does not lend itself to the price set-up and, as demonstrated in OPA days, it cannot be made to work.

Under these conditions a roll-back in live-animal prices coincident with a roll-up of meat prices will put the industry sharply out of balance and will result in increasing the confusion in which it is now involved.

We are gravely concerned over the situation facing the industry in the next few months. Unquestionably there will be considerable liquidation both of cattle from the feed lots and from the ranges and pastures, particularly in time to avoid the roll-back on August 1, yet today the slaughter quotas issued by OPS, a function which I understand the Department of Agriculture has unwisely surrendered to that agency, are established at 90 percent of last year's volume. It seems clear that the purpose of holding these quotas down in this fashion is to force a break in the market. Mr. DiSalle has stated in response to anxious inquiries on this point that the quotas will be adjusted if necessary to prevent undue hardship, but it is my prediction that no such adjustments will be made until the small quotas have accomplished the desired purpose of forcing a break in the market.

Under the circumstances, the only thing that can save the livestock producers and feeders from a disastrous situation is the development of the black market which apparently is increasing day by day at this writing. Old-time traders at the central markets speak of the new faces among the buyers.

DISCRIMINATION

We maintain that it is rank discrimination to attempt to roll cattle prices back to pre-Korean War levels. We find at the very time that the DiSalle orders were being issued, Eric Johnston, Administrator, Economic Stabilization Agency, was announcing that he had found a way to pierce the ceiling which he himself had imposed upon labor, based on a maximum increase of 10 percent over wages paid in January 1950.

One rule is applied to the cattle industry, which has borne the brunt of the price roll-backs to date with cattle, beef, hides, tallow, and soap all hit, while another rule is applied to labor.

SUBSIDIES

Our organization, and I think practically every individual member thereof, is strongly opposed to the use of subsidies as a means of holding prices down or as an incentive to production. The figures I have presented indicate that the consumer has not had to increase the percentage of his income which it takes to buy his meat, and there is no excuse on that point for subsidizing his purchases. We think the damaging inflationary effect by payment of subsidies would far outweigh any possible advantages that might be cited in their favor. Furthermore, their use, as has been proposed recently in connection with the price-control program, appears to us to be a side-door or back-door method of bringing the Brannan farm plan into operation.

LIVESTOCK AND MEAT INDUSTRY PROGRAM

Th livestock and meat industry has for several months been studying what can be done to increase production of meat and at the same time to combat the trend toward inflation. We are promoting a program for increased production and this program is going to be given wide publicity throughout the entire country. In connection therewith we advocate the following five points as essential:

1. Restriction on expansion of money supply.

2. Strict economy by Government, thereby setting an example for business and individuals.

3. Pay-as-we-go taxation.

4. Limitation on consumer credit.

5. Encouragement of individual savings.

CONCLUSION

Therefore, in view of all of the facts submitted to you in this statement, we strongly recommend that title IV of the Defense Production Act of 1950, under which price and wage stabilization programs are developed, be not continued after June 30, 1951. In the case of cattle and beef it is already evident that price ceilings can no more be policed now than in the days of the OPA. In all sincerity, we believe that the continuation of the price ceilings on cattle and beef

will prove to be a real calamity, will disrupt production, will actually cost the consumers large sums of money instead of lowering their costs, and, if long continued, will do damage to the industry that it will take years to overcome.

Hon. EUGENE D. MILLIKIN,

ECONOMIC STABILIZATION AGENCY,
Washington, D. C., March 12, 1951.

United States Senate, Washington, D. C.

DEAR SENATOR MILLIKIN: Mr. Casey called to my attention late last week a letter from you containing excerpts from a telegram urging you to contact me and "protest any roll-back on cattle prices while wages are being advanced." As you recall, this wire advised you of a "rumor" that we planned as of March 7 to roll back cattle prices $4 or $6 a hundred under a "concession" I was supposed to have made to labor.

No livestock order was issued on March 7, of course, and although one is "in the works," it will probably not be ready for some time. Details of its provisions are still being worked out, and before any order is issued it will be fully and thoroughly reviewed at all levels in the Agency. Furthermore, it is our intention to consult with an Industry Advisory Committee on this matter and obtain the full benefit of their background and knowledge in this very complex field.

In a broadcast over the CBS network Friday night, I outlined some of the problems involved in any roll back of prices, and tried to make clear that I have no intention of ordering roll-backs which would destroy businesses, bankrupt farms, or throw people out of work merely for the sake of a roll-back. I mentioned particularly some of the factors in regard to meat. Since those comments are relevant to the subject of your letter, I am taking the liberty of enclosing a copy of the text of that broadcast, and call your attention particularly to page 6.

ERIC JOHNSTON, Administrator.

EXCERPT FROM RADIO ADDRESS MADE BY EPIC JOHNSTON, ADMINISTRATOR,
ECONOMIC STABILIZATION AGENCY, ON MARCH 9, 1951

If these orders went out, I'm sure that all of us who like steak *** or need a new suit or new coat * * * would cheer the announcement.

You'd cheer if the order didn't threaten to destroy your business; or threaten you with the loss of your farm. You might applaud that roll-back if it didn't wipe out your job or cut your wage or salary back so far you couldn't meet installments on your car or the mortgage payments on your home.

Think about it that way. For that's what could happen if we abritrarily shoved down the price of meat or suits or anything else to last year's figures when production costs—and wages-were lower too.

Would you want us to do that? Would you want us to tailspin the economy in trying to stabilize it?

You might still cheer a roll-back order such as that if you could really get the steak you like or the suit you want. But the chances are you couldn't.

They'd disappear from your butcher's counter and from the racks in your clothing stores. You might find plenty of beef, yes. Plenty of beef in the black market ***

And all at fantastic bootleg prices. I don't think you'd like that *

[Telegrams]

F. E. MOLLIN,

WASHINGTON, D. C., March 5, 1951.

Executive Secretary, American National Cattlemen's Association: Have talked with Joseph Casey, specialist with Eric Johnston, who tells me there is no present basis for rumors outlined your wire. He says they are preparing material for presidential message having to do with price controls but that there is nothing in it so far as roll-backs of cattle are concerned; that since there is no official consideration of cattle roll-backs there is no consideration of that kind as to effective date or as to amount of roll-back.

EUGENE D. MILLIKIN, United States Senator.

WASHINGTON, D. C., March 6, 1951.

F. E. MOLLIN,

Executive Secretary, American National Cattlemen's Association: OPS advises roll-backs on cattle merely a rumor.

ED C. JOHNSON.

WASHINGTON, D. C., March 14, 1951.

F. E. MOLLIN,

Fort Worth, Tex.:

Unable to contact Hutson but Ericson claims no roll-back under the base period which is not much under present level.

HUGH BUTLER, United States Senator.

WESTERN RANGE BEEF CATTLE PRODUCTION COSTS AND INVESTMENT REQUIREMENTS (By Mont H. Saunderson, Economist for many years with U. S. Forest Service— now on year's leave of absence)

Operating costs per animal unit of beef cattle for the cattle ranch of commercial family size, or approximately 200-animal units

[Estimated for the year 1951 from past ranching studies and from the trends in ranch operating costs and investments since the year 1939].

NOTE. The above costs are figured at the ranch. They do not include marketing costs.

I believe that my figures on the cash operating costs are a good approximation. The other items of the estimates, the fair amount for the present-day investment, the interest rate for operator equity, the allowance for the operator wage, may of course may be controversial.

COST OF PRODUCING A CALF FOR THE YEAR 1950

The following figures were taken directly from the books of Paul H. Hummell, who operates a 165-cow unit ranch in Boulder County, Colo. Total investment of this unit is $114,682.71. This amount includes ranch machinery, ranch land, 156 head of breeding cows, and 9 head of bulls. All equipment was purchased in the last 10-year period. Actual cost figures used:

Land cost: 250 acres irrigated land, $182.40 per acre; 240 acres dry landmountain land, $20 per acre, plus Forest Service permits (land cost based on Boulder County 10-year average).

Breeding cows: 156 head at $300 per head.

Breeding bulls: 9 head at $500 per head.

From 156 cows Mr. Hummel marketed an 87-percent calf crop, or 134 calves. Cost of producing this calf is as follows:

Labor

Feed (hay, $30 per ton; cake, $88 per ton; salt, $5 per 100 pounds).

$23.20

29.73

Ranch supplies: Fence posts, barbed wire, etc..

Repairs

Veterinarian services.

Gas and oil..

Taxes

Interest

Telephone and office expense_

Pasture fee, forest_

Auto

Advertising

Legal advice_.

Water assessment__.

Miscellaneous expense.

Depreciation on machinery.

Selling cost: Commission, yardage, brand inspection, etc.

Salary for owner, $3,000 per annum_.

Death loss, 3 percent (actual death loss, 8 percent)

Selling price, taken from stockyard receipts, $31.38 per pound or

Total cost of production_

Net profit per calf-----

3. 62 3. 26 .28 6. 84 10. 14 .87.

1. 81

5. 60

1.26

.06

.32

1.43

1.34

9.69

1.53

22.38

8. 20

137.26

151.65

14.39

855.84

Total investment required to raise 1 calf_
Return on investment....

--percent-- 0.049

Suggested roll-backs will force feeders to finish animals after October 1 for $30.68 per hundred pounds. Feeders to pay fixed operation expenses must purchase steers from 4 to 5 cents cheaper than the finished product; this would give $25.91 per hundred pounds he could pay for a calf he plans to finish. At an average weight of 476 pounds at $25.91, this will give the producer a return on a calf of $107.79, or a resultant loss of $32.28 per calf to the producer.

From a $3,000 income the owner must figure family living costs, family car, home upkeep, etc.

From his profits the producer must figure a percentage for reserves for unforeseen risks of crop failure, disease outbreak, drought, etc.

(Whereupon, at 12:45 p. m., a recess was taken to the time and place above mentioned.)

AFTERNOON SESSION

Senator ROBERTSON. The committee will please come to order. When we recessed, Mr. Bamert was testifying. I would like to ask if he finished his testimony, or does he have anything else he wishes to tell the committee?

Mr. BAMERT. If you have any other questions to ask me, I would be perfectly willing to go ahead.

Senator ROBERTSON. The acting chairman does not have any other questions. Does any other member have any other questions?

You may listen to these other witnesses, and if you wish to supplement what they have to say, we will hear you later.

83762-51-pt. 2—16

The next witness is a representative of the Southwestern Cattle Raisers Association, Mr. Ray W. Willoughby.

The committee is very happy to welcome to these hearings the distinguished senior Senator from Texas, Mr. Connally. We would be very happy to have him sit at the table with us.

Senator CONNALLY. I would be happy to.

Senator ROBERTSON. Do you wish to read your statement, and present it for the record, and summarize it?

STATEMENT OF RAY W. WILLOUGHBY, PRESIDENT, TEXAS AND SOUTHWESTERN CATTLE RAISERS ASSOCIATION, ACCOMPANIED BY JUDGE JOE G. MONTAGUE, ATTORNEY

Mr. WILLOUGHBY. You have been bothered so much with statements this morning, I will be governed by your wishes, Mr. Chairman. I have a prepared statement, and I can make comments on it, answer questions, or can talk from it.

Senator ROBERTSON. How long is it?

Mr. WILLOUGHBY. It is about 11 pages.

Senator ROBERTSON. How long would it take you to present it in extenso?

Mr. WILLOUGHBY. If I read it, I would say about 10 or 15 minutes. Senator ROBERTSON. You are a pretty good reader if you can read it in that time. We will see how you get along.

Mr. WILLOUGHBY. Mr. Chairman and gentlemen of the committee, my name is Ray W. Willoughby. I live in San Angelo, Tex., and I am president of the Texas and Southwestern Cattle Raisers Association, which is an organization of beef-cattle producers. While most of our members are range-cattle producers, we do have a representative group of cattle feeders in the organization.

I would like to point out, Mr. Chairman, we have about 11 percent of the beef cattle in Texas; that is, in the Nation.

Senator ROBERTSON. Do you have more than Florida?

Mr. WILLOUGHBY. I cannot answer that. I do not know. The average rendition of our members, of which we have about 9,500, is 107 head. Ninety percent of our members have less than 170 head of cattle.

The problem: The problem to which you are now giving attention is the question of whether or not the Defense Production Act of 1950 should be extended beyond its expiration date of June 30, 1951, and if it is to be extended then in what form such extension should be enacted by the Congress.

It is to this problem that we address ourselves at this time. Since we are cattlemen we are confining our remarks to an expression of the attitude of cattlemen.

In order to approach this problem logically and intelligently, it is appropriate that we review the record and appraise the present situation. We realize that the basic problem is the correction of the trend toward inflation in this country.

This same problem confronted the Congress in the summer of 1950. Obviously, at that time the Congress concluded that the proper method of approach was through the medium of the restrictive type of legislation enacted in the form of the Defense Production Act of 1950. But the conclusion that the Congress reached at that time was