Mr. SMITH. That is a factor, of course.

Senator NORRIS. I am wondering how great a factor that is.

Mr. SMITH. It wouldn't be such a factor, Senator, in my personal opinion if what you state was true, if that were the case. But these figures that we find run from 20 to 75 cents a hundred less

Senator NORRIS (interposing). I know that is true, but eliminating that, suppose that weren't true.

Mr. SMITH. This Dayton market that I speak about, I see no reason why a market that is that much nearer to the larger consuming centers, and has a tremendous consuming center around it itself, should be buying their hogs at 20 to 50 cents a hundred under our market. Senator NORRIS. If Swift & Co. are buying on the market in Chicago, they are one of the competitors. They and their competitors make that market. If they weren't there, what would the market be; wouldn't it go down?

Mr. SMITH. Yes, sir.

Senator NORRIS. If they withdrew their support of the market, wouldn't it go down?

Mr. SMITH. Yes, sir.

Senator NORRIS. Every time they go out, even though they pay more than the independent fellow could get otherwise, they are buying on that same market that goes down and down, and even if they paid a cent higher, if they destroyed the market after a while, they wouldn't get anything?

Mr. SMITH. That's right. In other words, it would be in their hands to do about as they pleased.

Senator NORRIS. It seems, if we are going to have public markets, and it is the theory to have them so far, no better way has been devised yet that I know of, than where the seller and buyer, each one of them unrestrained, perfectly free, come together, and they bid on the stock, and it sells for a price that the market will stand; if there was no competition on that market, the price would go down, wouldn't it?

Mr. SMITH. Yes, sir.

Senator NORRIS. When the price goes down, then even the independent seller, if he gets a cent or two more

Mr. SMITH (interposing). He has still lost.

Senator NORRIS. He has destroyed his market.

Mr. SMITH. Yes, sir.

Senator NORRIS. I may be wrong, but it seems to me that is the real gist of this legislation?

Mr. SMITH. In that way, we can bring this fellow and put him on a comparable basis to where the efficiency of his business must be in the business itself, the other will be taken care of all right.

Senator POPE. Do these illustrations you have given apply equally to cattle as well as hogs?

Mr. SMITH. I have used only one cattle illustration. We could cite you, too, many others. Probably the average cattle producer in our territory knows less as to the quality of his livestock than the hog producer does because he produces only a few head and doesn't follow the market. You take in the western situation, I wouldn't want to make that kind of statement. He, no doubt, knows his quality much better.

Senator POPE. This study that you refer to here, as to the distribution of the dollar as between the packer and producer and retailer, does it apply to the livestock business as a whole?

Mr. SMITH. That is just as to the hog situation. That is as to pork alone there.

STATEMENT OF H. G. KEENEY, PRESIDENT THE FARMERS UNION OF NEBRASKA, OMAHA, NEBR.

The CHAIRMAN. Mr. Keeney, will you state your full name and address?

Mr. KEENEY. My name is H. G. Keeney, president of the Farmers Union of Nebraska, Omaha, Nebr.

The CHAIRMAN. And your occupation?

Mr. KEENEY. I am a farmer; also the president of the Farmers Union of Nebraska, president of two terminal markets, and president of the Farmers National Marketing Association.

Senator NORRIS. Mr. Keeney, how long have you been president of the Farmers Union of Nebraska?

Mr. KEENEY. Ten years.

Senator NORRIS. And what is your membership?

Mr. KEENEY. Around 20,000 producers.

Senator NORRIS. In the State?

Mr. KEENEY. In the State of Nebraska.

Senator NORRIS. It is the largest farm organization in the State? Mr. KEENEY. Yes, sir; the only large farm organization.

Senator FRAZIER. How many farm families do you claim in Nebraska?

Mr. KEENEY. Twenty thousand.

Senator FRAZIER. How many farm families in the whole State? Mr. KEENEY. I think 100,000, not so many as there used to be. We have a large range country out in the sandhills, and they don't count up very fast.

The Farmers Union of Nebraska is an organization of around 20,000 heads of families and is confined to actual farmers. I also operate my farm in southern Nebraska, and have been a producer and shipper of livestock and hogs for over 30 years. Our organization operates, together with other farm organizations, cooperative commission firms in Omaha, St. Joe, and Sioux City, and Ogden, Utah. I have been connected with these houses since their organization in 1917. I believe the first cooperative business producer owned was started in Omaha.

When I first began producing hogs over 30 years ago, they were all shipped to the central markets. Here order buyers, shippers and packers competed for their supplies. The prices at river markets were largely based upon the supplies or receipts at Chicago, which then, as now, seemed to be the price setting market; and we had a real open competitive market.

During the last 10 years, or principally since the passage of the Packer and Stockyards Act, the large packers have gone to the country to buy their supplies, and have built up what we now call concentration yards. There are 28 or 29 of these concentration yards in Nebraska, and more than that in Kansas. We have no interior packing plants in Kansas. Our condition is different than they have over in

Iowa. There yards are controlled by the large packers and there is no competitive bidding. I am very well acquainted with these three instances that Senator Norris brought out at Grand Island, Aurora, and Hastings. My farm is a little way from Hastings.

Senator FRAZIER. The buyer representing these companies goes right out to the farmer and buys his cattle and hogs?

Mr. KEENEY. Their representative usually does. In some cases these concentration yards are situated on railroads that have branches, and they are shipped in there, and they enjoy certain privileges, which I am going to enumerate in a little while.'

Senator CAPPER. Generally speaking the farmer takes what is offered for his stuff.

Mr. KEENEY. He takes that or takes it home.

They enjoy special privileges such as change of ownership, 10 days to rebuild and resort, and reship to the ultimate destination on the basis of the through rate from the original shipping point to the ultimate destination.

Senator NORRIS. You mean these buyers do that?

Mr. KEENEY. These buyers have that privilege.

They might arrive in four or five cars and be forwarded out of the concentration points in a lesser number of cars. If, by reason of the consolidation, a less number of cars is required for the movement from the concentration point than for the movement into the concentration point, all the shipper has to pay is local rate from the original shipping point to the concentration point on the excess cars. Shipments of hogs in single-deck cars into the concentration point may be consolidated into double-deck cars on the basis of contents of three single-deck cars into the concentration points and the reforwarding out of the concentration point in two double-deck cars, the double-deck rate applying from the original shipping point to the ultimate destination. The double-deck rate is less than the singledeck rate.

On hogs which are billed to any of the larger markets Omaha, Kansas City, St. Joseph, or Sioux City-there are no market privileges authorized. These concentration points enjoy a change of ownership, resorting and reloading and rebilling, and taking up billings at the point of origin and getting through freight from there to the destination. In other words, shipments pay the local rate to these marketsI am talking about the terminal markets now-none of these privileges are allowed and shippers must pay the local rates to these markets, and if the hogs are reforwarded to a packer at another destination, they pay the local rate from Kansas City, Omaha, or St. Joseph, on to the destination, which probably might be Chicago. The advantages in the country concentration stations have over the public market lie in the fact that they can sort, grade, and sell on the basis of the through rate from the original shipping station to the ultimate destination, whereas shipments to a public market must pay the local rate from the shipping stations to the market and the local rate from the public market to the ultimate destination.

The savings in freight rates at these 29 concentration points in Nebraska, to Chicago, for instance, run from $16.10 to $89.95 per car-my associates are going to put in this freight rate so the committee will have it-per double-deck car over the cost if they were shipped by local freight to the Omaha market and then forwarded to Chicago.

For this and other reasons, order buyers have largely left the terminal markets and gone to the country to secure their supplies. The Missouri River markets are still influenced by the receipts in Chicago. The first thing that a salesman looks for is the direct receipts by the packers in Chicago. If they have large supplies, they know very well that they will not be keen bidders on the open market, as they have plenty of supplies to keep their packing houses going. The concentration points in turn usually pay so much under Omaha as well as the other river markets, that is out in the concentration points. These markets that you mentioned at Grand Island, Aurora, and Hastings usually bid so much for top hogs under Omaha. Omaha is influenced by the Chicago market, and the Chicago market is largely influenced by the directs that the packer have of these.

I was a member of the Corn and Hog Committee of Twenty-five which met at Chicago at the invitation of the Secretary of Agriculture on July 25. This committee was made up of actual producers of hogs and a few farm leaders of the Central West. The following resolution was passed unanimously:

Because direct buying destroys competition for the live hog and prevents the posted public markets from establishing fair prices for the producer and because one of the major objectives of the Agricultural Adjustment Act is to create fair prices for hogs, there should be exact equality of conditions established between price-establishing markets and the so-called concentration points, or direct-buying stations. The producers of hogs should have the same privilege to sort, grade, weight, consolidate, and sell at through rates at his public markets which buyers of hogs enjoy at interior concentration points and country buying stations.

The live hog should also be standardized when sold for the account of the producer. Such standardization should be brought about by governmental supervision of weighing, grading, docking, and fill. United States Bureau of Market Standards of grading are recommended.

I am in constant touch with producers of livestock in Nebraska and surrounding States. I would say that the hog producers of Nebraska, which has no interior packing houses, are practically 100 percent in believing that the present method of direct buying has destroyed the open competitive market, and that hogs would be from $1.50 to $2 higher if all supplies were bought at competitive supervised markets.

I receive copies of resolutions passed by shipping associations and at farmers' meetings almost daily, protesting against this method of buying.

În 1930, the Attorney General of Nebraska made an investigation as to the effects of direct buying in our State. I am quoting a paragraph from a letter he wrote about this time, April 1930:

Over 6 months ago this office commenced an investigation of the practice of direct buying by the big packers in Nebraska. There is no law against direct buying but we were interested in ascertaining whether or not the packers were dividing up the State among themselves in order to limit and suppress competition. We completed our investigation about a month ago. We interviewed their buyers over the State and checked all the shipments of hogs. We found that the big packers have divided the State into districts, and each packer apparently assigned a district.

The Congress has passed laws to raise the purchasing power of farm products. The dollar that the farmer receives for slaughter animals in purchasing power is less than that received by any other group in the country. I believe that regulation of methods of buying

slaughter animals, as suggested by this committee, would go a long ways in restoring prices to the farmer and again insure him an open competitive market. I believe the farmer's hog dollar is less in purchasing power than when this statement was made, this study that Mr. Smith just put in the record.

Senator HATCH. You speak of hogs all the time. Is it also true of cattle or not?

Mr. KEENEY. Not quite so much. These concentration points have not bought cattle or sheep largely the way they are taking hogs. That is increasing but not nearly to the extent that the purchases of hogs are increasing.

Senator HATCH. The tendency is in that direction, for cattle?
Mr. KEENEY. Yes, it is.

Senator SHIPSTEAD. Mr. Keeney, you have mentioned the purchasing power. There has been a great deal of controversy here before this committee as to who pays the processing tax, the farmer or producer or the packer. What is your opinion? You have had a good deal of experience with that.

Mr. KEENEY. Well, I think-this study by Professor Ashby, of the University of Illinois-the retailer was getting 25 cents out of the farmer's dollar in 1913. In 1932 he was taking 31 cents. The packer was taking 19 cents in 1913, and the producer was getting 56 cents, and when we move up to '32, the parker slices out 38 cents, which leaves the producer 31 cents. Now I understand the retail price of meat has advanced since this study was made.

Senator SHIPSTEAD. Those figures that you have there, weren't they compiled before the processing tax went into effect on hogs? Mr. KEENEY. Yes.

Senator CAPPER. I don't think you are quite right in saying there has been a controversy here. So far as I know, everybody has agreed that the packers have passed the processing tax back to the producer. Senator NORRIS. They don't dispute that. They admit that. Mr. KEENEY. I think the best evidence of that is the study of prices of hogs in Canada today and the price in this country. The CHAIRMAN. How do they compare?

Mr. KEENEY. They don't compare. They are very much higher in Canada. I cannot give you the exact figures, but I am sure my associate can. I think Mr. Carnes could give you the today's price of Canadian hogs, and we know the price of hogs in this country.

Senator SHIPSTEAD. What I meant as to controversy was that the Department of Agriculture's representatives were here, and my own understanding was that they said the farmer did not pay the processing tax unless he paid a small percentage.

Senator CAPPER. I don't think anybody here had any idea that the producer was going to pay the processing tax when we passed that legislation, but it turned out when they came to administer the act that the farmer had to carry the load. He is paying the tax.

Mr. KEENEY. Senator, I think the farm is paying every speck of it. Senator CAPPER. There is no question about it. I don't think they deny it, now, as Senator Norris says.

Senator NORRIS. I based that assumption mainly on a letter that was read on the floor of the Senate just the other day, just a day or two ago, from one of the large packers, in which that was stated in almost so many words.