STATEMENT OF MR. F. J. HAGENBARTH-Resumed. Mr. HAGENBARTH. Mr. Chairman, after reciting the fact that the wool market lost its stability and the bottom dropped out of it, and the fact that woolgrowers were unable to sell their lambs at any price near the cost of production owing to the large accumulation of foreign meats, etc., that had been brought into the country and which are now on hand to a great extent, I just want to very briefly recite the effect on some of our big banking and loaning institutions in the West. For instance, one of our very large institutions the president of which happens to be here at this time-the National Wool Warehouse Co., of Chicago, and which has about 40,000,000 pounds of wool belonging strictly to growers this is not a speculative concern at all; it is a cooperative concern for the marketing of wools through financing the woolgrowers, just like you put wheat in an elevator or cotton in a warehouse on warehouse receipts they have over 40,000,000 pounds of wool in Boston and in Chicago, principally, and on which they have advanced an average of about 36 cents a pound on wools. that to-day would not net them probably over 20 cents a pound, and yet they have loaned 36 cents a pound on those wools. A Senator LA FOLLETTE. What is the name of that organization? Mr. HAGENBARTH. The National Wool Warehouse Co., of Chicago. There are 30,000 consignors-farmers and live-stock men of Montana, farmers of South Dakota, Illinois, and throughout the country; there are no speculators, nobody interested but the growers. The Columbian Basin Wool Growers Co. is another in the Northwest in identically the same condition; and these big warehouse companies have been able so far to float their paper for the money loaned to the woolgrowers among banks. The banks have learned of the very unstable condition of the sheep industry, and they are refusing to rediscount this paper when it becomes due. They are simply carrying these institutions on hope that something in some way and some how something is going to turn up that will stabilize credits and bring the sheep industry back to a productive basis, and a basis that will enable these men to liquidate. We are not only facing the probability here of destroying certain sheep men or their industry-that is all right; they can go to work at something else, but when it reaches out to such an extent and touches the banking fabric to a great extent throughout the great West and the citizenship, as it does with us our very citizenship is involved there. For instance, the farmers in Idaho to-day have between 800,000 and 1,000,000 tons of alfalfa hay in the stacks that they can not sell, although the sheep men need it to feed their flocks, though they can not get the money to get it with; their credit is gone at the banks, and the only thing the farmer can take is the woolgrower's note. The woolgrower has not sold last year's crop; he is coming up to another crop in three or four months of wool to be sold, and no prospects on earth of getting any price for that. How can he, when he can not sell last year's wool? That condition is very serious and very urgent in our western country, and I want to try and impress it upon this committee with all the force and conviction that is at my command. If the committee could only see the real meaning of this thing they would forget any other differences, geographically or political or otherwise, and an emergency act would pass here to take care of those people and those banks in the great West. We are not making a plea on any other grounds. If this bill goes through, there will be for certain grades of wool, for instance, the very fine wool, as we call it 70/80's, that come into this country, that we do not produce here we used to produce them in Ohio, Pennsylvania, and West Virginia in the early days, but they are not produced now-there would be a considerable amount of revenue and another class of wools used for making alpaca coat linings, etc., would come in; carpet wools would come in. There is a considerable quantity of wool that would come in. This is not an embargo by any means, and it will produce somewhere between $50,000,000 and $60,000,000 of revenue in the interim, that will be used to great advantage, I should judge, at this time by the Government. One of the questions that we have to meet here is, What good is a tariff on wool going to do? We have tried to make it clear that it will restore confidence, and at least give notice that the bottom has been touched, and the accumulated mass of orders and cancellations that are piling up would begin to come into the manufacturers, and there would be a natural flow of business. Of course, that is a supposition, a reasonable supposition, I think. But, here is the fact: During the war there has accumulated a supply of wool throughout the world amounting up to, variously estimated, between 1,600,000,000 and 2,000,000,000 pounds, and the only big cash market at the top price open to that is the United States to-day; that wool is just hanging like a pall over the whole situation. We can not relieve that except by an embargo, and an embargo seems to be out of the question. But we can modify its influence to the extent of 15 cents a pound to the grower here in this country and stabilize his industry to that extent and also stabilize the banking industry and the whole citizenship out through the West. That is our plea, reduced to its simplest terms to get some protection against this terrible weight that is terrifying the bankers, that is terrifying everybody. They will say what is going to happen to you when this foreign wool comes in, or waiting to come in; that is the think that is bothering us. If this situation continues, disaster will follow. We have felt a good deal of concern for Germany and other nations, and justly so. They are freezing over there and starving over there, and yet it is our proposition to bring into this country wools that we do not need, when we have already got a two years' supply, when those wools should go to clothe those freezing people. We are bringing in mutton here when we have already gotten our cold-storage houses full, when it should go to them. Some one will say, "They can not buy it; they have not got the means to buy it." We can not, on the other hand, take care of all the accumulated supplies of all the world. If they can not ship those goods to the United States at an import bonus, if there is some sort of stop-gap put up, will they not be forced to find markets and devise credits. some way, and some how, to clothe and feed those starving people of Europe? The United States can not assume the whole burden of the whole world, and all their products, simply because we have gold here. I want to put into the record, with the consent of the chairman, a letter that I presume 75 or 80 per cent of the woolgrowers, livestock and other kindred associations-the American Federation of Farm Bureaus, the National Grange, and Patrons of Husbandry, and other concerns of a similar character-have presented to the President of the United States bearing on this subject. Senator MCCUMBER. It may be received and made a part of the record. (The letter, addressed to the President of the United States, submitted by Mr. Hagenbarth, is here printed in full, as follows:) WASHINGTON, D. C., December 11, 1920. DEAR MR. PRESIDENT: It is with great timidity that the live-stock interests of the United States come before you at this time, and we can assure you that it is only in the face of the greatest exigency and forced by desperation that we do so. While realizing the general deplorable condition of producers' markets upon practically all commodities in this country, we wish to submit that the situation as applied to live stock is more far reaching and the danger of permanent and irreparable damage to this basic industry is very imminent unless radical measures are adopted very promptly which will prevent the excessive liquidation of breeding and immature animals which is now taking place. We wish particularly to advise you that in that area west of the Mississippi River, comprising what is known as the range breeding and teeding grounds, which produces about 70 per cent of the wool and mutton supply and about 50 per cent of the beef supply of the United States, the live-stock industry is facing annihilation. These statements are not made in a general way, but with specific reference to the actual facts as have been brought by competent witnesses to the attention of Congres through hearings during the past week before the Ways and Means Committee of the House and the Agriculture Committee of the Senate. The live-stock producer is not only facing conditions of general commercial depression and lack of credit common to this time to practically all productive American industries, but is bearing additional physical burdens not shared in, to our knowledge, by any other industry. These physical conditions are twofold: First, that, unlike the manufacturer or the miner, the live-stock producer can not curtail expenses and outlay by closing down his plant. His animals must be fed, however great the loss, or else he must ship to market and thus permanently destroy his plant. This is what is being done to-day and this is what we are striving to and must prevent. Second, and applying more particularly to that group of States known as the Rocky Mountain and northwestern range territory, there is the added burden of a drought beginning in the winter of 1918, when there was a minimum of snowfall which curtailed water for irrigation of crops, and which continued all through the summer of 1919, and which was followed by a winter beginning in October and continuing until the end of April. Both the drought and the winter following were the severest known in the history of the western range industry. The net result of these meteorological conditions increased the cost of carrying animals through the winter from 500 to 700 per cent, and is evidenced by the fact that the average chattel-mortgage indebtedness now carried by the 30,000,000 sheep in these States is at least $9 per head, and the average debt carried by cattlemen is conservatively $45 per head. In addition there is the added burden of real-estate mortgages. This physical condition last described, which might aptly be called "an act of God," must be borne by the live stock producer in addition to the added burden of having practically no market for wool and the demoralized, rapidly declining markets for live stock to which he must ship for liquidation purposes. The live stock markets have apparently lost their absorptive power. Prices have rapidly declined, thus forcing additional shipments for liquidation purposes; these shipments, in turn, are causing lower prices and again further liquidation, thus creating a vicious circle. The evidence of credible witnesses before the congressional committees shows that during the first week of December western range breeding ewes were sold at a price which after paying freight, shipping, and selling charges only netted the Wyoming owner 33 cents per head-an entire animal thus bringing less than the cost of one mutton chop. Quarter-blood Buenos Ayres second clip wool was purchased in large quantities by one of the leading firms of Boston recently at 9 cents per pound f. o. b. Boston. The cost of shipping and selling similar wools from the western range territory, which produces 70 per cent of our wool clip, amounts to 6 cents per pound, so that the competing American grower would realize 3 cents per pound net for a similar shipment and for wools which cost 45 cents per pound to produce. These instances of actual commercial transactions could be indefinitely extended. The shipment to market of cows, calves, and other immature beef animals is unparalleled. The Middle West farmer who has corn and other feed crops to market and whose market is principally found through the feeding of live stock is afraid to use his credit for feeding purposes by reason of the constantly falling markets and lack of demand for his product when finished. Thus the animals shipped to market instead of going out to the feed lots are slaughtered. In the present difficult credit situation the feeding farmer naturally finds it difficult to convince his banker that money should be loaned for feeding purposes. The banker with a broader vision and more in touch with world conditions knows that during the year 1920 up to date that the increase in shipments of foreign lamb and mutton has increased, as shown by the Bureau of Markets, 1,022 per cent. Statistics from the same source show that imports of beef, fresh and frozen, and beef products from abroad are steadily increasing with a formidable crease in percentages. The increased imports of fresh and frozen beef for the month of August was 50 per cent, for September 62 per cent, and October 156 per cent. Fats and oils for the months of July to October, inclusive, show an increase over 1919 of 166 per cent and steadily increasing. All other beef product imports show an increase of 1,000 per cent for the four months named. The average increase in imports of beef fats and beef oils for the 10 months of 1920, ending with October, as compared with 1919, show an average of 140.8 per cent. The increase of general beef products show an increase of 108.5 per cent. The serious feature of these imports is not the present volume so much as the steadily increasing proportions which they are assuming. In the case of lamb and mutton there have been imported during the year, as reported by the Bureau of Markets, 2,663,000 carcasses, with several shiploads from New Zealand and South America now in transit. In the case of wool, our imports during the past fiscal year were 427,000,000 pounds. On October 30 there were 27,000,000 pounds additional afloat bound for the United States, with other ships loading for the same destination. These added imports of meats, especially lamb and mutton, are coming into the United States at a time when our cold storage supplies of 1,500,000 carcasses, principally composed of foreign frozen lamb, are the greatest stocks on record. Additional imports of wool are being added to an excessive supply already on hand and in sight, as estimated from figures of the Bureau of Markets, consisting of 966,000,000 pounds, exclusive of wools held by packers on pelts in storage which will bring the total supply of wool now available in this country up to and in excess of 1,000,000,000 pounds, which at normal rates of consumption is enough to supply our national requirements for the next two years to come. That serious liquidation in live stock is taking place is evidenced by figures furnished by the Bureau of Markets which show a 27 per cent increase of shipments in 1920 over 1919 in the case of cattle and an increase of 32 to 35 per cent in the case of sheep and lambs. The latter figure is arrived at by taking into account the fact that the western flock master, although he had only a half lamb crop this year, has shipped more than the normal number of sheep and lambs to market, thus showing that he is not holding the usual number of ewe lambs for the purpose of replenishing his flocks. The combined effect of demoralized home markets, plus the impending weight of foreign importations, which owing to the exchange situation practically gives the foreign importer a bonus on imports of 30 to 40 per cent, has been to destroy the financial credit of the live-stock producer and feeder. There can be no good reason. why an already overstocked market for wool and meats should continue to be a dumping ground for the whole world at prices utterly ruinous to our home producer (and from which lower prices the middleman derives the major benefit and the ultimate consumer but little). The producer under these conditions must of necessity be refused credit, he must lose his courage and morale. The net result of the whole situation is that our breeding herds of both cattle and sheep are being decimated and liquidated. Mr. President, on behalf of these herds and flocks and on behalf of the future meat supply of this country and in order to save the credit and banking structure and economic life of the great live-stock breeding and feeding areas of the United States, we appeal to you to call the attention of Congress to the serious situation and to take action against the imports of such commodities as are causing the present demoralization and which are a menace to our future. We most respectfully suggest that in the event of any one crop being produced or sold at a loss that another crop may be raised another year, perhaps at a profit, but in the event that a breeding herd of cattle or a breeding flock of sheep is once slaughtered the plant is destroyed and production entirely ceases. The danger of this result is most apparent. Mr. President, we submit these facts and this petition to you on behalf of the following organizations which have duly and authoritatively acted, and we call upon you in this crisis for assistance: National Wool Growers' Association; American Farm Bureau Federation; American National Live Stock Association; National Grange Patrons of Husbandry; United Range States Live Stock Association; Minn sota and Wisconsin Wool Growers' Association; Wisconsin Live Stock Growers' Association; Louisiana Wool Growers' Association; Maryland Wool Growers' Association; Idaho and Oregon Wool Growers' Association; Ohio Wool Growers' Association; New Mexico Wool Growers' Association; Kansas Wool Growers' Association; Texas Wool Growers' Association; South Dakota Wool Growers' Association; Arizona Wool Growers' Association; Rambouillet Sheep Breeders' Association; Illinois Wool Marketing Agricultural Association; Montana Wool Growers' Association; Pennsylvania Wool Growers' Association; New York Wool Growers' Association; Wyoming Wool Growers' Association; Iowa Wool Growers' Association; Michigan Wool Growers' Association; North Dakota Wool Growers' Association; Missouri Wool Growers' Association. Mr. HAGENBARTH. I have here a telegram which came this morning from Oregon, that will give you a side light on the situation there. [Reading:] F. J. HAGENBARTH, Raleigh Hotel, Washington, D. C. NAMPA, OREG., January 5, 1921. The bank at Prineville, Oreg., already has closed its doors-- Entirely the cause of delay in passing emergency tariff. Sheep men and farmers in the United States are placing the responsibility for failure to pass this legislation squarely on the shoulders of the present Congress. If the present Congress is sincere in its desire to help the farmers and stockmen, this emergency bill will be passed without delay or amendment. Western stockmen are unable to pay their taxes, forest reserve fees, or their labor. The whole situation can be fixed up immediately by passing emergency tariff which will interfere with no one in America except a half dozen wool importers. S. W. MCCLUre, Assistant Manager Colombian Basin Wool Warehouse Co. There seems to have been a misconception here. I have heard considerable statement from gentlemen that the manufacturer and the representatives of the manufacturers are opposed to the wool grower. There may be some isolated cases of that kind, but I do not believe it is true as a general proposition. I think they realize that the wool growers are citizens of this country and entitled to any reasonable consideration, the same as wool growers feel that the manufacturer is entitled to any reasonable consideration. I wish to call your attention to a statement issued as an editorial in the "Manufacturer," dated December 31, entitled "The Emergency Tariff," published by the Manufacturers' Club of Philadelphia, which is the largest manufacturers's club or club of that kind and one of the oldest in the United States; and it is so apropos that if you will pardon me I would like to read a short portion of it. May I do so, Mr. Chairman ? Senator McCUMBER. Very well. Mr. HAGENBARTH. I will be through here in five minutes. This is the manufacturer's periodical strictly. [Reading:] |