of the United States.' 8. Page 10, line 2, strike out the words " adequate accounts and audits, and". a proper financial plan, a system of articles of association or by-laws provide for the due safeguarding of any property Paragraph (e) would then read: "That the intrusted to it," etc. 9. Page 11 (d), line 20, before the word "registered" insert the word "other." Line 21, after the word "thereof" insert the words "or any registered terminal market association or any member thereof." 10. Page 12, section 8, line 3, strike out the words "for the purpose of maintaining a public market." 11. Page 13 (d), line 7, strike out the word "chartered" and substitute in lieu thereof the word "registered." 12. Page 13 (f), line 21, after the words "members thereof" insert the words "or any other terminal market association or the respective members thereof." 13. Page 14, section 9, line 10, after the word "each" insert the words "cooperative marketing association or cooperative marketing clearing house." line, strike out the word "chartered" and insert in lieu thereof the word "regisSame tered." Page 14, section 9, line 19, after the period add the following: "Each terminal market association registered under this act may use as a part of its title the word 'Federal,' and upon its stationery and advertising the words 'Federally registered." The committee did not ask, and there was not time, to state the reasons for placing the powers under this bill in the hands of Federal cooperative marketing board in place of reposing these power in a Government bureau. Briefly, the reasons were these: 1. It was the purpose of the conference to effect the solution of the agricultural problems through the development of a board, the majority of whom should be nominated by the agricultural industries themselves, and thereby free the development of the cooperative movement from the domination and control of any one department or bureau of the Government. 2. It was also strongly felt that service to agriculture would properly come through several departments and agencies of the Government rather than through any one department, and therefore a separate board should be created which would have the right to call upon every department and every agency for the aid needed by the agricultural industries of the country. In my opinion the Williams bill, with the amendments stated, would meet the broad principles outlined by the President's agricultural conference in its report to the President. As a result of several years' practical experience in the dayto-day problems of cooperative marketing, it is also my opinion that these broad principles enacted into Federal legislation at this time will fully give to the agricultural industries of the country a full opportunity for organization around cooperative associations and will provide for such associations ample opportunity for proper government leadership in the solution of their respective problems. May I acknowledge my appreciation of your courtesies, and my deep regret that I will not be able to meet with your committee at its next session. Faithfully yours, RALPH P. MERRITT. (There is printed as follows the supplemental statement from the Department of Agriculture, which was requested of Mr. Merritt and referred to in his letter:) UNITED STATES DEPARTMENT OF AGRICULTURE, Mr. RALPH P. MERRITT, The President's Agricultural Conference, Washington, D. C. DEAR MR. MERRITT: In response to your request for information with respect to what prohibitions there are at the present time upon cooperative associations adopting and carrying out production programs, the following is submitted: Section 1 of the act of July 2, 1890 (26 Stat. 209), known as the Sherman Act, reads in part as follows: "Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States * * is hereby declared to be illegal." The case of American Column Co. v. United States (257 U. S. 377) arose under this statute and was decided by the Supreme Court of the United States on December 19, 1921. The following quotation from the opinion discloses the character of the plan that was under attack and the purposes which were sought to be achieved thereby: "This elaborate plan for the interchange of reports does not simply supply to each member the amount of stock held, the sales made, and the prices received by every other member of the group, thereby furnishing the data for judging the market on the basis of supply and demand and current prices. It goes much further. It not only furnishes such information with respect to stock, sales, and prices, but also reports, giving the views of each member as to 'market conditions for the next few months'; what the production of each will be for the next 'two months'; frequent analyses of the reports by an expert, with, we shall see, significant suggestions as to both future prices and production; and opportunities for future meetings for the interchange of views, which the record shows were very important. It is plain that the only element lacking in this scheme to make it a familiar type of the competition suppressing organization is a definite agreement as to production and prices." In the trial court it was established that one of the principal participants in the plan made the following statements which are set forth in the opinion of the Supreme Court with the underscored words italicized: "If there is no increase in production, particularly in oak, there is going to be good business. 'No man is safe in increasing his production. If he does he will be in bad shape, as the demand won't come.' "The lumbermen have gone through several lean years, but we are confronted with the possibility of killing the goose that laid the golden egg. Overproduction will spell disaster, as it should always be borne in mind that the maximum productive capacity of the sawmills of the country is much in excess of any demand the country has ever known. "They can either reach forward to seize their opportunity, or they can cast it aside by the policy of overproduction. Which shall it be? It is up to the sawmill men themselves to decide." Toward the conclusion of its opinion the Supreme Court used the following language: "In the presence of this record it is futile to argue that the purpose of the 'plan' was simply to furnish those engaged in this industry, with widely scattered units, the equivalent of such information as is contained in the newspaper and Government publications with respect to the market for commodities sold on boards of trade or stock exchanges. One distinguishing and sufficient difference is that the published reports go to both seller and buyer, but these reports go to the seller only; and another is that there is no skilled interpreter of the published reports, such as we have in this case, to insistently recommend harmony of action likely to prove profitable in proportion as it is unitedly pursued." In the case of the United States v. American Oil,Co. (262 U. S. 371), which also arose under the Sherman Act, and which was decided by the Supreme Court on June 4, 1923, the Supreme Court approvingly referred to the case of the American Column & Lumber Co. v. United States referred to above, and, among other things, said: "We are not called-upon to say just when or how far competitors may reveal to each other the details of their affairs. In the absence of a purpose to monopo lize or the compulsion that results from contract or agreement, the individual certainly may exercise great freedom; but concerted action through.combination presents a wholly different problem and is forbidden when the necessary tendency is to destroy the kind of competition to which the public has long looked for protection. The situation here questioned is wholly unlike an exchange where dealers assemble and buy and sell openly; and the ordinary practice of reporting statistics to collectors stops far short of the practice which defendants adopted. Their manifest purpose was to defeat the Sherman Act without subjecting themselves to its penalties.' Other cases decided by Federal courts similar in their import to the two cases referred to above could be cited, but it is believed that the two cases in question justify the conclusion that an organized effort for the purpose of intelligently adjusting production to consumptive demands would run counter to the Sherman Act. The first section of the Capper-Volstead Act, which became a law on February 18, 1922, reads in part as follows: "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or therwise, with or without ket, handling, and marcapital stock, in collectively processing, preparing for ma keting in interstate and foreign commerce, such products Such associations may have marketing agencies in common tions and their members may make the necessary contracts effect such purposes.' of persons so engaged. ; and such associaand agreements to this statute in with the nar ted above that it It will be observed from an examination of the language quouced. In other deals only with agricultural products which have been prod arket, handling, words, this statute simply refers to the processing, preparing for mif the products and marketing in interstate commerce and foreign commerce o of persons specifically referred to in the statute. It is clear that s no way deals with production programs. It is simply concerned keting, processing, and handling of products after they have be It is interesting to note in passing that there has been no occasion the Secretary of Agriculture to file a complaint against any cooperativer under the Capper-Volstead Act. It may also be suggested that the the "manudifference between thousands of farmers who may be regarded as or en produced. us far for the association re is a wide facturers" of agricultural products acting alone in determining their Production ct, for the plans and the manufacture of almost any staple manufactured prod to act with reason that it is inherently impossible for thousands of farmers wisely ile, on the a view to simply producing what consumptive demands require. Wred in the other hand, the comparatively small number of manufacturers engash the promaking of any standard commodity can very easily, as a rule, ascertain termining duction programs of each other, and as a result can act accordingly in do the quantity of the particular commodity which they will produce. If we can be of further assistance, please let us know. Very truly yours, Y. LLOYD S. TENN Chief, |