livestock-we say that the marketing of livestock in this country is so affected with a public interest that the Secretary of Agriculture ought to determine when, as a matter of public necessity, people should be permitted to engage either in the packing business, the slaughtering business or the marketing business.

In that connection, I want to say just one more word along those lines. You will be told undoubtedly before this hearing is much older that the Secretary of Agriculture is now conducting an investigation of direct marketing. He is doing that. No one knows when that investigation will be concluded. Some of them down at the Department tell us perhaps next June or July; but Mr. Chairman and gentlemen, you don't need to wait for the result of that investigation to be able to determine for yourselves the necessity now that the Secretary of Agriculture regulate and control the country operations of buyers. If we were suggesting to you legislation which would eliminate country buying or in the interior packer, then I would say you ought to wait for the result of that legislation. We are not doing that. All we are asking of you is effective legislation to give to the Secretary of Agriculture the powers you thought you gave him in 1921, which will enable him properly to regulate and control these country activities of packers, which are now absolutely without any government control or regulation whatsoever.

Now for a few words with respect to the "Capper bill," so called. This bill does these things. In the first place it defines the activities. of a packer. That is to take care of some Federal decisions holding that a packer was not a dealer in reference to the Packers and Stockyards Act. I think it was at the suggestion of the Department, perhaps. Even if we hadn't had that suggestion we would have put it in anyway.

The bill adds to the definitions of stockyards as now found in the Packers and Stockyards Act a new class of stockyard, intended to include within it all of the yards operated by and used by the packers in their country buying operations, provided those yards handle a sufficient volume of livestock in the opinion of the Secretary of Agriculture to materially affect the flow of commerce in livestock or the price-fixing markets of this country, or that they enable the packers to allocate territory, manipulate prices, and otherwise injuriously affect the prices of livestock.

After defining that class of stockyards the act goes on and prohibits certain practices by the owners and operators of such stockyards. Briefly, I think those practices can be said to be these: The act prohibits them from engaging in any unfair or deceptive practice in the purchase or handling of livestock; prohibits them from giving preferences to any person or locality; prohibits them from selling or buying for the purpose or with the effect of controlling prices; prohibits them from doing any act for the purpose of controlling the prices of livestock; prohibits them from conspiring to apportion territory or control prices.

Surely no person can object to anything which is found in this legislation, unless that person simply desires that the packers continue to operate without any governmental regulation. If there is any business in this country which is affected with the public interest so as to warrant regulation by our Government, it is this business through which the packers acquire almost 40 percent of all the livestock produced in the United States.

In addition to those things, the bill regulates further, not only packers but all market agencies, by giving to the Secretary of Agriculture the power to suspend the right to do business of any market agency, packer, or stockyard, which or who violates any provision in the Packers and Stockyards Act or any order made by the Secretary of Agriculture. That is a right which with respect to market agencies the Secretary has secured through the tacking on to his appropriation bill each year of a provision giving him the right to suspend market agencies for violations of the law.

The bill also gives to any person who may be damaged by any violation of the law the right to sue the violator and recover damages. Now, Mr. Chairman, we have here a large number of witnesses. Mr. NORRIS. Before you go into that, did you have anything to do with the preparation of this bill?

Mr. RUMBLE. No; I did not.

Mr. NORRIS. Do you know where it was prepared? Senator Capper will probably give us that information.

Senator CAPPER. It was prepared by Congressman Polk, acting with a committee of the cooperative organizations. It was introduced in the House by Congressman Polk.

Senator BANKHEAD. Let me ask you a question, please, sir, because I am not familiar with this subject. I assume that your purpose is to eliminate practices which will depress the price of livestock to producers.

Mr. RUMBLE. That is one of them.

Senator BANKHEAD. Is that your chief objective?

Mr. RUMBLE. I would say that our chief objective is to raise the present price of livestock in this country and insure to the producer of livestock, who sells his livestock either on the terminal markets or in the country, an absolutely fair deal from the man who buys his livestock.

Senator BANKHEAD. Now your practices that you people thinkand I say now to you, so that you may not misunderstand me, that I am for any reasonable program that will get the producers more money-but is your difficulty largely with the central packers in Chicago, or do you have much difficulty with the smaller packers and distributors over the country?

Mr. RUMBLE. Senator, that question will be answered later by men who are thoroughly competent to answer it. I am just a lawyer and can give you my personal opinion about it if you want that.

Senator BANKHEAD. I assumed that from your connection with it, you would have a general idea of where the trouble is.

Mr. RUMBLE. I wouldn't hesitate to give you my own opinion, but I would much rather you would hear these men that are in the business and know what they are talking about on that subject.

As I said in the beginning, we think that Senator Capper's bill can be amended and enlarged so as to better accomplish the things which I stated to you we thought were necessary in the way of legislation at whatever time your chairman informs us is the proper time to do it. We ask leave to submit to you amendments of the Capper bill which, in our judgment, will make it more effective for the purposes I have outlined to you.

Mr. Chairman, we have here a good many witnesses. It is our plan that the first three of those witnesses will take probably some

substantial time to outline to you gentlemen the questions involved in these matters, explain thoroughly to you the practices of packers and others which are involved, and give you their reasons why this legislation in their opinion is necessary. All of the other witnesses will not take more than 5 minutes each, with their testimony. have attempted to arrange matters so as to expedite this hearing. We would like to know whether that suggestion meets with your approval.

The CHAIRMAN. Well, so far as the committee is concerned, they will have to be governed largely by other matters. I think it may be possible to hear the principal witnesses; as Senator Norris has suggested, this matter has been discussed before this committee some two or three times. I think we may be able to give you sufficient time to get enough of the facts to govern us in accordance with the legislation. Senator POPE. May I make a suggestion, Mr. Chairman? I didn't quite get clearly in my mind your statement with reference to the result of the present Packers and Stockyards Act. I understood you to say that the effect of that was at one time wholly nil, and then you made the statement a little later that it did affect the terminal operations as distinguished from your country operations. Either you or some one of your witnesses might explain that as to just what affect the present act does have, and then what you seek to accomplish in addition to that.

Mr. RUMBLE. That will be explained, Senator. Insofar as my statement was concerned, what I said was that the original Packers and Stockyards Act does not enable the Secretary of Agriculture to regulate or control in any manner whatsoever the country operations of packers, whereas on the other hand it does give absolute control of the marketing operations on the terminal markets.

Senator FRAZIER. What are the names of the farm cooperative organizations that you represent?

Mr. RUMBLE. Senator, I actually represent here the Farmers Livestock Marketing Association only, which is composed of farmers union agencies, operating on the St. Louis, St. Joseph, Wichita, Omaha, St. Paul, Denver, Sioux City, and Kansas City markets. The National Producers Cooperative, which I mentioned to you, has 22 agencies. They have an agency on each of those markets and in addition some 10, or 11, or 12 other agencies. I also said, and it is the fact, that the great farm organizations of this country are behind this legislation, and we will submit to you here resolutions and representatives of the National Farm Bureau organization, the National Farmers Union organization, and the National Grange, which I think compose all of the great farmer organizations of this country. The CHAIRMAN. Governor Kraschel, of Iowa. Will you come and take the witness stand?

STATEMENT OF HON. N. G. KRASCHEL, LIEUTENANT

GOVERNOR OF IOWA

Governor KRASCHEL. I happen to be Lieutenant Governor of Iowa, and our special session adjourned Monday, in which we tried very hard to enact legislation that would govern or control this evil in the State of Iowa.

I might say that Iowa, which produces approximately one fifth of the hogs of America, 72 percent are purchased direct; approximately

35 percent are purchased by out-of-State packers and approximately 37 percent are purchased by the interior packing plants of Iowa, of which we have five or six, and very large ones. Therefore, we feel in Iowa, that with 28 percent of 11 million hogs going to the central market, which is truly competitive, and 72 percent going to privately owned markets upon which no other competitor operates, our hog crop is not being sold on a competitive basis.

The bill that we sought to enact in Iowa

Senator BANKHEAD (interposing). Governor, right there, would you mind a question? Why do they sell to local markets if they can get a better price on the central market, say, in Chicago?

Governor KRASCHEL. Why do the farmers do that? It is a pretty hard question, Senator, to answer why farmers do some things. Being a farmer myself, or having been until recently, I think the greatest appeal to the individual farmer is the fact that he can load a small truckload of hogs as they finish from his feedyard, deliver them to some nearby point in just a few hours at a very low expense, and by comparison he feels that he is doing very well, but he fails to recognize that the packers, having withdrawn their support from the central markets, that the central market is no longer a competitive market.

I dare say that if we take into consideration the price that is being paid today in Chicago and most of the interior points, a very favorable comparison can be made considering the differential, but the farmer fails to overlook that when 72 percent of the hogs of the State are being purchased in this way, and more than 45 percent of the total Chicago gets is purchased direct, that Chicago ceases to be a proper base market.

Furthermore, the off grades, the stags, the piggy sows, and all of the second-grade hogs that are accumulated by the concentration point, or that the farmer chooses not to sell to the concentration point buyer, are all finally absorbed for the Chicago market. I use Chicago because it is comparable to others. In other words, the Chicago market today, consisting of 55 percent of the gross receipts, must absorb all of the off grades, thereby reducing the general price level. I think that is the best answer why, convenience particularly, the producer is enticed to sell to the local market.

Senator NORRIS. Governor, I realize the importance of the question that the Senator has asked. I would like to add to your answer if I may. It is claimed, at least, and that was the conclusion that we reached after a great deal of consideration, when you take the 72 percent off the central markets, you lessen the competition on those markets. The buyers are not there, and when the buyers are not there the competition ceases, and the central markets have a tendency to go downward. It is not that the farmer today might not get just as good prices at home as there, but if you continue that all over the country eventually you destroy the central market. That is the basis of the price upon which everything is based after all. You destroy these central markets.

The CHAIRMAN. What percentage of the operators on the central markets are practicing this method of buying in the interior?

Senator NORRIS. A very large percentage, a great many of them. Some of them do it partially, not entirely. The theory is at least that whenever you take away from the central market, the buyers

that are there to buy, they have bought out in the country and don't need to buy in the central market.

The CHAIRMAN. If they have the facilities of buying in the interior more profitably than on the central market, they neglect your central market and buy in the interior?

Senator NORRIS. Exactly. The result is that your central market goes down, it is not competitive, the buyers are not there.

The CHAIRMAN. The suggestion was made by Senator Bankhead. that unless the operators of the central market are the operators in the interior, it looks as though the scarcity of stocks going to the central markets for sale would create a higher price there because of the smallness of the supply.

Senator NORRIS. The buyers are gone. The buyers are not there.. They are in the country.

Governor KRASCHEL. By way of supplementing that statement, may I give you some figures? During last November there was what was known as a sellers' strike on the Chicago market. They held out for higher prices, and during the period of November 3 to the 18th, in which the sellers stood pat, the packing houses located on the Chicago market purchased 80,729 hogs. I might say that of the 80,729 that they purchased in the 2 weeks' time, they purchased nearly 60,000 the last day when they made their agreement to break up the strike. During that 2 weeks' period, the packers on the Chicago market purchased in their direct buying points over the country 177,849. In other words, they purchased twice as many from their country feeder points as they purchased on the Chicago market, proving conclusively that they could circumvent that market when an emergency arose.

I think that is one of the clearest points in question.

Senator FRAZIER. Let me say this: The price that is paid out in the field for these hogs is based on the price at the central market. Governor KRASCHEL. That is correct.

Senator FRAZIER. They say the central market has gone down, and it has gone down because the hogs haven't been sold there. They have been bought out in the field, not in the competitive market. Therefore, the farmer selling to this agent out in the field hurts his own market because his hogs do not go into the central market, and they are not sold there in competition with others that makes the market.

Senator SHIPSTEAD. I would like to ask the witness a question. I have been told that these people who buy out in the country in the concentration points, buy the best hogs and pay for them on the basis fo a lower grade hog at the main or central market. Do you think there is anything in that?

Governor KRASCHEL. I would hardly admit that it was as drastic as that. They are supposed to bid for the top grades in the country on the basis of the top grades in the central market, and they say freely that they only want top grades. Their argument for going to the country is that they can assure themselves of a satisfactory supply of good quality, and they tell the farmer that they don't want his second grades; and when the farmer asks them what to do with them, they say, "ship them to market." If the farmer takes a grade into the concentration point-and all farmers have a few of those off grades accumulating with every load-he is forced to