Mr. DiSalle and his organization have never been refused legitimate opportunities for additional financing, if he wants to ask for it. To come in here and say, as far as I am concerned, that you have to let it continue when you can trace it in New York City does not ring true to this Senator.

Mr. SCHWARTZ. They have started to do that. They have got some very good results.

And as far as Kansas and Wichita, we buy cattle out of Wichita, and what the requirements of Wichita are, I'm sure they get it right there in town without any trouble or any reason to believe that they would even have to pay a wholesaler's mark-up.

Senator SCHOEPPEL. Is there any reason why, when those cattle go into transportation channels, that the OPS does not have access to the transportation records to see where they go?

Mr. SCHWARTZ. No.

Senator SCHOEPPEL. Do you know of any reason why?

Mr. SCHWARTZ. It was on my recommendation that they started the investigation on short weights and all that.

Senator SCHOEPPEL. But it can be done; can it not?

Mr. SCHWARTZ. It will be done.

Senator SCHOEPPEL. It should have been done.

Mr. SCHWARTZ. It still gives them a better weapon when they have a quota to work with, because they can control it. There is one thing that the packers and slaughterers are afraid of. They know that there is the Department of Agriculture record on every cow that is slaughtered in a BAI-inspected plant in every State. And, when they knew that they had a quota of 1,000 cattle, they knew how many they killed; and, if they killed over, there was a reason. They were able to check. Now, today, when you've got the big runs from the South of cows, their historical pattern is that they took care of all of the cows that they wanted to have slaughtered and were getting them legitimate, were getting some of them under the ceiling at this time; but now, since quotas have been lifted, a lot of people are drawing them away in different sections. They are getting to the point where maybe they won't even be able to sell them at a compliance price.

It is a device that OPS needs absolutely. Otherwise, you've just got price control, and everybody is going to run like an open market. Senator SCHOEPPEL. Of course, Mr. Schwartz, if the premise that you are operating from in this case is that you are going to let them get away with it and charge it to quotas alone when it is an administrative policing proposition, I cannot subscribe to that.

Mr. SCHWARTZ. We have a producer down in your neck of the woods who I believe is one of the finest men and one of the men that is trying to help in every way to support the program. He sells a great deal of his cattle, all of them, I think, and he handles maybe 45 or 50 thousand head of cattle a year, on a grade and yield basis. In other words, on a legitimate ceiling price. If a slaughterer buys the cattle from him, and he has sold some in Wichita and so forth, here is his problem: In other words, it is the same as Safeway or we have. We have had a legitimate ceiling price and all of a sudden the market becomes glutted on a certain item. We have to discount. We can't raise our price on the item.that is scarce to overcome what we have to drop the other cut. Therefore, Safeway or any of these chains

or markets will not, outside of the percentage of profit that the OPS has left for them in this set-up, which is a good one, if they sell everything at ceiling price, they will always have something that sells under, as the hides and tallow did under carcass beef of the slaughterer, and judgments do have to be made.

Senator SCHOEPPEL. But they have been pretty slow being made and that is one of the difficulties that entered into your hide and tallow falling market; is it not? It does not permit the legitimate income to come in there based upon the historical ceiling price that they thought was adequate.

Mr. SCHWARTZ. Well, Senator, those things come up pretty fast. Our tallow business is pretty well controlled by the soapers of this country, and without warning they pull out of the market and say they don't want to buy it.

Senator SCHOEPPEL. This has been going on for 2 or 3 months, though.

Mr. SCHWARTZ. That's true. It took a little time.

Senator SCHOEPPEL. It looks to me like that is a quarter of a year, almost.

Mr. SCHWARTZ. There should be more and better action on that, but if you don't have your slaughter controls you will never be able to stop them. Everybody is afraid of that slaughter control. That's why they don't want it. The producer don't want it because that is going to limit him as to how much he can get for his cattle. He don't mind these people who want to go over compliance or over Governmental regulations coming out and giving him more for his cattle. He don't mind that at all.

Senator SCHOEPPEL. Oh, I recognize there is a segment of people in this country who think that the farmer and the producer is the fellow who is getting it all. I recognize that. I merely want to be fair about it. The man who wants to bring his cattle to market when they are fat and ready to go, I do not suppose he wants to wait around on Kansas or Texas or Iowa or Nebraska plains until the folks in New York or Chicago are ready for them. They have to be fed; they have to be watered, and they have to be cared for. The loss in shrinkage and the labor factor, all of those are increasing. So, I am just going to string along with those folks out there who recognized a raw deal when they get it.

Mr. SCHWARTZ. They got a pretty good deal when they got these commission men to tell them when to market their cattle. As soon as the big run comes in and the big packers take them, they don't have them in the next day and the market is tightened up again.

Senator SCHOEPPEL. The only other thing they could do is to hold them over in the stock yards for 2 or 3 days and then take the depressed prices the big packers want to pay for them, and that is a nice development toward a monopoly. That is the thing I am trying to readjust some way on an equitable basis. I hope in this series of hearings we can bring some of those things out and point to how they can be eliminated, because that is a factor we have to take into consideration.

Mr. SCHWARTZ. Well, the fact is that they don't pay over compliance for cattle and the farmer take less for them, because, if the farmer wanted to cooperate with what we are trying to get done here and work as a team, he would be willing to take compliance for his

cattle. He can buy his stockers and feeders to make plenty of money. He's done pretty well the last couple of years.

Senator SCHOEPPEL. Do you advocate establishing a price at which the farmer has to sell them?

Mr. SCHWARTZ. I advocate one thing. As long as we have price controls, as long as there are definite dollar and prices set up, that everybody can live in this industry, why should the farmer be any different? He has no legal entanglements. They are not going to criticize him for getting more or less. Why shouldn't he be satisfied to take the full amount of what those cattle are worth? They go through the packing house; if they're Choice, he's paid for Choice, and so forth, so that they can pass it on to the consumer.

We're talking about the consumer; not these separate industries like myself, our Safeway, or anybody else, what they're going to get out of the deal. We're supposed to keep the price down to the con

sumers.

Senator SCHOEPPEL. Six million farmers and their families I do not suppose are consumers.

Mr. SCHWARTZ. I mean, I'm for the farmer. We've got to have him. He's our lifeblood. If we don't give him the opportunity to make money, we'll have nothing here.

Senator SCHOEPPEL. I agree with you 100 percent.

Mr. SCHWARTZ. I mean I'm not against that. I say throw the thing out and you're doing a good job. Then you have free trading. If they want to pay more for one cut, we'll charge them, and we'll sell them the rest of it for less.

Senator SCHOEPPEL. But the point I am making, Mr. Schwartz, what I am trying to get out of you: You are appearing here in favor of these controls. You have had some dislocations, and I am not questioning your sincerity. Please do not misunderstand me, though my questioning may appear otherwise. I can see your point of view. But you do feel that what you would like to have would be a stated price that that animal could be sold for on the farm, and no more?

Mr. SCHWARTZ. Well, that's just my opinion. That wouldn't carry any weight.

Senator SCHOEPPEL. Well, you are dealing in quite a lot of livestock. Mr. SCHWARTZ. To all intents and purposes, this regulation is set up for that.

Senator SCHOEPPEL. It is set up for that, you say?

Mr. SCHWARTZ. Yes; that they should only pay so much for cattle to be in compliance, so that they can sell it to every legitimate buyer. Senator SCHOEPPEL. That is the thing I am afraid of. If your assumption is correct, that is what you are driving for. I am glad that you have the forthrightness to indicate they have that opportunity and maybe they should do it.

Mr. SCHWARTZ. If they did that, then there wouldn't be any problem. Anybody can be in this business today, because the demand is great, and anybody can become a crook overnight easily because the pressure is broad enough. It's only the people that want to live with this thing, and they are the most of them, that might be forcing it.

There is one I know positively, one of the best packers in the country in a smaller way, is Gibbs in Cleveland, who happens to be a member of the advisory board. I know that they only do business in the right way. He supplies 600 customers with the 800 cattle a week that he

kills. Now, when he closed up last Monday, what happened? Those people weren't going to go out of business. They no doubt had to make deals with somebody to get meat.

Safeway doesn't buy from us because I'm Benny Schwartz or anybody else. They want the meat, and as long as they buy it legitimately-they've asked me for a lot more than they've gotten.

Senator SCHOEPPEL. I think the great overwhelming mass of purchasers are honest and want to comply.

But I understood that Mr. Gibbs came in and went to some of his Senators, he went to Senator John Bricker, and I hope I am not misquoting him, but they pointed out that a lot of their difficulties were due to the price at which they were forced to sell their hides and their tallow.

Mr. SCHWARTZ. That's what I just said, Senator.

Senator SCHOEPPEL. Yes. But it was awfully slow coming in. They had to close down, and that was not fair.

Mr. SCHWARTZ. It's the historical pattern of everybody in the slaughtering business to lose money in July and August on good cattle, where there's a free market or a good one. It's always the fellowwhen I want a couple of good seats at a show in New York, I'll pay $5 extra for them, and I'll be down in front. Everybody wants to get in on the picture now.

Senator SCHOEPPEL. That is the way we want to keep it, as a competitive proposition.

The CHAIRMAN. We thank you very much, Mr. Schwartz, for your testimony.

(The prepared statement of Mr. Schwartz follows:)

STATEMENT OF BENJAMIN SCHWARTZ, PRESIDENT, B. SCHWARTZ & Co.

I am Benjamin Schwartz, president of B. Schwartz & Co., Chicago, Ill., a meat wholesaler that has grown in 20 years from an annual sales volume of $50,000 to approximately $40,000,000 the past year; and presently handled approximately 4,000 beef carcasses weekly selling to both domestic and governmental buyers.

I urge the passage by Congress of bill S. 1928, reinstating slaughter-quota controls to aid in a more effective operation of price controls, more equitable distribution of beef and beef byproducts, and the elimination or reduction of the many faulty business practices presently in effect through the failure of the inclusion of quotas.

(1) Slaughterers with properly established quotes will more generally distribute to their historical base of doing business. This can be stated strongly because quotas are to be established from an historical background.

(2) Plants having quotas will be required to purchase product in compliance of price regulations, as failure to do so will not permit noncompliance operators. to function legally. Review of businesses operating when quotes were in effect will demonstrate that a more stable and sympathetic relation to OPS regulations existed. This applies to all segments of the industry.

(3) Properly established quotas give slaughterers a reasonable profit when livestock is purchased in compliance. A reasonable profit for handling is available under OPS price regulations to all other segments of the industry.

(4) With the reinstatement of quotas, defense agencies will be able to secure their requirements above the allowable domestic slaughter at a cost to the Government at no more than to the domestic buyer.

(5) It is my considered opinion that the cost of livestock as outlined under the quota regulation will permit generous profit to the farmer and will aid him to move his product in an orderly and historical manner.

The CHAIRMAN. The next witness is a representative of the National Association of Meat Processors and Wholesalers, Mr. Joseph Danzansky.

Mr. Danzansky, will you come up?

STATEMENT OF JOSEPH B. DANZANSKY, GENERAL COUNSEL,
NATIONAL ASSOCIATION OF MEAT PROCESSORS AND WHOLE-
SALERS

Mr. DANZANSKY. My name is Joseph B. Danzansky, and I am a member of the law firm of Danzansky & Dickey, who are general counsel of the National Association of Meat Processors and Wholesalers, Inc., an organization comprised of approximately 500 independent meat processors and wholesalers, essentially in the nonslaughtering phase of the meat industry.

The bipartisan sponsorship of the bill is a clear answer to thoughtless critics who claim that controls, particularly in meat, have become a mere political football and that the best interests of the country are not being protected on both sides of the Senate aisle.

As we have analyzed the arguments in favor of quotas, the primary argument is a question of fair distribution of available supplies. Against the livestock quotas, it breaks down into two issues:

One, that any action that fosters a controlled economy is not good; and, two, when quotas were in effect, they were not administered properly.

Unfortunately, the results of these hearings and the passage or nonpassage of the amendment in question will not constitute a panacea for all meat-control ills. this question who state that the passage or nonpassage will cause the We do not agree with those on either side of complete breakdown of meat controls or meat production. In this decision, as in most other decisions involving an attempt to control an economy as complex as ours, no one can point to any signpost and say in effect: "Take that road to Utopia." committee are in a position where they must weigh the facts developed The members of this at these hearings and then choose the lesser of evils.

I would like first to analyze the arguments against reinstatement of quotas.

The first was that: "Any action that fosters a controlled economy is not good."

There is no true American who will not agree with the broad principles behind that objection. However, in times of emergency, the people of the Nation, through their elected representatives, have been willing to give up certain of their privileges in order that they might enjoy them in a more fruitful abundance in the future. This attitude manifested itself in the passage of the Defense Production Act of 1950 as amended this year.

So we start in our answer to this objection by agreeing that no one likes controls, but that despite that fact controls are with us. then, leads us to the next question, which is: Can we partially control This. our American economy?

Within the last year this committee has been able to observe the practical effects of the Defense Production Act of 1950. recall that the act set out a formula for the control of the American You will economy. In effect, the act stated that the President should first attempt a voluntary control program. Failing in this, it gave him the right to introduce certain selective controls. Third, if the above two steps failed of accomplishment of the ultimate goal, it instructed the President to invoke complete mandatory controls.