ment in income and estate taxes from that group of people who enjoy the maximum amount of our prosperity, and it will not be the Government that pays the loss.

Senator NORRIS. I agree with you.

Senator CARAWAY. In other words, in one way you shift the tax burden back.

Senator NORRIS. To begin with, the money comes out of the Treas ury, of course. I do not know that I ought to have an argument with you on it. That same argument about the general increase of prosperity for all the people could be made and has been made thousards of times in behalf of the McNary-Haugen bill or any other plan, and always with a good deal of force, I think.

Senator HEFLIN. I think your debenture plan would go a long way toward helping the farmer.

Mr. TABER. Would you like me to conclude my argument at this time, Mr. Chairman?

The CHAIRMAN. I think you had better return at 2 o'clock, Mr. Taber.

Mr. TABER. Before we take a recess I want you to get this thought clearly in mind, because I want to emphasize it again.

I believe that the American farmer accepted Herbert Hoover's acceptance speech and his St. Louis speech and his promise to call a special session of Congress, and his statement that he proposed to solve this problem, at face value. I want to make it clear now that the grange wants to support 100 per cent that program; but we must insist that to solve the farm problem we must have a program that will really lift farm prices and not be a temporary expedient.

Senator NORBECK. I find no fault with your position, but did you find anything in the platform or in the expressions of the Executive that promised equality to the farmers?

Mr. TABER. I think so.

Senator NORBECK. After lunch we will get that from you.

(Whereupon, at 12.30 o'clock p. m., a recess was taken until 2 o'clock p. m.)

AFTER RECESS

At the expiration of the noon recess the committee reconvened. Present: Senators McNary (chairman), Norris, Capper, Norbeck Frazier, Thomas of Idaho, Heflin, and Caraway.

Present also: Senator Brookhart, of Iowa.

The CHAIRMAN. The committee will begin the afternoon session. Mr. Taber, will you please continue with your remarks.

STATEMENT OF LOUIS J. TABER-Resumed

Mr. TABER. Mr. Chairman and gentlemen of the committee, I think at the lunch hour I was just concluding some of the points in regard to the grange favoring the export debenture method of the solution of this problem. I want to emphasize, before I leave that thought, that the whole purpose of the grange and others who have advocated the export debenture program is to equalize the tariff benefits to those branches of our agriculture that have an exportable surplus. That is the whole purpose of the program.

Then I want to come back to the question of expense and cost that was emphasized a time or two in the morning session. The first thought is that the effect of the export debenture in operation does not take money from the Treasury, but it does divert money from the Treasury. And that brings up the thought: Do we divert money from the Treasury by the protective tariff system? I insist that we do, and with the indulgent permission of the committee I want to read some figures into the record in that connection.

When we raised the tariff so high that it becomes protective, we at once divert revenue from the Treasury. I am going to take a very conspicuous example. In 1920 we imported into the United States aluminum hollow ware, the kind we farmers use in our kitchens, to the amount of $422,000, and paid an ad valorem tariff of 25 per cent. In 1921 we imported $672,000, and in 1922 we imported $780,000 of aluminum kitchenware. There was a change in the tariff. In 1925 We imported $126.000, in 1926 we imported $96,000, in 1927 we imported $72,000. But in 1925 the ad valorem equivalent was 77 per cent, in 1926 the ad valorem was 78 per cent, and in 1927 the ad valorem was 77 per cent. In other words, we raised the tariff on aluminum hollow kitchen ware from 25 per cent to 77 per cent ad valorem, and kept out of the United States a large amount of aluminum ware. But that is not the point I want the committee to get. We kept out of the Treasury of the United States $391,140. I am not complaining about a protective tariff that benefits aluminum. Senator NORRIS. They do need it.

Mr. TABER. But I am saying that if Congress can vote to divert $391,140 from the Treasury to stimulate the manufacture of aluminum, why can you not divert a little money from the Treasury to stimulate agriculture?

Senator HEFLIN. I think we can.

Mr. TABER. Then we come to Table 2. I just referred to Table 1. In Table 2 I have these figures in regard to pocketknives. In 1920 we imported $585,000 worth of knives, with an ad valorem tariff of 51 per cent; in 1921 we imported $790,000 worth of knives, with an ad valorem tariff of 56 per cent; in 1922, $936,000, with an ad valorem duty of 63 per cent. In 1925 we imported $298,000 worth of pocketknives, but the tariff was 116 per cent. In 1926 we only imported $267,000 worth of knives, and the tariff was 117 per cent. But that is not the thing that I want you to remember. During the first three years under the old tariff law we imported $2,319,000 worth of pocketknives, and we collected $1,200,000 of duty; but under the last three years, under the new tariff act, we only imported $800,000 worth of knives, and we only collected $923,000 in revenue. In other words, the country suffered a loss in revenue to protect the cutlery_manufacturers. We diverted from the Treasury $354,784. Again I say, if we can divert money from the Federal Treasury by building a protective-tariff wall, I insist that we can also divert money from the Federal Treasury to protect agriculture.

I have been milking cows since I was 6 years old, and I am the only man in this room who milked cows last night. The hired man was sick on the farm when I came by was the reason, however. As a dairyman interested in dairying I want to talk about butter. We have had some very interesting experiences with the tariff. We

first had a 2-cent tariff, and it was not enough. Then we ha 8-cent tariff, and it was not enough. Then we got a 12-cent t The purpose of the tariff is not for the creation of revenue, bu the stabilization of business and the maintenance of the Amer standard of living in the American home.

Senator NORBECK. Provided it is not on the farm.

Mr. TABER. I mean the farm. It ought to be on the farm. Senator HEFLIN. It must apply to the farm.

Mr. TABER. You may say that I have been unfair because I ta about aluminum ware and pocketknives. Under an 8-cent tarif butter, in 1923, 1924, 1925, and the first three months of 1926. imported 50,000,000 pounds of butter, valued at $18,000,000. collected in duty $4,018,000. But in 1926 and 1927, with a 12tariff, we imported only 11.000,000 pounds of butter, valued $4,000,000, and the revenue collected was $1,400,000. In other wo under the 8-cent tariff the average monthly revenue was $103.4 but under the 12-cent tariff on butter the average monthly reve was $68,000. In other words, when we raised the tariff on butter 12 cents, we diverted from the Treasury $734,000.

I am reading these figures simply because I want to indicate th we are not asking the Federal Government to do a single thing it not now doing. It has provided the drawback for the manufactur It has been in operation for half a century. It has provided for i mitting the tariff duty on Cuban sugar and other commodities 19 years. It has provided a tariff to the point of protection, revenue. A tariff for revenue would mean low tariffs, and larg amounts would be imported. A protective tariff builds the wall high that it restricts the flow, reduces the revenue. So the debentu will only give the export branch of agriculture the same type of pr tection that other industries have been receiving.

In the days of Alexander Hamilton, when he first proposed wh is called the defensive idea, 95 per cent of our revenue came fro the tariff. In 1928 about 15 per cent of our revenue came from th tariff. I mention that because they had no income from State taxe and they utilized the tariff as a producer of revenue. We feel the we are entirely justified in what we ask, and are proceeding on soun business principles and a sound constitutional basis.

Before some one asks me, I want to point out that we favor th export debentures being made good for payment of import duties because, first, we are accepting a principle of proven constitutional ity, which was through the Supreme Court a half century ago; se ond, that we are giving this protection to the consumer, and it i no more of a subsidy or a bonus than the tariff. It is no more special favor to agriculture than the remitted tariff duty or the tariff drawback. With that in mind, I want to make one other thing

clear.

Senator HEFLIN. Before you get away from that, the claim has always been made, and, of course, is sound to that extent, that our manufacturing interests should be allowed to prosper, to do well to make money. That is what we want them to do. The Govern ment has declared its purpose to aid them to that extent. Well, it is just as important to have a prosperous agricultural industry, and more important in some respects, because any nation that would be involved in war with a foreign power, that was not self-sustaining

Then what line, would be in a terrible fix. It is necessary that the Govalment should render what assistance it can toward having a prospus agricultural industry.

fth Ir. TABER. I agree with you, Senator, except that I would say § more important that agriculture should prosper than any other up, because it is basic. It produces food and fiber and shelter hef mankind.

Senator HEFLIN. I think so.

Ir. TABER. It is more important that agriculture should prosper, Sause we farmers are the only people who can not spend money shout spending it in town. The manufacturer can spend it abroad. e millionaire can buy a yacht and go around the world. But when farmer has more money, he buys a bathtub, he buys a Victrola, buys what every farm home ought to have, a power washing Inchine. When he buys those things there is only one place to buy em, and that is in town. Consequently, the manufacturer should more interested in his properity than any other group.

ter.

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Senator BROOKHART. If he buys a Ford or a radio, that is evidence at he is too prosperous.

Mr. TABER. That is not true. The automobile has become as essenal to the farmer as to the business man. The point that I wanted bring up was that we favor flexible debentures. I indicated that e debenture value should go down as the production increased bove the 5-year average, and objection was made, I believe, by my iend Caraway.

Senator CARAWAY. Yes, sir; I objected to that.

Mr. TABER. We favor legislation that as the farm board finds the ost of production is above or below one-half of the tariff, there can e a proclamation that the debentures are lowered

Senator CARAWAY (interposing). You want that like the flexible rovisions of the tariff?

Mr. TABER. We would make the debenture rate flexible, the same is the flexible provisions of the tariff.

If I may have the indulgence of the committee, I am going to eave the debentures for just a moment, and finish our program. You will remember that I mentioned that our first step was organizaion; second, tariff reduction; third, a farm board with broad powers. Senator CARAWAY. What do you provide as a stimulus to bring people into the organization?

Mr. TABER. We provide no special stimulus.

Senator CARAWAY. Do you not think that it would be wise to do that? Might I make this suggestion to you, and it is merely a suggestion: If you were to provide that none, unless he were affiliated with some farm cooperative association movement, could utilize the debenture plan, you would at once get a 100 per cent organization, would you not?

Mr. TABER. That is a very good suggestion in a way, Senator. It has been suggested to us before, that the debentures should be applicable only to farmer-owned commodity cooperatives. But that raised a constitutional question that we do not care to inject. We want something that will be at once effective, and can be perfected. Senator CARAWAY. This is merely another suggestion. I am in thorough sympathy with your idea. If you were to provide that farm products, in order to enjoy the benefits of the bill, must be ex

ported either by farmer cooperatives, or must have a certificate from a farm-cooperative association, you would achieve the same result and there could be no question of constitutionality.

Mr. TABER. That point might be well left with the farm board to arrange the method whereby that be done.

Senator CARAWAY. You have more confidence in farm boards than I have. I have never seen any wisdom fall from people simply because they were appointed to a board. They generally take lunch from 3 to 8, and the rest of the time they are golfing.

Mr. TABER. We will admit the weight of your point, but I was just reviewing the four steps. The fourth step was export debentures: and the fifth step is a sound land policy and waterway development. Senator CARAWAY. What is a sound land policy?

Mr. TABER. A sound land policy is a policy which would provide for the wise utilization of land; the recognition that the purpose of land is more than the mere production of food. Land should be used for food products, conservation, reclamation, forestry, and so forth. Senator CARAWAY. Do you purpose to legislate that into your bill! Mr. TABER. That addresses itself, not to this committee, or to this particular legislation, but is a part of a sound program. Until we have a sound land policy that will not permit exploitation or speculation; until we recognize that we ought to build parks and playgrounds for the public; until we recognize the fact that God's open country is the birthright of the children of to-morrow; until we grow timber and wild life that is what I mean by a sound land policy.

Senator CARAWAY. I begin to understand. I am in sympathy with that.

Mr. TABER. We have not had it.

Senator CARAWAY. No; we have not had it.

Mr. TABER. We are not opposed to irrigation or reclamation when needed. We opposed it now, in a period of depression and overproduction. It is unsound agricultural statesmanship, and I believe that it is unsound national statesmanship, to increase land area when not needed.

Senator CARAWAY. To increase the area in cultivation?

Mr. TABER. When prices get up to a proper level, then open up new areas, build new dams.

Senator BROOKHART. Speaking of land or any of those things, it is only a question of diverting it from one to another. In reference to an increase of production, I am convinced that there is no danger in over-production.

Mr. TABER. I can hardly agree with that conclusion.

Senator CARAWAY. May I ask you one question? I am going back to your question of limiting production. I think that it is an economic crime to restrict production. It puts a premium upon slovenliness in cultivation. It strikes from our source of national wealth one of its steady wealth producers. I think that somebody said that of the actual increased wealth each year 80 per cent comes from agriculture. Take, for instance, our country where we grow cotton. If you limit our production, I do not know what we would substitute instead of it, because that theory that you can grow anything anywhere is only good as a theory. It will not work.