ceiling on beef? Our industry has never taken a stand for that, but if you had an overriding ceiling on beef, it would overcome the difficulty, perhaps, that was stated by the Iowa cattle raisers yesterday, which impressed us very much, namely, that this price control is discouraging the feeding of animals.

I can't lay too much emphasis on the feeding of animals, because if you take a 600-pound steer and feed him up to 900 pounds, you have increased your beef supply by 50 percent.

Senator MOODY. That is the nub of the problem from your industry's standpoint.

Mr. LAROE. These Iowa people yesterday, who are very sincere, and I know made a deep impression on the House Agriculture Committee, said that price control as it is shaping up now will cause the feeders to have an actual loss, and they gave cost figures, and proved that feeding can't be done.

Now, I am not arguing against the control of inflation.

The CHAIRMAN. Will you go on and explain the over-all thing you are talking about? I would like to know what that means.

Senator SCHOEPPEL. Mr. Chairman, might I ask this gentleman a question at this point in relation to what Senator Moody said a while ago?

I understood you know quite a bit about the Chicago market, don't you?

Mr. LAROE. Not too much. I am only a lawyer. I have to absorb what meat knowledge I get.

Senator SCHOEPPEL. You know Chicago is probably the top cattle market of the country. We can start with that premise.

Mr. LAROE. That is right.

Senator SCHOEPPEL. I think if you check the records, you will find that in 1948 the top for cattle in Chicago for that year averaged about $35. I think you will find I am substantially correct on that.

Senator BENTON. What year?

Senator SCHOEPPEL. 1948. The top price in Chicago during April-that is just the month before we are sitting right in this room in the city of Washington today-was approximately $40.

Now, let's go back to this wage situation. I think the country and a lot of these gentlemen are losing sight of that relationship.

In 1948, according to the labor statistics, the average wage per hour was $1.35. The average in April 1951, or in May, was $1.56 per hour. Mr. LAROE. It is now $1.57.

Senator SCHOEPPEL. I wanted to be on the conservative side; I will give them a cent one way or the other.

Now, if you will look at the price of top choice meat in Chicago for 1948, the average for that year, and your figure for May or April 1951, in Chicago, you will see that the relationship of the meat, the price of cattle, let's say, in Chicago at $35 back in 1948, and in May or April of this year is almost in direct proportion and relationship.

Now, that certainly isn't accidental, so that shows there is a degree of relationship here that has kept pace one with the other.

I want to say that, because I think it dispels completely the picture sought to be presented; that this is one-sided; that the purchase power isn't here; that we haven't kept pace with that purchasing power; that is the point I want to make, and I want somebody to start refuting that to me.

Mr. LAROE. Well, the plain truth is that the price of meat is not abnormally high. Now, I should think, answering Senator Moody about the inflationary aspect, I should think that abnormal increases in prices ought to be checked, but I don't think you ought to take such an important item, which is already within the framework of your economy, and which hasn't been inflated, but which is subnormal compared to the rest of the economy, and drive that back still further.

Senator MOODY. If I may interrupt, I think a great many people in the country would be amazed to have you say that the price of meat is subnormal.

Mr. LAROE. The price of meat is subnormal today, I repeat, compared with the increases in the price of labor.

Senator MOODY. As compared to what period?

Mr. LAROE. Any period that you want to take from 1920 down to date. A recent period was just stated here since 1948.

Senator MOODY. There are a great many people in this country who live on virtually fixed incomes, too. You are speaking, I assume, of the cost of industrial labor?

Mr. LAROE. The Bureau of Labor figure as to the hourly average industrial wage.

Senator BENTON. May I read from this table that has just been shown me, which bears out Senator Moody's point very well?

An hour of labor, according to the table, 1 hour of factory labor in 1929, it took 1 hour of factory labor. The quantity of various meat items that could be purchased with 1 hour of factory labor, selected period 1929 to 1951, in 1929, 1.2; 1939, 1.8; 1947, 1.6; 1948, 1.5; and as Senator Schoeppel has just brought out, in March of 1951, it is 1.5. The ratio today is just what it was in 1948, but the ratio today. shows you can buy less meat than in 1949-1.6; 1951, 1.6; and 1939, 1.8; which bears out Senator Moody's point that you prove your case according to the base period you pick. By picking 1929, you picked the best possible base period.

Mr. LAROE. You have given the round-steak figures.

Senator BENTON. It says various items.

Mr. LAROE. May I give the bacon figures?

Senator BENTON. This must be a weighted list of various meat items.

Senator SCHOEPPEL. Will the Senator yield at that point?

Senator BENTON. Certainly.

Senator SCHOEPPEL. Is the Senator aware that in 1939 the agricultural products were only 85 percent of parity?

Senator BENTON. Yes; I accept that; 1939, I think, was a bad year. Senator MOODY. Does the Senator from Kansas feel that parity is the fair standard for balance between wages, industrial prices, and the prices of agricultural products in the United States?

Senator SCHOEPPEL. I don't know too much about labor. I know what the statistics show, but I do know that 6 million farms in the United States under parity are finally coming into their own, and that is the reason I am for it.

Senator MOODY. That is fine, I am for that, too, but I would like to point this out to you:

I have always thought that the parity price was a price which should be sustained, should be supported. The agricultural economy,

as you and I were speaking of it yesterday at the Capitol, is a very essential part of the economy in American life. The agricultural depression of the 1920's helped bring on the big depression.

I would like to point out that most agricultural products now are selling at parity, or below parity, but meat is selling at 52 percent above parity.

Senator SCHOEPPEL. Let's get this straight for the record, though: We are walkin on a floor here that supports us, that is what parity is. Parity is the floor.

Senator MOODY. But there are a great many agricultural products selling below parity now. They ought to be up to parity. But it seems to me to be a dislocation when you have the consumer paying $1.10 a pound for ground round steak, and meat selling at 52 percent above parity, and a great many other farm products selling below parity.

The CHAIRMAN. What I would like to find out is what these packers, and farmers from Iowa, thought would be the proper way to put a ceiling on meat, if you had to put a ceiling on meat.

I understood you to say the feeder came in and told the difficulty of the feeders, and so on. I would like to understand what they recommended to the House committee, so that I may learn the full details.

If something had to be done, what do they suggest?

I would like to find out something constructive.

Mr. LAROE. You misunderstood me, Mr. Chairman, if you thought I said that the Iowa people suggested an overriding ceiling. They were here to fight price controls on meat and meat products, because it would kill their feeding industry, and the only point I was making there was they produced their cost figures, and showed that under this set-up of OPS they will actually lose money.

The feeders just can't live.

The CHAIRMAN. Didn't you say there was some other type of ceiling could be put on

Mr. LAROE. I said the suggestion had been made in some quarters, and our industry is not committed to it

The CHAIRMAN. I didn't suggest you be committed to it, but I would like to know what the suggestion is.

Mr. LAROE. That there might be an overriding ceiling.
The CHAIRMAN. How would that work?

Mr. LAROE. It would simply be this: You wouldn't pay more than 40 cents for any kind of beef, Chicago base, or 38 cents, whatever the figure was, and price control would be greatly simplified, because you eliminate the terrible grading aspect if you do that. The weakness in that proposal is that it might have a tendency to cause the lower grades of beef to come up nearer to the ceiling, but it would avoid the terrible complexities you have in the grading proposition. Grading is messy, dishonest, unworkable.

The CHAIRMAN. In other words, a pound of beef, no matter whether it was prime, commercial, or what it was, would all have a ceiling? Mr. LAROE. You couldn't pay more than the overriding ceiling, whatever that was.

Senator BRICKER. There are two or three aspects of this that I am interested in. First, nobody wants to see a return to the black market with all the loss that is attendant to it, in our productive system. The

losses became very dangerous during the latter years of the war, the byproduct losses that came from the institution of black markets, and I don't know whether adequate provision has been taken or can be taken for the enforcement of these regulations to prevent the spread of the black-market practice, but I am interested in another section to which you referred a moment ago. That is on page 10 of the law, paragraph (f) of subsection (3) of section 402, that says that the powers granted in this title shall not be used to make or made to operate to compel changes in the business practices, cost practices, or methods or other aids to distribution established in any industry except where such action is affirmatively found by the President to be necessary to prevent circumvention, or evasion of any order or requirement under this title.

I think you mentioned a moment ago that certain business practices that had been developed over the years in your industry are disturbed by this regulation. Will you be a little more specific about that, and give us, if you can, any method by which you could protect the established business practices that have been determined to be practical throughout the years?

Mr. LAROE. I am not sure that you can operate price control in such a manner as to accomplish what the law says shall be accomplished. It is not changing business methods in violation of that clear paragraph of the statute if you had a great feeding industry for yours and I can't overstress the importance of beef feeding, and beef feeders, they are just as important as the man who raises the animal from the start-to add 300 pounds to one animal, from 600 to 900 pounds, is increasing your beef supply by more than 50 percent. Now, if your Iowa friends are right, and if this law is being administered in a way to practically wipe that feeding industry out-they say they will sustain such heavy losses they can't feed any moreisn't that wiping out or changing a long-established business practice? Senator BRICKER. Will that just result to those who have bought at the high prices and will have to sell under the reduced prices?

Mr. LAROE. I wish I had here with me that expert feeder who testified so clearly yesterday before the House committee. He produced his figures, and he showed heavy losses from the feeding of animals. He gave his cost of feed, his cost of hay, his cost of veterinarian services, he had all the figures which showed a heavy loss.

Now, I submit that a heavy loss from price control which wipes out or threatens to wipe out an industry violates a statute which says the powers granted in this title shall not be used or made to operate to compel changes in business practices.

Wiping out an industry is worse than changing a practice, and the law doesn't contemplate that sort of thing.

The CHAIRMAN. Let me ask: these feeders are farmers, so to speak? Are they allied with the Farm Bureau, or what is the set-up?

Senator SCHOEPPEL. In my State you will find them members of the livestock association. You will find them overwhelmingly members of the Farm Bureau, many of them are members of the Grange and many of them are members of the Farmers Union. They are all allied with the farm organizations.

The CHAIRMAN. The same in your State, Senator Thye?

Senator THYE. I am not a member of this committee, but I am vitally interested.

The CHAIRMAN. I am interested, too. I might ask if the organization would give the answer that Mr. LaRoe said he couldn't give-he wished the feeder who testified before the House were here. What I am trying to do is get information from that field as to the over-all ceiling price.

Senator THYE. Mr. Chairman, I am not a member of this committee, and I just came in here this morning because I am vitally interested, and I do not intend to project myself into the discussion, I think that would be entirely unfair, but inasmuch as my name was mentioned, I don't want the record to show I sat here as a mummy and made no remarks about it.

If you want a remark from me, I will gladly give it, but I want to make clear that I came in here just as the press came here this morning; to listen in and try to gain as much information as possible from the discussion.

The CHAIRMAN. I want to learn, but the frank question was whether these feeder organizations belong to the Farm Bureau or Grange, all of whom will come here to testify. It would seem the members of those organizations when they appear they should give some attention to the question we are trying to find out about.

Senator THYE. If I may be permitted to make one brief comment for the sake of trying to clarify the question of the feeder.

The CHAIRMAN. Senator Moody, did you want to ask a question? Senator MOODY. On the point made a minute ago, about wiping out the industry. I believe during the last war you had criticism of the OPA and I would like to read into the record the fact that in 1943 and 1944 the production of meat was far above the average.

As a matter of fact, I believe it was the highest in industry, so that at the time the industry was apparently not wiped out by controls. Mr. LAROE. I don't want to exaggerate. I was talking not about the whole industry, but about Mr. Hill and his testimony that the feeders can't live under this regulation.

Senator THYE. Senator, may I comment briefly on what Senator Moody has referred to? I know that Senator Moody, like all the rest of us, is endeavoring to get as much light on this very perplexing question as possible.

Senator MOODY. That is certainly true.

Senator THYE. This is what I think has happened since the OPS put out its order:

If you were a feeder that had purchased thin cattle last fall, September and October or November-that is the normal time that a feeder

is apt to fill up his feed lot, that is the normal time when cattle come off the range in the northwest, like Montana, Colorado, and so forth; if you had been the purchaser, and you had paid a fixed price of, we will say 34 cents a pound-some feeder cattle were bought for less than 34, some were bought for more than 34 cents a pound. If you had been feeding throughout these months and had normally fed out through June and July, and put your cattle on the market in the latter part of July or early August, and if you found that a roll-back had been ordered, effective May 20, again effective in September, and again effective in October, you, if you were a businessman, at all, I know you are, and the average cattleman must be or he would have long since been broke-you couldn't continue to feed those cattle, knowing you were going to take a roll-back periodically.