Senator NORRIS. If that was just one year, it would not be so difficult.

Mr. BowEN. It would be only one year, Senator, because I have reduced my acreage, and the surplus is wiped out for the next year. Senator NORRIS. That brings us to another proposition which, it seems to me, is not a practical proposition, and that is this. You are going to control the production by the limitation of acreage.

Mr. BOWEN. But it is a voluntary limitation.

Senator NORRIS. I know it is, and it would have some effect, but everybody knows, taking wheat as an example, that on a small acreage the farmer often produces more wheat than he does on double the amount of acreage. He has to gamble with wind and weather, gales and dry and wet weather, bugs, worms, and everything. You can not regulate production by regulating acreage. I do not believe that is possible. You might overdo it very much.

Mr. BowEN. It would be better, Senator, to overdo it that way and give the farmer something, than to overdo it the way we are doing it now, and give him nothing.

Senator NORRIS. Yes.

Mr. BowEN. It would be very much better for the farmers to have many thousands of dollars for just a few hundred bushels, than to have a few hundred dollars for many thousands of bushels. Senator NORRIS. Very much better. I agree with that.

Mr. BOWEN. Everybody I have talked to, Senator, except you, thinks that we have to reduce acreage in this country.

Senator NORRIS. That is the present administration's doing, but it seems to me that if a man will think that out, he must reach the conclusion that you can not regulate the price by regulating the acreage of any crop.

Mr. BOWEN. We are not doing it here. We are fixing it by law here, and then we are letting the farmer's desire to get the most possible for his products, influence him in reducing acreage accordingly. If he did not do that, Senator, if he had a 250-bushel surplus built up this year, and 250 bushels more the next year, and 250 bushels the third year, the third year he would have 750 bushels, which is all of his share of the next year's crop. It would be all right to let it go until he had 750 bushels, and give him a dollar a bushel for that, and then put in no wheat at all. The argument against it would be that the 18 cents a bushel storage would be charged against it each year.

Senator NORRIS. Would you have anything in your law that would compel every farmer who produced wheat, using that only as an illustration again, to come in under the law?

Mr. BOWEN. Yes; I would make it compulsory.

Senator NORRIS. Suppose I would not pay any attention to the law, and I should go out and produce wheat. Would you have anything to prevent me from selling that wheat to an elevator?

Mr. BowEN. You could sell three-fourths of it, and the other fourth would accumulate to your credit, and be eaten up by storage, unless you curtail your acreage the next year.

Senator FRAZIER. The grain buyers would be licensed.

Senator NORRIS. We did it during the war, of course, but a good many people would resent it. However, I think they would have to

submit to that.

Mr. BowEN. Of course.

Senator NORRIS. If we are going to take any remedy of that kind. Mr. BOWEN. I have taken more time than I had intended to.

Senator NORRIS. I am responsible for a good deal of it.

Mr. BowEN. In closing, I want to say again that I am sold on this idea. I thought this out. This is my child-the details of it. I think it would be simple, easily understood, and would be an economical way to handle it. It is the only plan I have ever heard of, and it is the only plan any member of this committee has ever heard of, that would tend to reduce acreage, as they say now must be done. It would turn the surplus over into the hands of a Government agency, and the farmer would not be paid for it until it was sold, so that the Government would not have to make that investment in the surplus, which is an added argument in favor of it.

I am in favor of this bill that the three organizations have agreed on, because it authorizes somebody to work out the details, and bring about the handling of the crops, giving the farmer the cost of production. Let them try this plan. If they try this plan, and there is some weakness in it, they can switch to some other plan on 24 hours' notice. They would not have to come back to Congress and wait another 10 years to change the provisions of the law.

The National Producers Alliance, of which I am the organizer; the Farmers Union, for which I speak, representing Mr. John Simpson here to-day; and the organization represented by these gentlemen here, have agreed to ask the Congress to pass this bill authorizing the Farm Board, and commanding the Farm Board to ascertain the cost of production, and after they have ascertained the cost of production, to give the farmer the cost of production on the percentage of the crop that is to be consumed at home, and authorizing the Farm Board to resort to this or any other plan to give the farmer relief.

We pray the members of the committee to report that bill favorably.

We believe the time has come when the farmers are in such dire need that something has got to be done for them. Something has got to be done. I know you Senators get a lot of letters. I know that last summer, Senator Norris was at home, and Senator Frazier was at home, and probably some of the rest of you were, and you know how deplorable, how desperate the situation of agriculture is. The entire Nation is just in the same situation. Here in the Ways and Means Committee of the House I sat, day after day, when the hearings were going on, and they were trying to study how to get money. That was the thing. The question was not, "Is this a good thing? But, "Will it raise money?" The Finance Committee of the Senate to-day, and for days, has been discussing ways and means of raising money.

The only way to get a nickel is out of a dollar that rolls by. The only way the Government can get any money is out of the income of the people. The only way for the people to pay taxes is out of income. There is no other place to get it. Ultimately, the taxpayer has to pay taxes out of his income.

The only way to give the American people an income, and the only way to make every man engaged in any business in the United States prosperous, is to make the farmer prosperous. When you

put the cost of production in the hands of the farmer, the merchant, the lawyer, the banker, the doctor, the working man, and everybody, will have money to spend, and the raising of money to pay the expenses of the Government here will be a very simple proposition. Unless you do it, in a few years you will not even be able to draw your own pay as United States Senators, because the people can not pay the taxes. We will not be able to pay the salaries of our county officers. In Chicago they can not pay their school teachers. The time is going to come, if this thing goes on, in the next five years, as it has gone on in the last five, when there will not be money enough to maintain the Government of the United States. You will be like the dead man that has a blood clot on his brain. He has plenty of blood, but no circulation.

Senator NORRIS. That may be true, but we take all the money to build battleships and keep up an army.

Mr. BOWEN. I could make another speech on that.

Are there any more questions?

Senator THOMAS of Oklahoma. Does any member of the committee have any questions to ask Mr. Bowen?

(No response.)

Thank you, Mr. Bowen.

Mr. BOWEN. I thank the members of the committee.

STATEMENT OF M. W. THATCHER, ST. PAUL, MINN., REPRESENTING FARMERS NATIONAL GRAIN CORPORATION

Senator THOMAS of Oklahoma. Give your name, residence, and occupation.

Mr. THATCHER. M. W. Thatcher; representing the Farmers National Grain Corporation.

Senator THOMAS of Oklahoma. Where do you reside?

Mr. THATCHER. For the time being, at Washington.

Senator THOMAS of Oklahoma. Where is your permanent residence?

Mr. THATCHER. St. Paul, Minn., where I have been located for the past 18 years, all of the time during that period closely related to the cooperative movement, and for the past 9 years giving all my time to the cooperative movement.

Senator NORRIS. In what capacity, Mr. Thatcher?

Mr. THATCHER. In 1923, I was asked by the Hon. James Manahan, former Member of Congress, to come in and assist him as receiver of the largest grain cooperative concern in the Northwest, known as the Equity Cooperative Exchange, and help him liquidate the affairs of that institution, and if possible to build another cooperative out of it.

I left my practice as a public accountant to undertake that work with him. We have liquidated that receivership, and paid all its debts, $1,087,000, and built, along during that time, the Farmers Union in the Northwest. I was the chairman of the northwest committee that built the Farmers Union in Minnesota, Wisconsin, North Dakota, and Montana, during a period of nine years.

We organized the Farmers Union and set up four state-wide organizations during that period. We liquidated that receivership,

117902-32--13

and set up 3 cooperative institutions, 1 livestock, 1 in grain, and another on the buying side, setting up cooperative bulk oil stations, and the like.

We set up about 100 of those cooperative bulk oil stations in the Northwest, so-called Farmers Union cooperative associations.

We built our cooperative grain organization, known as the Farmers Union Terminal Association, of which I was general manager. We built that to be the largest cooperative grain marketing organization in the United States, up until the time the Farmers National Grain Corporation was set up. I was one of the committee of 16 who set that up, under the auspices of the Federal Farm Board, and have been one of its directors ever since, and for the past year a member of its executive committee, up until April 15 of this year,

1932.

I was drafted by the Farmers National Grain Corporation board of directors, agreeably to my own associates in the Northwest, to represent the Farmers National Grain Corporation in Washington, as its Washington representative, until such time as our affairs here were in a more acceptable position to the Grain Corporation.

That relates to three things. That relates to our financial situation with the Federal Farm Board; matters pending before the Revenue Department; and in connection with affairs here at Congress for the time being. About 95 per cent of the force that drove us and impelled us to arrange for this assignment were the first two reasons I have given. The third is very minor.

Does that answer your question?
Senator NORRIS. That answers it.

Mr. THATCHER. The Farmers National Grain Corporation, which I have the pleasure to represent, is indebted to Congress and the farm organizations for the farmers national grain cooperative marketing act, and for farm organizations. The marketing act, and the Farm Board, in my judgment, would have been a colossal failure if it had not been for the farm organizations who picked up the work with the Farm Board under a law which none of the farm organizations prescribed, to take what we got, for its size, for its character and quality, no matter how far short it was of what we wanted-to take it and make the most out of it, with the hope that we would get further legislation to strengthen it.

It has been a boon to the cooperative movement. All the four farm organizations, known as the Farm Bureau, the Grange, the Equity Union, and most of the Farmers Union, particularly those in the grain States, have given the Farm Board loyal support in setting up the national marketing institutions. The farm organizations, and the little cooperatives spent their time and money trying to build something further in the cooperative field, and made possible whatever success the large national cooperative institutions have enjoyed. That I know of my own knowledge to be particularly true of the Farmers National Grain Corporation. It has relied upon the strength of the cooperative movement and the farm organizations as a whole, whatever value there appeared to be in the marketing act, to get further support of farmers to the cooperative movement.

I have been very much interested. Like yourself, this has been my first opportunity to hear these discussions before the Senate Committee on Agriculture and Forestry. I have had some 29 years of

experience in business, finance, and commerce. The longer I study all these questions, the less I know about them, the less I know of any definite thing to be done to put agriculture on a parity with other institutions. It is such a complex and involved thing, that the more I study, the harder it is for me to see a way out. I try to keep away from a lot of statistics, and many of the different formulas that are presented. I am interested in all of them. In most of them I am very much interested. I see value in more or less all of them, but, when it comes to thinking the thing clear through, as a practical business proposition, as a whole, and seeing all the wheels go round, and the thing balanced to the eventual satisfaction of agriculture, it is difficult for me, but I try to keep along a few fundamental lines of business, as I learned it in actual operation. I have handled grain, and I have operated mills, and I have organized farmers. I have been comptroller in large business institutions, and I have audited large business institutions in about half the States of the Union. I try to keep a few fundamentals I learned out of that experience in mind, and that is, the capital requirements, the industry involved-of course, that means efficiency as to equipment and character of work, type of machinery, and so forth-land, and everything involved in agriculture; and the distribution of the product into sale satisfactory to the industry itself.

As I see it, agriculture has been depleted, to some extent exploited, into a position where there are many things that need to be done, and of a rather heroic nature, if the farmers on the presently occupied farms and those who formerly owned the farms and now partially own the farms, are to have any continued ownership in those farms.

Speaking of the capital situation of the farmer and his depleted capital, the only thing that I have seen and given limited study to, that will make restitution to the farmer for his depleted capital, to some extent exploited from him, is the Frazier bill. I was very much interested in your questions, Senator Norris, to Mr. Lemke, as to what will happen under this.

Personally, I feel that the welfare of agriculture in this country will be benefited in many respects if farm mortgages are made a basis of credit, and can be stabilized, and I think it will be desirable and beneficial if farm mortgages, at least temporarily, for a few years, can be made the basis for the issue of currency.

I am not an expert on currency matters. I make no claim to any great knowledge about it, but I have never been able, within my own limited understanding, to see why we had to be entirely on a metal basis, and why the most valuable thing to us in this country, the land from which the food and clothing come, on which we all depend, should not have its proper place in relation to the scheme of things. What the dangers are, more expert people than myself can determine, but from my own limited understanding and the study I have made of it, the Frazier bill is the only measure that has been presented that, in my judgment, offers restitution of capital to the people from whom it has been taken, putting them on a basis of confidence and hope and making it possible for them to hope to operate with a limited capital charge that will carry them through to eventual debt payment.