this service he will meet the same fate he met during the crop-year 1934–35promises made but unfulfilled.

In all fairness, the ginner should be compensated for the outlay expended by him and the loss sustained during the crop year 1934-35. In this connection, I would like to call the committee's attention to a few facts and figures which very graphically set forth the plight of the ginner and the actual loss sustained by him during the crop year 1934-35.

From the answers made to questionnaires mailed to ginners in Missouri I am able to present to you the following summary of the report of 23 ginners in the State of Missouri. These 23 gins ginned a total of 38,369 bales and made bonds required by the Government, aggregating the sum of $90,500, at a cost of $853. These same gins expended for additional books and records required by the Government the sum of $1,026. The additional cost and expense accrued to these gins for that year amounted to the sum of $24,020.32, or an average of $0.626 per bale.

It is fair to assume that the report from these 23 gins is a fair cross section of the ginning industry in Missouri and that the cost per bale would be about the same in other States as in Missouri, unless it be in the State of California, where the volume per gin is much greater than in the other cotton-producing sections of our country.

The records of 2,254 gins, out of approximately 13,000 operating gins in our country, show the average additional cost per bale to be the sum of $0.508, as will more fully appear from the following table:

Bankhead expense summary (crop year 1934-35)

The above figures not only present the loss sustained by the ginners for the crop year 1934-35 but also present a fairly accurate picture of the additional loss which they will sustain for the crop year 1935-36.

The ginner should be compensated for this loss sustained by him during the crop year 1934-35, and unless he is recouped for this loss he cannot give the efficient service during the crop year 1935-36 that he could and would give if he were reimbursed for the money he was compelled to expend to assist the Government in collecting the cotton tax designed primarily to benefit the cotton farmer and grower.

In other words, one part of the industry should not be penalized for the benefit and advantage of another part of the same industry. Justice and fair play demand that the cotton ginners be repaid for these outlays made by them and that adequate provision be made, by express legislative enactment, for the protection of the ginner in the crop year 1935-36. Unless this is done the ginner will in a very short time find himself financially involved and unable to render the service which the producer should receive.

STATEMENT OF FACTS IN REGARD BANKHEAD EXPENSE

This statement filed by the National Cotton Ginners' Conference, a conference representing the cotton ginners of all cotton-producing States.

To the committee:

GENTLEMEN: It is the purpose of this statement to as briefly as possible present the position of the cotton ginner in relation to the administration of the Bankhead Cotton Control Act.

ADMINISTRATIVE PROVISIONS

The administrative provisions of the act fall into three subdivisions:

(a) That section of the law administered by A. A. A.; that is, in relation to farmer education, the fixing of national, State, county, and farm allotments.

This provision naturally calls for the employment of much additional help and much administrative expense. All of which has been provided for under the provisions of the law in powers granted the Secretary of Agriculture.

(b) That section of the law relating to the collection of a tax on excess production, the collection of exemption certificates, the issuance of liens to be attached to cotton under certain conditions, the compiling of reports, and the complete enforcement of the taxing provisions of the law, being administered by the Internal Revenue Department, under the Secretary of the Treasury. All of which involves a great expense, much additional help, and equipment. All of which has been proved by the Bureau and the expense paid by the Federal Government.

(c) The actual enforcement of the provisions of the law, the actual collection of the tax, exemption certificates, the attachment of liens, the preparation of records, the compiling of the reports, the assumption of financial risks, all devolve on the cotton-ginning industry, without pay.

REQUIREMENTS OF GINNERS

The law as written specifically provides that the Secretary of Agriculture and the Secretary of the Treasury shall determine the manner in which the provisions of the law shall be administered.

Under the power of this authority that has been prepared by such officials, a bulletin known as "Regulations 84 ", in which the cotton ginner is designated the agent to carry into effect the provisions of the law:

He is required to:

1. Post a surety bond, payable to the Federal Government, in an amount to be determined by estimating the largest number of bales he will gin any one month of the ginning season. (He pay the premium.)

2. Secure from the internal revenue collector of his district the necessary supplies, metal tags, certificates of tagging, lien cards, and other such supplies for each month's operation.

3. Compile daily reports (covering all cotton ginned). (See attached report form.)

4. Prepare a monthly report, remitting taxes, tax-exemption certificates, affidavits in regard to liens attached, and other vital information. This report must account for every bale of cotton, every pound of cotton ginned. If exemption certificates, liens, and cash enclosed do not balance with report, the ginner must pay the 'difference. (See monthly report blank, attached.) 5. Hold all cotton ginned in his possession until the farmer surrenders of the following:

(a) Tax exemption, to cover the tax.

(b) Cash, to cover the tax at the prevailing rate.

(c) Lien, attached to the bale covering tax.

6. Pay the insurance on such cotton accumulated on the gin yard.

7. Employ competent office help to keep the above required record of all cotton ginned.

8. Employ the necessary yard help, to tag, roll, load, move, and protect the cotton on the yard.

9. Provide night watchman service, due to additional fire hazards. meet many other expensive requirements.)

(And

ENTITLED TO PAY

The Bankhead cotton control law being a part of the emergency program which has been designed to speed economic recovery, and being a national law, administered by Departments of the Federal Government, should not be so interpreted as to permit only the payment of a part of the administrative expense and to leave a huge amount to be absorbed by a private, legitimate, necessary industry that has suffered reverses, severe losses, and bankruptcies, just as the cotton farmer or other industries.

Under the provisions of Bulletin 84 the cotton ginner is in fact and in practice, a deputy tax collector, under bond, for the Internal Revenue Bureau. Since the very economic life of the South not only depends on a practical solution of the cotton program, but the value of the cotton, whether ten million or fifteen bales, depends upon the kind of ginning service rendered

the farmer.

Cotton is not salable until it is ginned. Its value is affected from $2 to $10 per bale. If poorly ginned, the farmer not only suffers a loss, but the value of the entire crop is reduced.

A survey of the cotton ginning industry has just been undertaken in regard to Bankhead administrative expense.

Reports received to date, covering various sections of all cotton-growing States show the following totals:

The above summary shows a partial report from 14 cotton-growing States. This summary shows an average per bale cost of $0.508.

It is needless to say that this additional expense of something over an average of $437 per gin plant has made it impossible for many ginners to pay their taxes, their insurance, machinery accounts, and other just debts. Unless the cotton ginners are paid for this service they are rendering, naturally they will be forced to forego making the needed improvements to the gin plants.

Respectively submitted for the ginners of the United States.

JOHN C. THOMPSON,
Vice President National Conference.

ACCOUNT OF BALE TAGS, CERTIFICATES OF TAGGING, AND LIEN CARDS

1. Tax. The Cotton Act, approved April 21, 1934, imposes a tax on the ginning of cotton. The rate of such tax (proclaimed from time to time by the Secretary of Agriculture) effective June 1, 1934, is $0.0567 per pound of lint cotton.

2. Exempt from tax on ginning is (a) cotton with respect to which a certificate of exemption is surrendered, (b) cotton harvested before June 1, 1934, (c) cotton harvested by publicly owned experimental station or agricultural laboratory, and (d) cotton having a staple of 11⁄2 inches or longer.

3. Monthly return on this form must be executed and filed in duplicate for each place where ginning is done. Report with respect to each bale of cotton ginned must be made on a separate line. The respective affidavits (on G. T. Form 106), in duplicate, must be attached in support of exemption from the tax on ginning of any cotton in class (b), (c), or (d) set forth in paragraph 2 above. The owner of cotton in class (a) (par. 2) must surrender to the ginner exemption certificates covering the weight in pounds of lint cotton ginned; any excess cotton ginned is taxable unless the cotton is returned to the producer to be stored by him. In such case affidavit A on G. T. Form 106 must be executed in triplicate, one copy retained by the ginner, one copy filled with his return, and the third copy delivered to the producer.

4. Bale tags, certificates of tagging, and lien cards. Each bale of cotton ginned other than a bale returned to the producer to be stored by him must have a bale tag securely attached thereto and a certificate of tagging on G. T. Form 104 must be issued to the -owner of the cotton. Each bale of cotton returned to the producer to be stored by him must have a properly executed lien car attached. Bale tags, certificates of tagging, and lien cards must be accounted for as provided on this return.

5. Payment of tax.-All taxes are due and payable without any assessment by the commissioner or notice from the collector. Return on this form, under oath, in duplicate, with supporting affidavits attached, all exemption certificates received, and remittance for any tax due, must reach the collector of internal revenue for the district on or before the last day of the month following that for which the return is made.

6. Records. Each ginner must keep an accurate record of all transactions involved in the ginning of cotton, of all bale tags, certificates of tagging, and lien cards received, issued, and on hand. Such record must be safeguarded and open to inspection by a duly authorized agent of the Bureau of Internal Revenue.

7. Penalties. If the tax is not paid when due there shall be added as part of the tax, interest at the rate of 1 percent a month from the time when the tax became due until paid. Severe penalties for willful failure to collect tax, pay tax, keep records, file returns, or for false or fraudulent return, are imposed by law.