thereof be liable to a penalty of $500 for each such offense. Each day during any part of which such offense continues shall constitute a separate offense. Such penalty shall be recoverable in a civil suit brought in the name of the United States, and shall be covered into the Treasury of the United States as miscellaneous receipts. "(f) Upon the application of the Attorney General of the United States, at the request of the Secretary, the district courts of the United States shall have jurisdiction to issue writs of mandamus commanding any packer, stockyard owner, market agency, or dealer to comply with the provisions of this section, of this Act, or any order of the Secretary made in pursuance thereof." SEC. 11. That the passage of this Act shall not affect or be construed to affect any violation of the Packers and Stockyards Act, 1921, committed prior thereto, or to relieve any person from liability for such violation; nor shall it affect or be construed to affect any matter or proceeding under the Packers and Stockyards Act, 1921, theretofore pending before the Secretary of Agriculture or the courts; nor shall it affect or impair, or be construed to affect or impair, the force or validity of any existing order of a court or of the Secretary of Agriculture issued pursuant to the provisions of said Packers and Stockyards Act, 1921. SEC. 12. That nothing contained in this Act shall affect, nullify, repeal, amend, or alter, or be construed to affect, nullify, repeal, amend, or alter, in any manner any of the provisions of the Act entitled "An Act to authorize associations of producers of agricultural products" (42 Stat. L. 388). SEC. 13. If any provision of this Act or the application thereof to any person or circumstance is held invalid, the validity of the remainder of the Act and of the application of such provision to other persons and circumstances shall not be affected thereby. Senator Capper, you have a list of witnesses. Who is the first witness that you desire to appear? Senator CAPPER. Mr. Chairman, I wish to make a statement rst in reference to the bill. The CHAIRMAN. Senator Capper, please proceed. Senator CAPPER. I will not take the time of the committee to discuss this measure, nor the evil it is designed to correct, in detail this morning. There are more than 2 dozen men here, representing farm organizations and farm groups and others directly affected. They have first had acquaintance with the situation which actually confronts the livestock industry, and their testimony will be much more informative and conclusive than anything that I can say. The measure is not a new one. This committee approved a similar measure several years ago, when the evils of the private owned packer stockyards were just beginning to be understood by a few farsighted members of the livestock industry. The manipulation of prices on the central markets, which are very properly under Federal control and regulation, was pointed out at that time. The bill which I introduced, and which this committee approved at that time, was designed to correct the evil. Unfortunately, it did not become a law. At that time a large percentage of the livestock producers did not believe that the privately owned yards were detrimental to producer interests. In fact, many producers believed that the privately owned and operated yards, which did not have the fixed charges against which they complained very properly at the central markets, would be a benefit to the producers by eliminating some of these charges. It is true that the shipper escapes some charges-and I want to say that the charges are a heavy item in the marketing of livestock, and in many instances cannot be justified. But it has developed, just as we asserted that it would develop when these privately owned yards were in their inception, that the private yards and concentration points, unregulated, without proper protection to the shipper as to weights and grades, have been used to beat down prices in the central markets. The private yards are not free markets. To a great extent the central markets are free markets. The central markets furnish a place for the exchange of livestock for money, and register the value of such livestock in money. They are under Federal regulation. Shippers are protected as to weights and grades, and the central markets register sales prices. Here is what has happened: The witnesses who follow me will verify this statement, and give the facts and figures to prove it. Prices paid in the private yards are supposed to be based on centralmarket prices for the same grade and date. The private yards are owned by the packers, almost entirely. When the packers have their private yards filled, they can lay off, so to speak, the central or public markets. In other words, they remove their own demand for hogs from the public markets, and that causes prices to sag. This lower price level is reflected in the privately owned yards of course. In other words, these private yards and concentration points are used by the packers to eliminate buying competition in the central markets. But the selling competition is not eliminated. Elimination of the buying competition naturally lowers prices. Then these lower prices are reflected in the private yard prices. The packers work both ends against the middle. That, as I see it, is the main problem presented by the privately owned yards and concentration points. It is charged also, and I believe the charge can be sustained, that these private yards and concentration points aid the packers in dividing territory and further eliminating competition in the buying of livestock. It also is pointed out that in the private yards the buyers--the packers-by agreement with the sellers do their own weighing, do their own grading, fix their own prices without buying competition. Given that measure of control, it is beyond human nature to expect that the packers as buyers will so handle these yards as to enable them to buy at the lowest possible figure; and through these yards buying, competition, as I have stated before, is to a large extent eliminated. All we are asking is that these yards and concentration points be placed under the same regulations and Government control as the central markets have. We believe this in a large degree will tend to restore buying competition; it certainly will be an added safeguard to the shipper as to weights and grades. There has been action in nearly all of the States in the Middle West and Missouri and the Mississippi Valley sections, backing legislation of this character. The Wisconsin State Senate, January 30, adopted a resolution favoring it, the Nebraska State House of Representatives, April 25, 1933, approved it, and the Kansas State House of Representatives in the early part of this year approved it. In State conventions the Nebraska Farmers Union, Kansas Farmers Union, Kansas State Board of Agriculture, the Omaha meeting of 6,000 producers, the Oregon State Grange, and a large number of others. I will put this in the record, if I may. (The list referred to by Senator Čapper is as follows:) American Farm Bureau Federation, December 13, 1933, and March 2, American Farm Congress, March 1, 1926 Eastern Meat Packers Association, June 16, 1933 Mid-Eastern Independent Packers, August 1933 United States Livestock Association, October 14, 1933 and February 17, 1934 National Corn-Hog Committee, 11 States, September 25, 1933 Wisconsin State Senate, resolution, January 30, 1934 Nebraska State House of Representatives, resolution, April 25, 1933 Illinois Farmers Institute, February 23, 1934 Illinois Agricultural Association, February 25, 1934 Nebraska Farmers Union, January 1934 Kansas State Board of Agriculture, January 10, 1934 Washington-Idaho Farmers Union, Feb. 27, 1934 Kansas Livestock Association, Mar. 9, 1932, Mar. 10, 1933, Mar. 10, 1934 Colorado Stockgrowers and Feeders Association, June 17, 1933 Wyoming Stockgrowers Association, Jan. 10, 1933 Shenandoah, Iowa, meeting of 10,000 producers, Dec. 13, 1933 Cattle & Horse Raisers Association of Oregon, March 1, 1934 Pacific Northwest Livestock Association, Aug. 23, 1934 Missouri Livestock Association, Feb. 4, 1934 Nebraska Stockgrowers Association, June 16, 1933 Ohio Cooperative Livestock Association, Mar. 1, 1934 Producers Cooperative Commission Association, Feb. 15, 1933 Senator CAPPER. Mr. Chairman, I hope the committee will give this measure careful attention and prompt action. My object is to have effective legislation enacted in the interest of the producer. _Amendments to the bill in its present form may be necessary. But I do believe that this industry is entitled to legislation along these lines, and I hope to see it enacted at this session of Congress. It should have been enacted years ago. I will ask Mr. Rumble to give his name, address, and occupation to the stenographer. STATEMENT OF W. E. RUMBLE, COUNSEL, FARMERS LIVESTOCK MARKETING ASSOCIATION, ST. PAUL, MINN. Mr. RUMBLE. My name is W. E. Rumble. I am a lawyer and am here as the attorney for the Farmers Livestock Marketing Association, a group of nine cooperative marketing organizations operating on the river terminal markets. I think probably that I can accurately say also that in making this opening statement-I was about to say that I think I can accurately say that in making this opening statement, I represent all of the cooperative marketing organizations of this country, which have national associations. In addition to the Farmers Livestock Marketing Association, there is included in that group the national producers' group, in which there are about 22 marketing agencies of one kind and another. In addition to those organizations, the general farm organizations of this country are proponents of this legislation. So, too, are the stockyards' group and the national exchanges which operate on all of the terminal markets of this country. Mr. Chairman, I was instructed insofar as the statement I make is concerned, to simply briefly point out to you the situation which exists today with respect to the marketing of livestock in this country, explain Senator Capper's bill to you, and tell you what the proponents of this legislation think is essential in the way of regulatory legislation. There are in this country today two distinct systems by which the packers acquire livestock. One of those is by purchase on the great public terminal markets, such as Chicago, Kansas City, St. Louis, St. Paul, Omaha, Denver, and other points of that sort. The other system is the acquisition of livestock in the country, either direct from the farmer on his farm or through so-called "concentration yards and stations" owned and operated by the packers. Engaged in that practice are all the packers of this country with the exception perhaps of those in the eastern part of the United States. Some of those packers are so-called "interior packers," who operate only in that fashion. Others are the great packers, the four large packing interests of this country, who buy both on the terminal market and in the country. You on this committee have had this subject before you on other occasions, the last being in 1928, at which time this committee recommended to Congress the enactment of legislation along these lines. Nothing came of it. The situation was serious. Senator NORRIS. Let me ask you: As I remember it, this committee had it before it twice, two different Congresses, practically the same bill. We had very extended hearings on it. Mr. RUMBLE. Senator, that is so, except that the legislation then proposed was not practically the same as Senator Capper's present bill. Senator NORRIS. No; but it had the same object in view. Mr. RUMBLE. Yes, sir; the regulation of country buying. Senator NORRIS. So we have been over it twice, the older members of the committee have? Mr. RUMBLE. That is right, sir. The situation was bad enough in 1928. It has grown progressively worse, so that today more than 43 percent of all the hogs slaughtered in this country are acquired in the country. Senator NORRIS. What is that percentage? Mr. RUMBLE. More than 43 percent, off the terminal market. A rapidly increasing portion of all other livestock is now acquired in the country. In addition to that, many of these packers are going into feeding operations and are themselves operating farms upon which enormous numbers of livestock are being fed. Our main position in this hearing will be that those operations of the packers tend to destroy the integrity of the great price-fixing markets of this country. One more word in that connection: When you adopted the Packers and Stockyard Act of 1921, you intended to regulate the activity of packers. Regardless of that intention, you have wholly failed to regulate the packers to any extent whatsoever. The only effective result to date of the Packers and Stockyard Act of 1921 has been to give the Secretary of Agriculture thorough and effective regulatory and supervisory power over operations on the terminal market, but substantially the only people who are regulated under that law are market agencies operating on those terminal markets. In addition to what this bill asks for, we believe that Congress should now do with the Packers and Stockyards Act what it intended to do in 1921, and that is put into it a measure which will effectively enable the Secretary of Agriculture to regulate all activities of packers. I would like to refer for just a moment to the report of this committee after the 1928 hearings. In that report, you said: After the decision of the Supreme Court in the Wallace case, the packers engaged in direct operations these are the fact findings of this committee the effect of which was to seriously impair the integrity of the public markets and to forestall these markets, thus taking an increasingly large number of livestock beyond the jurisdiction of the Secretary. Today that situation is far worse than this committee found it to be in 1928. This has seriously impeded the development of the cooperative marketing of livestock. Today it has almost destroyed the cooperative livestock shipping associations in many sections of this country. Unless regulated, my own personal opinion is that through country buying of livestock, the packers will eventually destroy the cooperative-marketing organizations of our producers. You said and found that this system of direct marketing gives selected packer shippers a monopoly at some shipping points, constitutes an unreasonable burden upon commerce in livestock. You found that public market prices, the terminal market prices, established the market value of all livestock and by direct buying packers have power to manipulate and control prices. We say they do that today. You found that if this method is permitted to continue, the efficiency of the price-establishing markets will be impaired and perhaps destroyed. You found that the operation of private stockyards by packers depressed the prices of livestock. We will demonstrate that conclusively to you through witnesses here at this time. You found that the forestalling of open markets renders disorderly the demand for livestock in the public markets. Now, Mr. Chairman and gentlemen, what we ask of Congress today is substantially this: We say that conditions today demonstrate the accuracy of the findings you made in 1928. We say that legislation is essential at this time which will maintain the integrity of these price-fixing markets, which will place country buying and selling of livestock on a parity with terminal market operations, which will place the country operations of the packers under the supervision and control of the Secretary of Agriculture, which will make effective the packer provisions of the original P. and S. Act. We have some suggestions to make in that connection, which we think will accomplish that purpose, one of them being that we will give to the Secretary of Agriculture the power to get into the books and records of these packers, something that he has never been able to do under the Packers and Stockyards Act. That the marketing of 49990-34- -2 |