paid for the animal. We have had cases where a second Government grader disagreed with the first Government grader. This constitutes another reason why price control on beef will not work. Our position on grading is confirmed by the Secretary of Agriculture in a telegram to the Governor of Colorado. He says:

Removal of OPS compulsory grading of meat would be a good thing for all segments of the industry and the consuming public.

That is the same thing as saying that the removal of price control would be a good thing for the consuming public.

If the Congress approves standby controls it will approve compulsory grading of beef, against the wishes of the Secretary of Agriculture, against the wishes of the cattle industry and farmers, and against the wishes of all processors of beef

The CHAIRMAN. Will you yield for just a moment? Are you not just misrepresenting it a little bit there?

Mr. LA ROE. I hope not.

The CHAIRMAN. I hope you are not either. I do not think you intend to. But are you not leaving the impression that if the Congress adopts standby controls that that means controls will continue at the moment on meats?

Mr. LA ROE. That is misleading and should be corrected. I do not mean that at all.

The CHAIRMAN. That is exactly what you said. What you mean to say is, if the Congress adopts a standby control bill and the President at some future date should put it into effect, then they would be doing that?

Mr. LA ROE. You are right. It is misleading. Let me change it, please, that if the Congress approves standby controls and this results in price control on beef

The CHAIRMAN. If it results in the President putting it into effect at some future time?

Mr. LA ROE. Yes; you are right. I will continue: and against the best interests of the rank and file of the American consumers. The variable factors which cause two experienced beefmen to disagree. on the grade mark to be used on the same cut of beef is bound to result in hardship and injustice.

This danger of being penalized for overpaying makes the meat packer very cautious and almost forces him to pay a low price for his cattle, thus injuring the producer. The present situation in the cattle industry is deplorable and will have very serious repercussions later because it is sure to cause a reduction in the beef cattle supply and therefore in the volume of beef available to producers. The cattlemen are in a bad mood today, and they cannot be expected to go on feeding cattle in the face of heavy losses.

Imports: Cattle, meat, and hides are flowing into this country from foreign countries and meat is coming even from behind the Iron Curtain. Gentlemen, I submit to you that it is not fair to hurt our producers and our industry by the importation of meat from these Communist countries. It is difficult for us to understand why the Government permits the domestic cattle, hog, and meat industry to be hurt in this manner at a time when farmers are really up against it and prices are sagging badly.

Demand and supply: The present low beef prices and low beef cattle prices are proof that it is volume and not price control that

30216-53-pt. 2- -3

protects the consumer. There is no secret about the reason for the present decline in beef prices because the number of beef cattle on the ranges and in feedlots is 5 million greater than a year ago, the present cattle population being 93,700,000. The number of cattle and calves on farms for the last two decades is shown in the following table:

I like the spirit of a fine Texas rancher, Dolph Briscoe, who has suffered from drought and from low prices, who dislikes price control, and who is quoted in the Washington Star of February 25 as saying to a group of Texas bankers:

There'll be times when we can pay off our bankers, and there'll be times when we can't. But if you'll stay with us, we'll stay with you-we haven't any other place to go anyhow. If it ever rains, things will work out all right-and it always has rained sometime.

That is good American philosophy.

We interpret the last election as a mandate against unnecessary regimentation. There should be no standby controls on meat because price control on meat has proved itself to be unworkable. Price control will not produce meat, even in an emergency. Price control is not needed to hold meat prices down in view of the enormous amount of competition in our industry. If price control holds the prices down below the level fixed by keen competition, then the price control is unfair, as it has been. You can't regulate the seasons and you can't regulate the attitudes of farmers, and you can't regulate the black market. You can encourage the farmers and thus aid production, through fair parity prices and otherwise. But you can't help them or us with red lights. And price control is a red light.

The CHAIRMAN. Mr. La Roe, you have made a good case against the administration and particularly the rules and regulations of OPS. I went all through it, as you know.

Mr. LA ROE. I know you did.

The CHAIRMAN. For months and months and months.

Mr. LA ROE. You were very helpful to us, too.

The CHAIRMAN. I agree with everything you say. I think there is a big question as to whether or not even in a war period it is in the best interest to try to control meat prices. I think that is avery, very debatable subject. I would like to see it looked into very, very carefully. However, all we are trying to do in this instance-controls at the moment are not on anything; I think we are all agreed on that and that they will all be out on April 30-but what we are studying here and the problem that is before us is this: If we get into a big emergency in the future should we be prepared to cope with it and prepared to cope with it in advance or wait until it is upon us?

I have the feeling, based upon experience with this whole business down here, that we ought to prepare for it in advance, and we ought

to do something quick. I have come to that conclusion as a result of the workings of OPA and OPS. I am confident-you may not be and I am going to ask you this question in a monent, that if you do get this big emergency, whether they should or should not, if you leave it up to the Congress, they will put on price, wage, and rent controls. They will do it after a period of time. They possibly might well do it when the need for it has long been behind us.

Let me ask you this question: You feel that if we do get into a big emergency that then we should have price, wage, and rent controls? Mr. LA ROE. Generally speaking, yes.

The CHAIRMAN. I agree with you that we might take a good look at meats, that is, livestock.

Mr. LA ROE. That is the sole purpose of my presentation.

The CHAIRMAN. It is one of the products in our economy that is awfully hard to handle. There is not any question about it. If you agree that the time might come in which we would need these controls, then do you not think it would be better to prepare for it now, and do you not think it would be better for your industry to come in and write rules and regulations, at least try to, and either come to the conclusion that practical, sensible regulations could be written under which you could live without wrecking the industry or come to the conclusion that it was impossible, and then sell the Congress on the idea that even though this big emergency comes and you must have controls on everything else the best interest of the Nation and people would lie in not having them on meats?

Mr. LA ROE. That is a very fair question. Let me answer it in this way: In the first place, my clients are good Americans and have the highest regard for you and your motives in this thing.

My whole point-I am not qualified to talk about subjects other than meat is that years of experience have proved you cannot control meat without hurting us and hurting the Nation and hurting the farmers.

The CHAIRMAN. The 90-day freeze bill gives the President the right to make exemptions. He could exempt, of course, livestock under that, providing in the meantime a study was made and you had convinced the Congress and others as a result of the OPA and OPS that it just could not be handled.

As it stands today, my best judgment is if an emergency occurred next October the Congress would slap it right back on meats. They would do it hurriedly. They would do it under pressure. Then you would get all these rules and regulations, this grading business, which is absolutely unfair; I agree with you 100 percent that OPS has no right, if they had a ceiling of 20 cents on hides or lard and the normal market goes to 16, to come along and reduce the ceilings from 20 down to 12.

I know of nothing that is more unfair than that. Yet they did it. Those are the things that I personally am trying to avoid in the future, if we can do it. Maybe we cannot do it. I believe we can.

I am a great believer if handed a lemon to at least try to make lemonade out of it. I think some of these days you may be handed another lemon. Let us try to see if we cannot do something at the moment between now and then to make lemonade out of that lemon when it is handed to us.

Mr. LA ROE. Apparently what you are aiming at, Mr. Chairman, is that we should come in here with our experts and show you a pricecontrol program on meat that would work or come in later and show that to the Congress.

The CHAIRMAN. It is absolutely impossible to make it work?

Mr. LA ROE. I say to you that all the experts in our industry, and they are honest, good Americans, cannot devise, and they think it is utterly impossible to devise a price-control system that would work.

The CHAIRMAN. If that were true under this 90-day freeze order under this bill, the President could, if he wanted to, exempt meats. I am not saying that he would. I am not going so far at the moment to say he should. But I certainly do know the problems involved.

You certainly can make a fine case for it, that it would not be in the best interest of the people to do it. You see, the matter of livestock is a little different than controlling the prices of consumer goods, because if you get into a war the Government takes a very, very large percentage of the copper, the steel, and the nickel, and so forth, that go into tanks, airplanes, and so forth, whereas with food you do not increase your population.

You make take 10 million boys into the Army but if they were not eating in the Army they would be eating at home.

It might well be that the productive capacity of agriculture could well take care of providing you with the indirect controls that we hear so much about that would siphon off part of the purchasing power.

Mr. LA ROE. Let me give you one illustration as to how even Congress unintentionally is unfair to us. If they could handle the lemon and could make lemonade out of it we would not be here. We came before Congress and said, "Don't you think there ought to be a clause in here saying that for the processing of cattle and hogs there should be a fair margin?" "Yes," Congress said, "there should." And they wrote it into the law. What do you think OPS did?

The CHAIRMAN. They sabotaged it.

Mr. LA ROE. They interpreted that to mean there might be an overall profit on hogs and beef but not beef separately.

The CHAIRMAN. That is what we are trying to avoid in the future if we can. If this emergency ever occurs, whether it should happen or not, we want to avoid that situation in the future.

Mr. LA ROE. The underlying basis of all of this is grading these animals. If we knew how to grade these animals by law, it would be a comparatively simple matter, but you cannot do it. How can we come before you, or the President, and make a program of grading work when we know it will not work.

We submit to you in all sincerity, Senator, that we cannot do it. You do not need to worry about meat prices if you have volume.

The CHAIRMAN. Under the 90-day freeze ceiling the President could exempt livestock if it were proven it was in the best interest of the Nation.

Mr. LA ROE. Now you scare me more than ever, because if you exempt livestock and do not exempt our products, put prices on our products

The CHAIRMAN. On what?

Mr. LA ROE. I say, if you put price control on beef cuts and do not put price control on the animals, then we are squeezed, are we not? The CHAIRMAN. I would not think so.

Mr. LA ROE. I would.

Senator BENNETT. I would like to ask a question, if I may, Mr. Chairman, if you are through with the witness.

The CHAIRMAN. Yes.

Senator BENNETT. You have indicated that the price pattern in your industry has a cyclical form. At what time is the low point of the cycle under normal circumstances?

Mr. LA ROE. Of course, the low point in the price cycle is when the supply is down.

Senator BENNETT. You have explained that, but at what time of the year, approximately?

Mr. LA ROE. In talking about beef, the cattle begin to come to market in volume about late July or mid-August. The grass-fed cattle begin to flow in at about that time, and then from then to Christmas there is a pretty abundant supply of beef. Before that prices will be high.

Senator BENNETT. How much of a swing is there between that time? Mr. LA ROE. I do not have a chart with me. The Department of Agriculture has a chart. It is a substantial change. Senator BENNETT. Twenty percent?

Mr. LA ROE. At least that.

Senator BENNETT. If the proposed quick freeze were to be imposed at the low point of the cycle, what would that do to the industry? Mr. LA ROE. Almost ruin us.

Senator BENNETT. That was the point I wanted to get. I have another question. Could we have price controls on meat without compulsory grading?

'Mr. LA ROE. NO.

Senator BENNETT. Could we have price controls effectively without rationing?

Mr. LA ROE. I do not believe it is fair to our industry or to the public or to the Nation without saying that the emergency is severe enough to require price control on this very difficult commodity and yet it is not serious enough to require rationing.

In other words, if the emergency is serious enough to require price control, it is serious enough to have consumer rationing. But we do not believe that we should have either price control or rationing on this commodity.

Senator BENNETT. The chairman has indicated that possibly your industry should be exempted. Do you operate under a different set of economic laws that makes your problem different than that of any other industry?

Mr. LA ROE. The economy under which we operate is the same, but the seasonal variations are peculiarly bad as to our industry. If the farmers would raise the same number of hogs every month, or if the grass would grow every month, that would be one thing, but you cannot regulate the seasons. You cannot regulate the farmer's attitude. It just will not work. You cannot regulate the black market. There are so many factors in this thing. You cannot police what a man puts into sausage.

Suppose I was a sausage maker in Washington, D. C., today and put some cheap stuff in sausage that I should not put in. Why, the whole United States Army could not police that sort of thing.

Senator BENNETT. Your point is that you are subject to the same economic laws, but the effects of them produce wider variations in your industry than they do in other industries?