There are 24 men whose integrity and purpose and motive and honor can't be assailed.

I will say to you men since it has been proposed that you investigate those who attended the meeting of the 23d of February, you investigate their tobacco history and production. You investigate them as gentlemen and as men of character. I will very patiently and happily abide the results.

I want to say one further thing in that connection and I regret that I feel obliged to say it, that is, that had the Burley Tobacco Growers Cooperative Association of Kentucky, which has had an enviable history for 35 years, stayed out of the field of legislation and not offered its counsel to the people charged with the responsibility of legislating, I wonder where and when and from what source we would have had today the 1938 act as it applies to tobacco.

Right in the councils and in the offices of this association at Lexington, Ky., were born and formulated and perfected some of these ideas of adventure in American agriculture at the time, and ideas which down through the years have proven practicable, and have been the greatest boom to the burley tobacco growers of the eight-State belt of anything that has happened in my lifetime.

While I am proud to be associated and honored to be the chairman of the Eight-State Committee, I am prouder of the record of the Burley Tobacco Growers Cooperative Association of Lexington, Ky. But these two groups, cognizant of the situation, afrighted by it, as a matter of fact, come here and bring their recommendations for whatever they may be worth, solely with the purpose of serving the cause of burley tobacco and improving a program for beltwide and not local application.

I think there is a complete accord upon the lack of good sense in allowing a producer of tobacco to exceed his allotted acres, and thus acquire the right to an ever-increasing or to a larger, at least, tobacco allotment. It is tantamount to saying to him, "Now, you are not satisfied but by your acceptance of an allotment you have subscribed to the quota program, and to the acreage allotment idea (and that, mind you, was done in the national interest). Yet you can go on and transgress the national interest and be rewarded for it."

It is just about tentamount to saying to a man who wants a liquor license that if you go out there and bootleg for a while, for 5 years, perhaps, we will give you a license to sell legitimate liquor at the end of that time. There is accord on that. There is no issue.

Both groups believe that not only should a producer of excess tobacco be required to pay a penalty under the law, but he should be penalized by a reduction in his allotment by an amount equal to the excess. The necessity of that may be obviated if we can get applied an effective penalty.

Both groups agree that the penalty should be higher. But there is a little difference of opinion on that. The Eight-State Committee recommended a flat 75 percent of the previous year's market average on all excess marketing. The burley association takes a rather novel view of that. It may even be an unsound one. But the Burley Association of Kentucky said, "Yes, make it 75 percent, but there is no difference between the producer who has a little excess deliberately and undertakes to sell it-in fact, he is worse than the man who has no privilege or no license to sell penalty free tobacco or the man who has

no allotment at all." So the burley association has said if you make the rate 75 percent, make it apply to the entire production of the man who has blown both hot and cold, the man who wants to derive benefit from this program and at the same time ride it.

The reason for the association's view is this. As the 50-percent penalty has been applied over the years 40 percent and then some other percent-when it is reduced to a converted rate, it is not a penalty that scares or frightens any producer in a 50-cent-a-pound market. In other words, if the penalty applies only to excess, if a man has 5 acres and produces and undertakes to sell 5.5 acres, he perhaps would pay half a cent or a cent a pound on his entire production. When you consider his motive that he has had and will still have in one particular, that his object in planting excess tobacco was to get away with it if he could and to not be discovered, and that in the second place it was to acquire the right to increase his quota provided the excess was more than 10 percent, as I recall, of his allotment, when the penalty is applied and looked at in a realistic manner, it simply does not constitute a deterrent to the production of excess tobacco. It may be, though, that 75 percent of the previous year's market average on the excess is enough and the burley association won't quarrel with anybody about it.

The Eight-State Committee recommended that this penalty is imposed for the purpose of implementing public policy. If it were so declared by the Congress it would probably mean that a taxpayer who happened to have grown excess tobacco would not be permitted to take as a deduction against income the penalty that he paid on his excess tobacco. There are tobacco growers who are in high brackets for income tax purposes. Obviously, if they can pay a 50 percent or a 75 percent penalty and then get credit for one half of it back against income they have not suffered too much punishment in violating this concept of production control and this program.

The two groups recommend that we employ aerial surveys annually. The burley association recommended that as a subject of regulation. The Eight-State Committee recommended that as a statutory requirement.

The two are in accord on the question of tolerance in calculating acreage. The Eight-State Committee recommended that it be eliminated by statute, and the burley association that it be eliminated by regulation.

Both groups believe that those who promote violations or conceal violations of the program should be punished by criminal prosecution and they recommend that, in cases where there is willful mismeasurement of tobacco, the Government employee responsible for that be subject to a fine and imprisonment or both. Select the amount of time and the amount of fine that may be appropriate and proper. They suggested a fine not to exceed $1,000 and a jail sentence not to exceed a year, or both.

The two are in accord on the proposition that in the event of increases in the future those increases be shared only by those who have taken decreases in the past.

Here is where the controversy begins. I certainly don't want to be at all disagreeable about it. I only want to express to you the views and the reasons as best I can.

The Eight-State Burley Tobacco Committee recommends that title 7, United States Code Annotated, section 1315, be amended to provide for a minimum allotment of 10 percent rather than 25 percent of the cropland. That is the minimum allotment statute.

The Burley Association of Kentucky, administering the program in five States of this eight-State area and having a membership in those States of 250,000 tobacco growers, recommends that all minimum allotment provisions of the law be repealed.

We would not pose an issue between the small and the big grower. We do not for a minute subscribe to the charge or the claim that it is war between the little grower and the big grower. All of us know who have watched the tobacco history over the years that in the market place, without the protection of this program, all the little growers, and it is because of the pecularity of the tobacco market where there are many sellers and few buyers, it is only by the intervention of the price support program in the market possible by production control that anybody, a big grower or a little grower, a five-tenths allottee, or a hundred-acre allottee, has any right or any protection.

I started practicing law with the depression. I had the pleasure of being here in Washington 4 years with the greatest champion of tobacco people that I have ever known, and that was the lamented chairman. He let me go to law school when I worked for him. I went back about the beginning of depression and I started in the practice of law. It was a great experience and a great training.

You know what class I saw more often sold out at the court house door? Not the little grower but the so-called big ones. They suffered. They took a far more terrific beating than the little ones did, if judicial sales at the court house door of my county mean anything.

The Eight-State Committee recommends that the Secretary of Agriculture be authorized by law to redetermine and set quotas for 1955. The Burley Tobacco Growers Association of Kentucky recommends that the Secretary of Agriculture be authorized to redetermine and set burley tobacco quotas for 1955, only in the event that the minimum allotment provisions are repealed and that everybody, big and little, if we want to deal with tobacco growers in that sense, pay their fair share and their fair proportion of the freight bill.

As I said at the outset there is nothing wrong with the principle of production control, but we simply have not employed it when we should have. We have allowed to slip up on us a situation that is frightening and that may well be calamitous. But I submit to any person the question, how can you have production control when you control the production on only 2 acres of your tobacco and you let the third acre of your tobacco go without control.

We are verging on an era of tobacco production when they say we will be able to produce 2,500 to 3,500 to 4,000 pounds per acre. Whenever we get up to that point, we will not need anything to supply the trade, but this 110,000 or 112,000, or 113,000 acres of exempt tobacco. Where are the rest of the crowd going to wind up?

In conclusion, I want to report to you that the Eight State Burley Tobacco Committee makes no recommendation relative to poundage limitation but the Burley Tobacco Growers Association of Kentucky positively recommends that the Secretary of Agriculture in his discretion be authorized to invoke in addition to acreage allotments a pound

age limitation for every acre and every tenth acre of Burley Tobacco that is grown.

Now I grant you that there are many people who say it is difficult of administration. We have known that all the time. We have heard that from very competent people and very reliable people. But I want to ask those who oppose it how can you have effective production control in the light of our experience unless we control the pounds produced per acre or per every tenth of acre. The fact is that in the past 15 years the production of Burley Tobacco in every year except 1947 has exceeded the marketing quota in pounds for Burley Tobacco consistently in spite of cuts, in spite of weather, adverse conditions and everything else, tight controls and lax controls.

Whatever we have done in the way of production control, we have had more production year in and year out. You cannot gage by the mere allotment of acres the number of pounds that you will have when the tobacco is marketed. The only way we can ever reach parity between production in pounds and market requirements is to superimpose on acreage allotments a reasonable limitation in pounds.

The Burley Association of Kentucky suggests that it be a flat arbitrary figure of 1,800 pounds. I am sure the Burley Association of Kentucky would counter-if that is rejected-with the suggestion that it be based upon the individual farm history and that information, gentlemen of the committee, is variable in every county office in the eight-State area.

And quickly every man's average production or every farm's average production for the previous 5 years could be determined, and every owner of a farm could be apprised not only of the tobacco acreage that he might produce but the number of pounds that he might sell from those acres. That would be sure enough very definite and the Burley Association of Kentucky thinks very sensible production control. The Burley Association of Kentucky believes that until you do invoke poundage limitations, you will never have effective production control.

The CHAIRMAN. Mr. Berry, we deeply appreciate your most clear presentation of the matter.

Mr. BERRY. Mr. Chairman, there is one further suggestion that I had no memorandum on that I wanted to call the committee's attention to, and that is by regulations; there is a provision that underplanting of tobacco works a forfeiture of allotment rights. The Burley Association of Kentucky and the Eight State Committee, as well, believe that is a very unjust provision. I do not know whether there is authority for that in law.

However, be that as it may, we believe that the law should be amended to preserve to every farm, whether it has produced or not, the tobacco allotment. A tobacco allotment comes to be an essential part, and a very substantial part of the value of a farm.

For an older person, for instance, because of the disability of age, to forfeit his right to grow tobacco is a hardship. It robs him of his property. More than that, in central Kentucky there are many farms, I understand, that are principally devoted to the production of horses and other livestock that would not grow burley tobacco in the present time were it not for the fact that failure to grow burley tobacco would cause them to lose their allotments for that purpose.

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How it should be done, we have some suggestions about it, but it is not necessary to disclose and discuss them here. We think certainly that the act ought to be amended to overcome that practice of working forfeiture for underplanting.

The CHAIRMAN. Thank you, sir.

Are there any questions?

Mr. WATTS. Mr. Chairman, I would like to thank Mr. Berry for the splendid statement that he has made. I want to say that I am well acquainted with the illustrious history of the Burley Tobacco Association at Lexington, Ky., and I wish Mr. Berry would tell the committee how many States that association represents the growers of?

Mr. BERRY. We represent the growers and we have a membership in five States, West Virginia, Ohio, Indiana, Missouri, and Kentucky. Our membership consists of 250,000 growers.

Mr. WATTS. I would like to add, Mr. Chairman, that I am well acquainted with the splendid work that this association has done in formulating legislation in past years. It has always worked for the benefit of all the growers and not one group of growers against another.

While I cannot visualize anybody attacking the integrity of this association or its right to participate in legislation, if such attack was made, in my opinion it was made through ignorance and prejudice. That is all, Mr. Chairman.

The CHAIRMAN. We certainly thank you.

Mr. BERRY. Thank you, sir.

Mr. WATTS. I would like to call Mr. William Clay who is an attorney for the Warehouse Association of Kentucky. He is a fine young attorney from Mount Sterling, Ky., and that also happens to be in that district I have been talking about. I ame sure that he will bring us the best thinking that is possible on the subject.

STATEMENT OF WILLIAM CLAY, ATTORNEY, WAREHOUSE

ASSOCIATION OF KENTUCKY

Mr. CLAY. Mr. Chairman, members of the committee, more than 90 percent of the burley tobacco which is marketed in the United States is sold through the sales facilities of members of the Burley Auction Warehouse Association. Out of that fact arises one of my first prejudices and all of my prejudices should be disclosed to you. If we suffer any additional crop curtailment, there will be many warehousemen who will make an inadequate yield on their investment this next season. There will be some who actually will lose money.

I have another prejudice. I am one of those seven-tenths-acre producers myself. Nevertheless, the warehousemen like the Farm Bureau and the burley pool, are paid by farmers to work for farmers. Their interest is our paramount interest.

For that reason the Burley Auction Warehouse Association endorses all of the proposals of the Eight State Burley Tobacco Committee and it endorses, too, the suggestions which you heard this morning from Mr. Randolph Taylor.

This is the first time that the Burley Auction Warehouse Association has taken a position publicly on minimum acreage restrictions. We feel, as many of the other witnesses, who have appeared here today