Why is it, if extra cattle are coming into the market, that something doesn't happen to retail prices to bring them down?

Senator THYE. Mr. Moody, that is a question that I am just as much concerned with as you are, for this simple reason

Senator MOODY. I think every consumer in the United States is concerned with it.

Senator THYE. Absolutely. The fact of the matter is, going back to the over-all question, and I say this in all due respect to Mr. Johnston, Mr. DiSalle, and Mr. Charles Wilson, there has been too much talk about the fact that we are going to put on ceilings, there has been too much talk about scarcity, and inflations and increased prices, and that had a tendency to drive the consumer to market to make purchases. It is unfortunate that we have had so much talk and so little action. I would say this, Senator Moody: that this is the most inopportune time to put these ceilings on, because it is not the range cattle coming in that is being affected; it is the man that was doing his utmost to help the consumer to get the best quality of beef and the maximum of beef on every hoof of livestock, and that man found himself faced with a roll-back in the next 3 months that he could not take without going broke. So he unloaded his cattle just as fast as he could, and that is why you had the increase of 34,000 head into the yards of the United States in a period of 5 days' time.

Senator BRICKER. There is no question in my mind but what you are going to lessen the supply of beef. There is no question in my mind but what your feeders are going to take a loss, and they are not going to produce prime beef, you are not going to have it fed out to where it is best for the market or the consumer.

I want to ask this question of Mr. LaRoe:

Is that a temporary thing for this year's market, or will it have a permanent, continuing effect if these price controls are continued into the next year and the year following?

Senator THYE. If I were a feeder, and I am sure Senator Moody would agree with me, I would not put feed cattle into the lots until I knew that the OPS had made its last roll-back, and had stabilized the market to this extent by announcing that not another roll-back will be put into effect for the next six months.

The CHAIRMAN. Will the Senator yield?

Senator THYE. Yes.

The CHAIRMAN. That is the reason I suggested to Mr. DiSalle, and I didn't want to lecture because I know I know very little about meat. That is why I suggested that probably the May-June price figure in the present law should be changed to a January-February figure, which would insure the feeder that he would not be again caught in the position he is caught in now.

That is why I asked that specific question. I don't know what answer I am going to get on it, and I don't know whether Mr. DiSalle caught the full intent of my question, to change that June date to January and February, so the feeder will know, as Mr. DiSalle stated, that that is the end of the roll-backs.

I don't know whether or not Mr. DiSalle will be here next March or April. That is the reason I was trying to protect the consumer; so that we will get the quantity of meat for them. It will come down

of its own accord, if the feeders are guaranteed it won't be rolled back again.

Senator MOODY. I would like to read into the record a statement made today for the Department of Agriculture before the House Committee by Secretary Brannan, who says:

Feeders who purchase their stock

and this partially bears out Senator Thye's point, and also explains what I have been trying to get at here—

Feeders who purchased their stock during the main seasonal movement last fall should come out all right under the OPS ceilings for June through September. On the other hand, feeders who bought stock at high prices from February through April

and that is after they were on notice that prices were to be controlled

will be lucky to break even, even under the June ceiling, and many of those who sell under the August ceilings will probably lose money.

Senator THYE. Senator Moody, if I might comment on that, a man that was fortunate to get into the yards last fall when there was a heavy run, and was able to buy a good feeder at 27 cents, 28 or 29 cents, he could come out, as the Secretary stated, but if he came into the yards and happened to buy when he paid 32 or 33, and I know of men last fall that had been in the feeding business for 15 or more years that were buying their feeders, and they were good feeders, at about 34, and some paid 35 cents a pound. That man can't come out, and I defy any man to sharpen all the pencils he would like to sit down and try to figure it, and he couldn't figure a profit for that man with the rollback he is now faced with.

Senator MOODY. This comment bears on the point which the Senator from South Carolina, the distinguished Chairman, made. If you shift the base, Mr. Chairman, from last June to this year, that creates an entirely new problem, not only in the farm economy, but also in the industrial economy, because if you may remember in an effort to sustain

The CHAIRMAN. It doesn't shift it as much as one might think, because the only commodities of any consequence that are above the May-June level, are beef and cotton.

Those are the only two.

Senator MOODY. You may remember that in an effort to keep the free enterprise system as free as possible, and as strong as possible, an effort was made to get people to voluntarily decrease prices last fall. There were a great many patriotic people who held their prices down during that period. There were other people who ignored that order and charged everything the traffic would bear.

If we shift the base date, Mr. Chairman

The CHAIRMAN. The base date is only insofar as agricultural commodities are concerned, in that section of the law. The law says between May 24 and June 25, or parity.

Now, there are still a lot of things below parity, and the only two commodities that I know of any consequence that have advanced above that base period are beef, which is way over parity, and cotton, that is over parity, over the May-June level of 1950.

There may be some others, but I don't know of them, and my only desire in suggesting that was to get this production, please understand.

Senator MOODY. Yes, indeed; but my point is that people who were patriotic enough to hold their prices down should not have been penalized now by having the base moved over.

The CHAIRMAN. This wouldn't have anything to do with corporations; it is only the parity figure in the law.

Would you answer Senator Bricker's question?

Mr. LAROE. Senator Bricker asked a question which has not been answered; to say whether this wet blanket restrictive effect on the industry is temporary or permanent.

It was near the end of the last price controlled period when the situation got worse from the standpoint of shortage and black market and restrictions.

In other words, price control came to an end near the close of 1946. May I read you a few figures, Senator, to show that after several years of OPA operation, the restrictive wet-blanket effect was worse than at the beginning?

The CHAIRMAN. What about the roll-back? If the roll-back has ended, will that get the feeders back?

Mr. LAROE. Of course the roll-back has a wet-blanket effect, but I would like to read these figures.

January 1946-these are monthly figures showing cattle slaughter. January 1946, 1,012,000. 1947, after price control was removed, 1,403,000. March 1946, 904,000. 1947, 1,229,000.

June 1946, 451,000-getting worse. 1947, 1,207,000.

September 1946, after years of price control, 360,000, and one year later, 1,407,000.

Senator BRICKER. From that do you conclude that there will be a permanent curb upon the production of beef?

Mr. LAROE. I certainly and confidently do say that price control will have a continuous and never ending wet blanket effect, largely because of the blacket market.

Now, I am not going to tire you gentlemen with this
Senator BRICKER. One further question.

Will that be true because of the present controlled prices, or will it be true because of the threat of further roll-backs in the future? Mr. LAROE. It will be due to two factors. First because the present set-up structure of pricing is grotesquely unfair, and second because you cannot devise a system of price control on meat that is workable. Senator MOODY. Mr. LaRoe, I do not believe you answered the question as to whether you felt inflation could be controlled, but is it going to be possible to control inflation, and at the same time leave open, without control, a commodity that you said a few minutes ago is as important to the war effort as gunpowder?

Mr. LAROE. That is right.

Senator MOODY. I am trying to find out what the country should do here this morning, and I do not see how you can control inflation and leave meat without control.

Mr. LAROE. You cannot solve the problem by reducing production through price control from 1,403,000 cattle slaughtered to 360,000 slaughters, and that is what control does.

Senator MOODY. I have an article here from last Sunday's Detroit News, written by one of the most reputable correspondents in Washington, Mr. J. G. Hayden. The headline, "Little Hope Given for Beef Curb." This I think was syndicated by the North American

Newspaper Alliance, and is a very revealing article, and I would like to read you a couple of paragraphs from it and ask your opinion of it. Mr. Hayden says that it is doubtful whether Mr. DiSalle will be able to succeed in controlling the price of meat, and here is what he says:

Even so despite the fact that he is licensing slaughterers and attempting to close up the loopholes-scarcely anyone in either the producing or marketing end of the meat business believes that the new beef price regulations will succeed. Now mark this:

The principal reasons given for this skepticism are (1) the close organization of cattle raisers and their proven ability to either flood the market or starve the market as suits their purpose, and (2) the susceptibility of beef to black-market operations.

I would like to read another paragraph further in his article:

In the fall of 1946, although beef cattle were selling locally at 62 percent above parity, a very large percentage of raisers refused to ship.

Now, you notice he does not say the cattle were not in the country. They refused to ship it to the packers:

With famine increasing in the butcher shops and election just ahead, the President was forced to lift the controls.

Now, that is something that has troubled me a good deal since then, and I would like to have you discuss that situation.

Mr. LAROE. I will be very glad to discuss it, because it deals with two vital points.

First, I would repudiate, without qualification, the idea of a monopolistic conspiracy amongst the cattlemen. There is no monopoly amongst these cattle growers all over the United States, or any monopolistic conspiracy, and anybody who suggests that they are conspiring with each other to hold animals off the market is absolutely unfair, and the statement is wholly unwarranted.

Senator MOODY. May I ask a question?

Mr. LAROE. Yes, sir.

Senator MOODY. I did not use the word "monopoly" or "conspiracy." Mr. LAROE. It says

Senator MOODY. But it does hit me as rather singular that at that period there was, as Mr. Hayden says in this article, a large supply of cattle which was not marketed.

Mr. LAROE. That is right.

Senator MOODY. And suddenly, as soon as the controls were lifted, and prices shot upward, and a great many distinguished people came in here, I believe including yourself, and testified that the chances were that prices would adjust themselves downward as soon as the controls were lifted, the market was flooded with meat, and we had plenty of meat. I would like to know why, by what device, monopolistic or otherwise, that meat was held off the market until the plug was pulled, and then there was plenty of meat for the American people?

Mr. LAROE. I think that the real answer to your question is that these cattle raisers are so concerned and fearful about the restrictive effect and the unfair effect of price regulations and roll-backs that they simply say, "I am not going to send my cattle to market until this situation clears up."

I believe they are deeply concerned about the restrictive effect of these controls. It is not that they are conspiring. It is that they are discouraged by price controls.

Senator MOODY. I did not use the word "conspiracy," and neither did Mr. Hayden.

Mr. LAROE. It is implied in what you read.

Senator BRICKER. I think that was the time when the President threatened to go out and requisition cattle on the ranges.

Mr. LAROE. Yes.

Senator MOODY. As a newspaperman, I happened to be traveling in the West at that time, and happened to be in the State of Wyoming. Three days before the controls were lifted on meat I talked with a large cattle raiser there and he asked me, "When in the world is the President going to lift this price control. The ranges are drying up, we have no place to send the cattle, and if he does not hurry up and pull the plug we are going to have to send the meat to market." It looked very much to me as if that gentleman was holding this cattle off the market to get a higher price.

Senator SCHOEPPEL. Mr. Chairman, I am on the calendar call in the Senate in about 5 minutes, but I want to leave for the record here one thing from a practical standpoint. I think we are overlooking too much that is practical in these regulations.

Now, something was said a while ago that these people in the cattle industry had the warning that they should not have gone out and purchased any cattle. They should have stood by. That would be poor business.

Let me give you a concrete illustration from my State. My State has what is known as the blue-stem area. It grazes out of State, from Oklahoma, Texas, New Mexico, and a lot of places, around 400,000 and sometimes 500,000 head of cattle each year.

Now, these farmers that are the owners of grazing range in those areas go down into Texas, New Mexico, Arizona, and buy cattle. The old cattlemen of my day, their word was as good as their bond. What did hundreds of them do? They went down into those areas, contracted for cattle, contracted for them last fall at 500 pounds, with a choice pick. They were moving those cattle up into the blue-stem

area.

Now, here are some figures. I challenge anybody to refute them.

For a 500-pound critter, under contract in Texas, or Arizona, or New Mexico, a lot of those fellows went down there and purchased them at 37 cents a pound. Now, what did that man have in them, before the roll-back, before this whole picture developed? He had to take delivery on them to keep his contract. He had $185 in each of those critters at 500 pounds. He had, when he ran them on pasture, a $20 pasture bill. Nobody will question that in my State. If he went to the bank and borrowed money, he paid the banker about $10 interest on that critter for the time he used the money. He has a death loss, and there are a lot of things the visionary boys do not figure, but from a practical standpoint we have to consider that. He will average on that critter about a $3 to $5 death loss. Then he has freight from Texas at about $5 a head. He has certainly got to figure a marketing cost of $5, and that is a reasonable marketing cost. He has got $230 in that critter, and he is out there in the blue-stem area. He may have 150, 250, or may have 500 of them. I know a lot of them that do.

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