Now, the farmer has made up his mind to go into agricultural commerce himself, and largely through commodity marketing-that is, by staples and by direct trading-which will eliminate the necessity of boards of trade and exchanges as now conducted; he proposes to handle his crop as far as possible straight through to the ultimate consumer, whether in this country or abroad. And the big fight now on is between the manufacturer in this country, who wants to control and to get the entire foreign market for export from this country, and the American farmer, who sees that he has a right to at least an equality of opportunity in foreign markets as well as here; and I think the Chicago Board of Trade is only a part of the big financial system which has exploited the farmer.

Senator NUGENT. Then, it is your opinion that one of the remedies for the conditions now existing is a comprehensive system of cooperative marketing on the part of the farmer?

Mr. MARSH. I think there is no other economic salvation for the American farmer, Senator. That is our opinion.

Senator NUGENT. I agree with you; I have been preaching that doctrine for years.

Another question: Do you not believe that the tremendous increase in railroad freight rates has very materially affected the situation, particularly in the western country?

Mr. MARSH. Senator, when Congress enacted the Cummins-Esch law returning the railroads to their owners you drove a dagger up to the hilt in the heart of agriculture, and that is the basic cause-that together with the credit situation-of the farmer's undoing to-day. Senator NUGENT. What is the average increase in freight rates throughout the country, if you know?

Mr. MARSH. The average increase is roughly one-third. For the eastern district it is 40 per cent; for two of the other districts it is 25 per cent, and for one of them 30 per cent. Of course, it varies as to products.

Senator NUGENT. The reason I asked that question is this: The reason I asked you with respect to the effect of the increase in freight rates so far as the farmers are concerned lies in the fact that I am in receipt of resolutions adopted by a number of farmers' organizations. and so forth, in Idaho, to the effect that this increase in freight rates has been very largely instrumental in bankrupting many of our farmers, and I was simply curious to ascertain whether or not, in your opinion, that was correct.

Mr. MARSH. Senator, the Farmers National Council, with several State organizations, fought all over the United States to prevent the return of the railroads under the Cummins-Esch law, and we know that the majority of the farmers of America were opposel to the return of the railroads and wanted a two-year extension of Government operation of the railroads-not discussing Government ownership, but a two-year extension. And then those organizations like the National Grange-and their representative, Dr. Atkeson, sits here and the American Farm Bureau Federation, which endorsed the Cummins-Esch law, though opposing, as I understand it, the whole purpose of the Cummins-Esch law, through the guaranteed dividend-even those organizations have gone on record as opposed to the principle of guaranteeing a return to a public utility plus costs of operation.

There will be no future for agriculture in this country, I think I can safely say, until you restore the railroads to unified Government operation, reduce the rates to those in force when the railroads were returned to their owners, and if there be a deficit, which is questionable, make it up out of taxation.

Also you have got to give the farmer equality of credit. I did not mean to bring in the railroad question, but it was directly raised.

I might add that I have been out through the West and Northwest recently, and the farmers from all over the country were telling just how they were situated, and this increase in freight rates was simply knocking them out. Freight rates went up and farm prices went down. I can not give the final figures, but I do know that freight rates are becoming to-day 10 per cent and in some cases 30 per cent of the price the farmer receives for his product, and he is getting less than the cost of production.

Senator SIMMONS. There was a statement reported to have been made by Mr. Fordney, the chairman of the Ways and Means Committee, upon the floor of the House, with reference to a carload of sheep that was sold in the market at 2.14, I think it was, and of that price the farmer got only 35 cents a head.

Senator SMOOт. That has not very much to do with freight rates. Senator SIMMONS. I would like to know where the balance of that money went. Can you tell us?

Mr. MARSH. Well, I know it did not go to the farmer, and the farmer is now organizing a search to find out what becomes of the difference between the 35 or 40 cents on the average that he gets for his product and the $1 the consumer pays for it, and the farmer of America is not going to rest until he finds out what predatory interests get that difference and what bona fide service is rendered. There is some, of course, in distribution. The farmers and consumers are getting together in the All-American Cooperative Commission to settle that question of direct trading.

Senator SIMMONS. Is not this one of the great troubles of the farmer, that he is now in the hands of distributors, or speculators, or combinations, and he is not getting anything like a fair price, but getting a price that is arbitrarily fixed, not by market conditions but by combination conditions?

Mr. MARSH. Precisely, and the farmer is the only producer who has to go to the consumer or the buyer of his goods without having any price tag upon his products. He does not say, "Here are sheep, so much, and cattle, so much"; he says, "What will you give me?" He is the only producer in the country that does that. Because of that fact, the farmer has to pay the freight rates; he can not add the freight to the price of the goods.

Now, may I take up a question that Senator Smoot raised? I am not an expert in economics. I went through college, and I spent one year at Chicago University Graduate School and three years at the University of Pennsylvania Graduate School, and you must agree I did not learn any free-trade doctrines at either place. But I was never able to find out just exactly how we could restore the parity of exchange between our country and other countries unless they were allowed to export something, Senator.

Senator SIMMONS. Is not that the trouble about the disparity now, that we are exporting so much more than we import, and will not that become more and more accentuated?

Senator SMOOT. I do not want to go into a discussion of that; I could tell you very easily.

Senator SIMMONS. I wanted to get some information.

Senator MCLEAN. The difference between the value of paper and of gold has something to do with the rate of exchange.

Senator SIMMONS. I undertake to say this, as a general proposition, that in these conditions if you cut off the imports and continue your exports you will accentuate the difference in the exchange instead of reducing it.

Senator McCUMBER. Our exports to Great Britain for 50 years have been $2 for every dollar's worth that we import from Great Britain, and yet they were on a parity just the same with our money. Senator MCLEAN. A gold mark is worth just as much as it ever

was.

Senator SIMMONS. Undoubtedly; gold is worth just the same the world over.

Senator MCNARY. Mr. Chairman, I had an appointment to address the committee at 11 o'clock this morning on an amendment, but I have come into conflict with this witness.

Mr. MARSH. I will suspend immediately, Senator McNary. Senator MCNARY. Well, you have to conclude some time, and you might as well do it now.

Senator McCUMBER. Let the witness conclude his statement, and then we will hear you.

Mr. MARSH. I would be glad to suspend immediately. Senator Simmons, I believe you addressed a question to me?

Senator SIMMONS. I said, if we stopped our importations from abroad and continued our exports, would not that accentuate this difference in exchange-increase it rather than reduce it?

Mr. MARSH. I can not see how there could be any other result. Every country has got to do some exporting; if it is doing a great deal of importing it has got to do some exporting.

Of course, things are not on a normal basis to-day. With the national debt of the world $300,000,000,000, an increase of $45,000,000,000 each of the two years since the armistice, or greater than the annual increase during the war, we know that we have absolutely an uneconomic situation.

Now, we have got to export something, but we suggest, gentlemen, do not arrange it so that you are going to close the foreign markets to the farmer's products. Let him have at least a fair show in the exportation of his surplus products with the great manufacturing interests of this country, who are so well organized that they are able to control, and have controlled in the past, the system under which they get the major part of the foreign exports.

Senator SIMMONS. Is there any class of our people more interested in our export trade than the farmers of certain of the main staple products of this country?

Mr. MARSH. Cotton and tobacco very largely, of course, and of wheat we are exporting, roughly, about one-third-from 28 to 31 per cent.

I think that completes the statement I have to make, and I thank you, gentlemen, very much.

STATEMENT OF HON. CHARLES L. McNARY, A UNITED STATES SENATOR FROM THE STATE OF OREGON.

Senator MCNARY. Mr. Chairman and members of the committee, some days ago I presented to the consideration of this committee and the Senate an amendment to the emergency tariff bill, asking Congress to place a duty of 5 cents per pound on cherries in brine, or cherries used for maraschino purposes, and an equal amount in the way of a duty on walnuts and filberts.

These fruits are raised in the West at a great expense and are, I think, deserving of the protection which is accorded to some other commodities under this emergency tariff bill. What prompted me to act more quickly, perhaps, than I should otherwise, was a telegram which I received, which I will read. It is from Salem, Oreg., dated December 27, 1920, and addressed to me:

SALEM, OREG., December 27, 1920.

Senator CHARLES N. MCNARY, Washington, D. C.:

Board of directors Oregon Growers' Cooperative Association in official meeting voted unanimously to ask you to work hard to have new tariff include Oregn cherries and walnuts. California has been able to introduce lemons and the South peanuts. Cherry business will be ruined without protection. I represent 1,600 growers.

C. I. LEWIS.

This organization, known as the Oregon Growers' Cooperative Association, includes all the cooperative organizations in the whole of Oregon and the southern part of Washington. They are nonprofit organizations, and comprise the farmers who assemble their fruits, which are sold in quantities under the direction of some guiding hand.

Senator SIMMONS. Is that the cherry that they used to put into cocktails?

Senator MCNARY. Yes; this is the cocktail cherry. They are using it now to cap ice-cream sodas and things of that kind.

Senator SIMMONS. I think that cherry is entitled to protection. [Laughter.]

Senator MCNARY. I will take up the cherry first, and be very brief with my statement. This cherry, the Royal Anne cherry, is a large cherry, white and pink, and is grown to perfection in the West, in the States of Washington, California, Oregon, and Idaho. Like all fruit, it is expensive to raise; it requires a certain character of soil in order for the trees to produce bountifully, and they must be pruned and sprayed, and the crop is subject to destruction by reason of rains. This cherry comes into competition with the Italian cherry, and to-day is out of the eastern market, stretching from the Mississippi River to the Atlantic seaboard. The Italian cherry is brought in here in brine—that is, the cherry that is used for maraschino purposes. It is packed in large barrels. The brine in the barrels consists of water, salt, and sulphur. They come over in that form and then are sold to these factories that put up the finished product known as the maraschino cherry.

These cherries are being laid down at different places anywhere from Cincinnati to New York at practically 7 cents a pound to-day and a much lower figure prior to the war. This cherry comes into

direct competition with the western-grown superb cherry known as the Royal Anne. Naturally, those who are in the business of selling this finished product want to get their raw material as cheaply as possible, and I understand some one is here to-day from that end of the industry objecting to this proposed tariff.

But the cherry which is grown on the coast, of the character which I have briefly depicted, must be sent East in competition with this Italian cherry, and now it is impossible to do so. In the first place, the transportation is too high. In the second place, the labor and material and the care necessary in producing the cherry tree make the cost so much greater than it is being laid down for to-day in these eastern cities that the grower is run out of the market completely. Senator SIMMONS. I understood from the witness that you refer to that the western territory into which these imported cherries do not go and which you now have a monopoly of would consume all you produced.

Senator MCNARY. Oh, well, I can not agree with that statement at all. I know something of the cherry business as a grower all my life and one of the members of this organization and also president of a cooperative organization. Nearly all our cherries are sold in competition with these Italian cherries on the Atlantic seaboard and in the Middle Western States. A great many are sold in Cincinnati, which, I understand, is the home of the gentleman who appeared in opposition to the tariff.

The labor market is very much cheaper in Italy, as you know. These cherries are brought over in ballast, and the transportation item practically amounts to nothing. We have to pay this huge freight rate across the plains and the mountains of the West, and when we reach the market we can not sell these cherries in competition with the cherries raised by cheap labor plus the depreciation of their money and the height to which our dollar has reached. So the cherry grower in the West to-day is absolutely out of this market. Senator LA FOLLETTE. What is the transportation charge from Oregon to the Atlantic seaboard, if you know?

Senator MCNARY. I do not know, Senator La Follette, except that it is so high that very few men are able to meet it in getting their product from the Pacific coast to the Atlantic. You will recall that in the last two years freight rates have advanced about one-third, and it is practically two-thirds higher to-day than it was before the

war.

Senator SIMMONS. Senator, can we not go on pyramiding these railroad charges, and can we not get them so high that it would be very burdensome to the people of the Atlantic seaboard to force them to buy products that have to be hauled clear across the continent?

Senator MCNARY. Of course, as a westerner, I am not at all in sympathy with the rates.

Senator SIMMONS. And that would be equally true of the Pacific coast. You might make it very burdensome to require the people on the Pacific coast to buy a product which has to be carried clear across the continent at these high rates.

Senator MCNARY. Oh, yes. The West is very sensitive and more keenly injured by the high rates, perhaps, than any other section of the country. Their farm machinery must be shipped across the