as it is a true cooperative and not operated for profit, there will be no reason to bring them in, and you do make an exception here that protects you. Under (h) on page 8 you say:

The provisions of subdivisions (c), (d), (e), and (f), except insofar as subdivision (f) applies to subdivision (a), shall not apply or extend to a cooperative livestock association or associations.

That exception relates to any conspiring or unfair practices, so it seems to me that is a very good provision to leave in the bill.

There has been quite a little reference made in the testimony to the cost of distribution. One of the most serious things that affects our industry, and I think that Senator Capper will remember in the investigation he conducted a couple of years ago that the charts prepared by the Bureau of Agricultural Economics at that time indicated that by far the biggest increase in the cost of distribution was between the packer and the retailer, rather than between the producer and the packer. That line-Mr. Conway has prepared a chart on that which I have often seen, and it shows the livestock price and it shows the packer price at a fairly constant level above that, but the retail price has gone way up, and it is that retail situation that we do not seem to be able to reach, and we are all agreed that we do not get a sufficient percentage of the consumer's dollar, and if there is anything that can be done about that it ought to be done.

Senator NORRIS. Now let me ask you a question, or make a suggestion on that. The thing that occurs to me in the division of the producer's dollar is that it has been going down, his proportion of it, and the proportion of the retailer and the packer has been going up. There may be some legitimate reason for that.

Mr. MOLLIN. I think the one reason-the important reason, Senator-would be the low price of the livestock today. The costs are more or less fixed. The packer's cost and the retailer's cost have advanced under N.R.A. tolls. They have had to pay their labor a lot more money, and our livestock is selling very cheap Naturally we are getting a smaller percentage of the consumer's dollar under those conditions. That is always reflected

Senator NORRIS (interposing). They had it long before we had any N.R.A.

Mr. MOLLIN. Well, that line has gone up steadily. That was true before, but it is very marked now. This comparison that Mr. Conway made was between last year and this year, as I recall it.

Senator NORRIS. No; 1913 and 1932.

Mr. MOLLIN. Well, we have a request pending with the Bureau of Agricultural Economics, covered in the resolution adopted at Albuquerque, asking if they will make a study to determine the causes for that change in the cost of distribution. Now, the latest figures that they have, that I know anything about, were in 1921. In 1913, when they had figures, we got about 60 cents of the consumer's dollar. In 1921, when they made this study, we got 532 cents. Now, they have not made any more recent study, and the difficulty in making that study and getting it absolutely accurate is to know just what the packer's costs are and what he gets for his byproducts, and you have got to get into the packer's books to do that.

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Senator NORRIS. It seems to me that regardless of the cause, if it is true that it is going down, has been going down all these years, is going down now, the goose that laid the golden egg is going to commit suicide. There will not be anything left, because certainly you cannot take the producer out of his problem without killing the business. Mr. MOLLIN. No, sir.

Senator NORRIS. And you are running down to a point where he is producing at a loss, which, regardless of everything and anything else, cannot continue.

Mr. MOLLIN. Our people are in very bad shape, Senator.

Senator FRAZIER. You are not defending the packers for their high prices or the retailers for their high prices, are you?

Mr. MOLLIN. No, sir; except that we know that-you spoke about this condition going on; I made a careful check last fall, and I found in September that, compared with March, the same grade of cattle were 25 cents a hundred lower on September 15 than they were March 15. The wholesale carcass price was 24 cents a hundred higher and the retail prices, the cuts from that kind of a carcass, were $1 a hundred higher. That is what happened to us the first 6 months. Senator FRAZIER. There is something wrong with that system, of

course.

Mr. MOLLIN. Yes, sir.

Senator NORRIS. The system will eventually kill itself. When the producer is out of the equation the packer goes too. So does the retailer.

Senator FRAZIER. We have thought that for a long time, Senator, but still it is going on.

Senator NORRIS. I know, but we are getting dangerously near to it, according to these charts, every day.

Mr. MOLLIN. I would just like to call your attention to one thing that we think will help and that we have been trying to get done and have not been able to yet. We have been asking the retailers for 6 months to enter into a marketing agreement with the packers so that we can get in and find out the reasons for some of these things, They would have to submit their books to the Secretary, and we could work out a system, and I think that in connection with any legislation that you might enact that would tend to put more hogs back through the central markets, it would be very important to have that packer marketing agreement in operation at the same time.

Senator NORRIS. One of the things that always disgusts me more or less, in the old days when everybody was independent and everybody was getting along all right, their objection might have been valid, I am not finding fault with them, but now we have come to a time when, just as I have said, the producer is gradually passing out of the picture; when he passes clear out he takes with him everything in the industry dependent on him, and that means the packer and the retailer. When he is ruined he ruins everything. Now, we want to find out what the matter is. We know it is going to kill the industry, but just the minute you undertake to do what you have suggested, to look into the books of this man or that man or the packer, we get right into court with a litigation that will last for more than the lifetime of the men that go into it. They say, "This is my business, and you have got no right to look into it." We have got

to do something about that or we are all going to pass out of the picture.

Senator FRAZIER. I think the whole purpose of this bill is to do that very thing, get a better price for the producer, and also by regulation lower the price for the consumer, by narrowing that spread between the price the producer gets and the price the consumer pays.

Mr. MOLLIN. I would like to say that I am also authorized to state by Mr. Marshall, of the National Wool Growers' Association, that their attitude in regard to the way the business is handled in the West is very similar to ours, and Mr. Marshall is not appearing, but they

are

Senator FRAZIER (interposing). They are satisfied with going broke too, are they?

Mr. MOLLIN. They are in pretty good shape, Senator.

Senator FRAZIER. I admit the sheep people are in better shape than cattle or hogs, but when you say your people out there are satisfied with the system, I just cannot agree with it.

Mr. MOLLIN. They are satisfied with our system of going to market. Senator FRAZIER. You admit you are going broke under your system; how can you be satisfied?

Mr. MOLLIN. That does not mean we are satisfied with price levels.

Senator FRAZIER. Well, there is something wrong with your system when you are forced to sell below cost of production and the consumer pays three times as much as he should pay, according to the price you get.

Mr. MOLLIN. Yes; but I do not think there is anything in this bill that offers any relief for our situation in the West.

Senator FRAZIER. Now, you fellows can come in here as you have repeatedly done, the representatives of the big cattle organizations, come in here repeatedly and stood up for the packers, fought for the packers all the time.

Mr. MOLLIN. No; we have not done that, Senator. We have stood up for our own industry. We are accused all the time by representatives of the Department of standing up for the packers, but the packing industry is a necessary part of our industry, and we cannot get along without them. We are not substituting for them. We are not defending the packers at all; we are defending our own industry.

Senator CAPPER. The testimony here shows that steadily the packers have gotten a tighter, stronger control over the buying and marketing of this product, and more and more it has gone into their control at these private stockyards and concentration points, and yet I think you admit that as that has gone on the situation has gotten worse for the producers, so far as his prices are concerned. Senator NORRIS. And it has not gotten any better for the con

sumer.

Senator CAPPER. No.

Mr. MOLLIN. No; of course, every industry has been affected by this depression. We are in the dumps because of the depression, just the same as every other industry, but there is no demand from the West, from anybody that I know, to have a change in this system of marketing. We want to get more of the consumer's dollar, but we do not think that shipping our cattle to Denver or shipping them

way down to Omaha, when we live thousands of miles away, is going to do us any good.

Senator ČAPPER. Something is wrong, of course. Now then, can you tell us what is wrong, how it can be corrected?

Mr. MOLLIN. In the system of distribution.

Senator CAPPER. Well, in the price that the producer is getting. Senator FRAZIER. In the system of distribution, of course.

Mr. MOLLIN. Well, one of the principal things, in my mind, is that we have got too many retail outlets. When the chain stores went into the business there were thousands of stores added. That simply increased the overhead of retailing beef. They operate on a certain basis. They have a sale of so many hundred dollars a week. They have got to get about a certain profit to operate their business on.

Senator FRAZIER. Will you not admit that the chain stores sell their beef cheaper than others?

Mr. MOLLIN. Yes, sir; and they have, therefore, to buy it cheaper, and they have a depressing influence all the time. They demand of the packer, not only demand special prices, Senator, but set up brokers; and they are under orders now from the Packers and Stockyards Administration to cease and desist from that practice, and they have taken it to the courts-not only do they demand a special price but they demand a broker's fee off of that, and the packer has to come back and buy our stuff so that he can sell it to them at that price.

Senator FRAZIER. Aren't the packers doing the same thing with the little independent packers over the country, taking the same attitude? Mr. MOLLIN. I do not know.

Senator FRAZIER. They have in North Dakota. They have forced the local butchers to buy and sell at their prices, packer prices, at South St. Paul, or go out of business.

Mr. MOLLIN. Local butchers?

Senator FRAZIER. Yes. If they have not been willing to do that they put in a butcher shop and put them out of business.

Mr. MOLLIN. You asked in regard to small packers. I misunderstood your question. We are not here at all to speak for the packers, Senator. They can speak for themselves. We are merely asking that in setting up any new system of marketing that may be entirely applicable to the Corn Belt, that we have got an entirely different situation. There is not a big market, really, west of the Missouri River. Denver is a fair market. It is a big sheep market and it is a relatively small fat-cattle market. We do not have anything else between that and the Pacific Coast, except small yards at Ogden and Salt Lake. We have had to build up this other system of marketing

Senator NORRIS (interposing). Let me ask you in the territory out there in California, we will say, where does the local retail man get the bacon that he sells to his trade?

Mr. MOLLIN. I think there are a lot of those packers there that make bacon. They ship in these high-quality hogs in the Midwest and make bacon.

Senator NORRIS. Do they make enough to supply the Pacific coast? Mr. MOLLIN. Well, I could not say. I think, Senator, that they ship in live animals and process them out there rather than for the big packers to ship bacon, because of the freight-rate situation. There is a case pending before the Interstate Commerce Commission now on that.

Senator NORRIS. Now, let me ask you about that. I am anxious to know-I am trying to get information. That freight rate, it is cheaper to ship bacon from Omaha to some point in California than it is to ship the live hogs from the same point in Omaha to some place in California and slaughter them there? Which is the most economical way?

Mr. MOLLIN. Well, I do not know as I could tell you-you mean on the basis of existing freight rates, which is the most economical way? Senator NORRIS. Yes.

Mr. MOLLIN. To ship the live hog. That is why so much of that business moves that way and why this case is pending. The big packers are trying to break down the freight rates on live animals, so that they can ship products from the Middle West, and the entire industry on the Pacific coast is opposing it. The packers out there, the local packers, and the livestock industry of the Pacific coast is strenuously opposing that effort, because they feel that if the packers are successful and break down that rate on the products, the Pacific coast will be something in the nature of a dumping ground. When they have a surplus in the Midwest they will send it out to the Pacific coast. They feel also that for every added car of livestock products that goes to the Pacific coast there is that much less need for a packing establishment on the Pacific coast, which will mean reduced competition in the packing field out there.

Senator NORRIS. I can see very clearly, it seems to me, how, in a locality where they produce hogs confining it to hogs-in a region where they produce hogs enough I think it would be economy to have a packing plant that will consume them in that locality, instead of shipping so far; but in a locality where they do not produce the hogs -in the main that would apply to the Pacific coast, where they have got to buy their hogs or their finished product from another locality away back in the Middle West, in Iowa, let us say-now, is it more economical to slaughter the hogs in Iowa and ship the processed material to the coast or to ship the hogs to the coast and slaughter them there? You have got to ship them in either case.

Mr. MOLLIN. Yes; and there is a large volume shipped out there and, of course, the big packers think it is more economical to ship the product, but the industry that is established on the coast has that industry to maintain as they don't want to be put out of business.

Senator NORRIS. I realize that. I am not finding fault with them. I am not thinking of them, however, in the question. I am trying to get the economy of the situation. That, I think, is what we ought to look at.

Mr. MOLLIN. But let me tell you this, Senator, that in this case that is now pending, the dressed-meat case now pending, Wilson and Cudahy, who have plants on the Pacific coast, have been rather active in opposing the efforts to bring about a break-down of this rate. Armour, who has no plant on the Pacific coast, has been the real prime mover in trying to break the rate, and Swift has taken a more or less neutral attitude, but they are in the case, as they tell us, for the purpose of getting reparations if the rate is lowered.. So there is your picture. Now, these people are interested not so much in the consumer or the producer, but they are interested in what they are going to get out of it. That is a natural interest. I am not finding fault with it.