packers according to quota would be a strict rationing program from the farm to the packer, and I do not think you fellows want to be in Congress, and I certainly do not want to be in Indianapolis whenever you try to tell Joe Doakes that his hogs that he has fed and marketed, when he gets ready to market them, that they are going to go to some fellow down in South Carolina or Alabama.

Senator SCHOEPPEL. You just watch my vote on that.

Mr. FARRINGTON. Now, to take the other side of the picture, I can point to no better example than the East St. Louis market. I have called your attention to the terrific increase they had during the spring months of 1951. Their receipts were down in '50, but came back strong in '51. All at once they awoke to a situation there that certainly proved to be financially disastrous to practically all their former customers. Packers at that market found that they were offered far more hogs than their quota allowance permitted, and therefore they could be awfully choosy in what they bought, and the packers away from the market, who had room in their quotas for some St. Louis hogs, providing the price was cheap enough to offset shrinkage in shipping, they got on their shopping clothes, and the St. Louis packers, realizing that the other fellow was going to get hogs cheaper, dropped their bids, too, and sometimes the prices broke as much as a dollar a hundred in St. Louis simply to distribute those hogs and get them across the country where they would fit into a quota.

The break was not just in St. Louis. It caused a break in prices in the whole United States.

Now, then, let me answer this argument about the quotas preventing black markets. Suppose you were a farmer out here and you had raised a drove of hogs or cattle, and you had them ready for market, and you wanted to go, maybe your neighbor across the way had disease develop and you had to get out of there with your hogs. They tell you the packers at your market have filled their quotas and you cannot come with those hogs. About the time you are disgusted and mad, a black-market operator comes along and says I will take them off your hands, and bingo, you let him have them, though ordinarily you would not trade with the black-market fellow. You are forcing him to go to the black-market operator that otherwise he would not deal with, and I want to call your attention to this, gentlemen. Livestock are a perishable product, you cannot keep them around without proper care, feed, and everything else. You do not put them up on a shelf like a pair of shoes and wait for the right buyer to come along.

You have got to move them, and any time you go to shipping livestock back and forth across the country, you are going to cause a loss in tissue, and a loss in shrinkage, and a financial loss to the fellow shipping them, with probably a loss in death. You cannot ship livestock back and forth across the country, and you have to have the buying power where the stuff is produced. Maybe you can ship the meat, but you cannot ship the livestock back and forth across the country.

It has been testified here that all you had to do was call OPS and get adjustment in quotas when your case that you cited of your thousand cattle comes up. Now, our experience was not exactly that way. We sent one man down there, and they had a whole table full of applications that they will not get processed for the life of the

agency, and that does not do you any good out there, when you are out in the market with those cattle that the Senator talks about, or the hogs, and the packers tell you they cannot buy them because their quota is filled.

Now, we have this condition also. A lot of these packers have concentration points, and small markets, unsupervised markets out in the country that are controlled by them. Now, when they have a quota, they are going to take care of their markets first, and if they get enough to fill their quota out there, then when it comes on the market, we have got no buyer there to buy those hogs, even though that local packer has a quota. It is filled. So he stays out of the market, and the market breaks, and the first thing you know you start a vicious cycle of reduction in prices. Every time our market goes down, he offsets it out there.

Now, gentlemen, Mr. Riddell is going to give you the situation as it works with cattle and calves, and I close with this statement. There may be only 6 million farms, but we should not lose sight of the fact that 150 million folks are totally dependent on those farms for their daily food supplies, and we could not get along very well without food. Personally, I like meat. I like to see it produced.

Mr. Riddell is the president of our National Live Stock Exchange. He is on the market in Peoria, he sells cattle out there, and I do not know of any one man better posted with the general market conditions and the lack of workability of quota system than does Mr. Riddell. Mr. RIDDELL. Mr. Chairman, and gentlemen of the committee: I am president of the National Live Stock Exchange, and our members are the livestock exchanges at 23 of the leading livestock markets throughout the United States, and the members of those local livestock exchanges are commissioners. Commissionmen sell livestock for the farmer. They sell it on a commission basis at a fixed rate of a per head nature. Consequently we have no financial interest whatsoever in the price that this livestock brings. We get the same amount of commission for a steer that sells at 20 cents as we get for a steer that sells at 40 cents, so we are not interested directly as to the price for livestock.

Neither do we have any connection with the packing industry. We are on the selling side, the packers are on the buying side, so consequently we are operating on opposite sides of the fence, but we are interested in the packing industry to the extent that we want these packers to prosper, and in that I include the independent packers, the small packers, and all the packers. They are all buyers, and we are interested in their welfare in order that we have the proper outlet for this livestock every day in the year.

We are very interested in orderly marketing, and we feel that slaughter quotas during the time they were in effect created great confusion in the market. We have instances to prove it. We have had actual experiences.

The St. Louis situation that Mr. Farrington referred to is a glaring example. I have a letter from Mr. MacInnis, president of the St. Louis Exchange, in which he says that owing to dislocation of quotas, big packers bought hogs in the country, brought them in there in numbers sufficient to replace their full daily buy at the St. Louis market, and the St. Louis market broke where down to one day it was $1.25 under the Chicago top. That is an abnormal situation, because St. Louis is ordinarily a higher market than Chicago.

Then the irony of the thing is that a couple of days later the market bobbed right back up again, it was $1.25 higher. Now, the farmer that was there unfortunate enough to market his year's supply of hogs on that day when that market was down the $1.25 has been very severely discriminated against and penalized as a result.

The cattle receipts have not been quite as heavy as the hog receipts, and we do not have quite the glaring examples in cattle that we had in hogs. I have had letters from Sioux City, St. Paul, and Omaha stating the same picture there in their hog divisions.

The cattle receipts have been a little lighter, but it has taken place in the cattle divisions just the same. I personally sell cattle every day in my life when I am not away like this, and I have had buyers tell me they cannot buy them because they have reached their quotas, so I know that that has axctually taken place.

We have it in the compliance field, too. They say they cannot buy because they are in compliance, and by the way there are a great many packers in the United States actually in compliance as well as out of compliance, and let us not forget that, and these fellows will say, "Well, it is about the end of the period, my quota is filled, I cannot buy the livestock," or, they may say, "It is about the end of the period, I am in compliance, I do not want to buy anything today, because that one buy might throw me over and I would be out of compliance."

That is the way the things affect the market at the public stockyards.

Senator SCHOEPPEL. What happens to the cattle or hogs there when you run into that situation? Who do they hand the ticket to for the expense and all that? Do the packers absorb it, or do they send it up to Mr. DiSalle? The farmer takes that, and the cattle shipper.

Mr. RIDDELL. I have lost the buying power of that buyer, so I have to take the next lower bid, and consequently you know the farmer gets the ticket. He is the fellow who loses money, very definitely.

They talk about quotas helping the packers get supplies. We sympathize with these fellows, we know they are honestly in trouble. I think it is more the fact they have to be in compliance, and operate under seals. I do not think the quota has anything to do with it. Senator MOODY. Who do you mean by "these fellows," packers or enforcement agents?

Mr. RIDDELL. Senator, I was referring to the packers who are having difficulty in getting supplies, and who are testifying that quotas will help them.

Senator MOODY. There is considerable testimony before the committee that the packers do want these quotas. I very readily concede this is highly intricate. I have never heard before Congress an issue where there was more honest difference of opinion, both in Congress, and before the committees. There are packers definitely telling us that it is imperative that they have these quotas back.

Mr. RIDDELL. And I think they are honest in that statement, that they really believe it will help them, but we as market people do not believe that is the cause of their difficulty, and we do not believe that the quotas will help. Now, that is a difference of opinion.

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Mr. FARRINGTON. In fact, our experience has proven that the fact you set a quota it will not necessarily follow that the fellow in Virginia will get his cattle. You tell me how to get them from Kansas City over to the fellow in Virginia, simply because he has got a quota, and then you have got your problem solved.

Senator MOODY. Is not the quota set on the normal shipment of cattle?

Mr. FARRINGTON. It is set on the number of slaughterings in 1950. Now, then, maybe the fellow in Virginia, the fellows who produced cattle in 1950 are not producing as many in 1951.

Senator MOODY. Did you not testify a few minutes ago, sir, that the quotas set were not on 1950, but on the estimated shipments in

1951?

Mr. FARRINGTON. Maybe I did not elaborate. If they estimate there is going to be a million hogs in this period, then they divide that million hogs on the basis of the way they slaughtered in 1950. Maybe I did not make that clear.

Senator MOODY. Oh, I understand that, but I just wanted to make it clear, because this I think caused confusion on the Senate floor when this thing was taken out of the law. I do not think it was made clear. There was a great deal of talk about where did the other 10 percent go when the quota was 90 percent. It was difficult to explain that the reason it was 90 was that the shipment of cattle was 90 percent of 1950, and therefore an equitable division would allow each packer 90 percent of the 1950 amount, or his fair share of 100 percent of the 1951 shipments as equitably as they could be estimated.

Mr. FARRINGTON. If he could get them. Our contention is further that then they estimate there would only be 90 percent, maybe there is a hundred percent of what they had the year before, or maybe there is only 80. In the first place, they cannot guess in advance. It might interest you to know that I send out a calendar every year to 5,500 of my customers, and I enclose a card for them, if they will send me back their feeding and marketing intentions I will try to keep them posted on the market, and they will send those back, and it is interesting and amusing how those fellows were just 2 or 3 months advance planning, how much they will be off in the actual marketing as to what they planned, so when the BAI, or the Department of Agriculture, or Senator Moody, or Senator Schoeppel-you cannot guess in advance what will be there, or when it comes, where it will come to.

Senator MoODY. Far be it from me to contend this is not an intricate problem, because I have sat here and listened to testimony on both sides of this thing as Senator Schoeppel and Senator Frear have, and it is certainly a problem. You see, we have two problems here, one is, we are trying to work out a law which will protect the country as a whole, including you people, against a damaging spiral of prices not only on meat, but everything.

The other is how can we protect legitimate buyers, and prevent black markets, and get an orderly production of meat.

Now, I have here this morning a wire from the Meat Packers, Inc., Atlas Packing Co., and some other names, from Los Angeles. This is a telegram that was given to me, sent to Senator Maybank, express

ing the opinions of the members of the Meat Packers, Inc., in favor of reestablishing slaughtering quotas.

It says:

We believe it is imperative that you know the sentiment of Meat Packers, Inc., a group of independent meat packers in the Los Angeles area. We voted 15 to 7 in favor of slaughter quotas, and it is our opinion that slaughter quotas should be reimposed at this time so that livestock can be channeled in a more equalized method, enabling the independent meat packer to buy livestock within existing regulation, and assist us in carrying out the purport of the OPS program. Results of the above vote in favor of slaughter quotas were sent to the Western States Meat Packers, Inc., of which we are members, but our vote was ignored. We wish to go on record that the majority of the independent meat packers that voted in the Los Angeles area are for the reestablishment of slaughtering quotas.

I readily admit I am not a meat expert. We have had a great deal of testimony in which it is said that unless there is an orderly system worked out, the bidding up of these prices will simply carry meat prices higher, and, as Senator Schoeppel said a few minutes ago, it results in breaking open the wage line-we are trying to hold the line as fairly and equitably as we can, and it is a very difficult job, I assure you.

Mr. FARRINGTON. I think the packer who only wants to kill his share of the cattle is a very fair-minded fellow. I think he has the best intentions.

Our contention is

Senator MOODY. There are those who undoubtedly do not. My feeling is that at a time when we have people—I do not want to wave the flag here, but when men are actually dying in Korea, and we are under great danger, I think it is up to all packers and everyone else to make their contribution. I agree that the packers who want to kill their quota are patriotic and fair-minded, and I think everybody should be.

Mr. FARRINGTON. But do you think that the fellow who is trying to hog the range now, and not in compliance, will pay any more attention to slaughter quotas? He would ignore your law on slaughter quotas just the same as he would the other.

Senator MOODY. I think a threat to violate the law is no basis upon which Congress should write the law. I think we have got to do the best we can, and enforce the law which is in the public interest. There is an enforcement division of the OPS. It is a highly difficult thing to enforce, but that same general tenor of testimony came in here before; that is, that people would not obey the law, therefore do not pass it. Let us have inflation. I do not go along with that one at all.

Mr. FARRINGTON. That is not what I mean. My contention is they have to enforce the law they have got, and if they enforce that and keep the man in compliance-let us talk about bidding the price up. If you hold that fellow responsible to be in compliance, he is not going to bid the price up, and if he is not paying any attention to compliance now, you are not going to handcuff him by putting quotas or anything else on him. The thing goes back that you have got to have enforcement of the compliance, and you do not need quotas to do that. Senator MOODY. Well, we are told by people whose responsibility it is to enforce it, and I might say those are responsible people, they are certainly not irresponsible people, and we are told that they cannot do this job unless they do have these quotas.