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, 1934 National Farmers Union, November 20, 1933 American Farm Congress, March 1, 1926 Eastern Meat Packers Association, June 16, 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 Progressive Farmers Union of Iowa, Jan. 17, 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? A Mr. RUMBLE. More than 43 percent, off the terminal market. 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 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. |