Mr. VEEDER. The fact has been established after three years, or pretty nearly three years of hearings or investigations on the part of the Interstate Commerce Commission. Now what we want, in spite of the fact that we are operating the cars at practically cost, is the service, and that we have got to have. We are distributing a highly perishable product. We have got to have the cars on hand for immediate shipment. We can not hold this perishable product awaiting delivery of cars by the railroads if they have to send to some distant point and get them. We can not wait until the railroad switches in cars from San Francisco, for example, where they have sent them to be parked, or some other place.

We have got to have the service or go out of business. We have got to have these cars immediately in order to handle this perishable product before it turns. We have got to ship it in the quickest possible time in order to allow the retailer to carry it for a time before it begins to spoil. We have got to move it quickly, handle it quickly, and the only way that we can handle it quickly is to have the car there ready when it is to be moved. Now unless the railroads are in a position to furnish enough cars so that they will always have equipment at the point where needed, why the service won't be satisfactory, and the meat distribution of this country will be wrecked. Now they can not do that unless they have several times the number of cars to perform the service that we have.

The CHAIRMAN. Have you anything further, Mr. Campbell?
Mr. CAMPBELL. No.

The CHAIRMAN. We will hear from you then, Mr. Free.

STATEMENT BY HON. ARTHUR FREE, A MEMBER OF CONGRESS FROM THE EIGHTH DISTRICT OF CALIFORNIA.

Mr. FREE. Mr. Chairman, I don't feel like taking up the time of the committee, for I know you have a great deal of work to do and a great number of people to hear, but I was anxious that Mr. Campbell should have the opportunity to present the thought that he presented here.

I am a Member of the Congress from the eighth district of California, where some of these farmers' canneries exist. In addition to the canneries represented by Mr. Campbell we have some 34 others. Now, I have been satisfied since coming here, and particularly just recently after having attended the conference of the United States Chamber of Commerce at Atlantic City, that the people of the East and even of the Middle West have no conception of our problems in California. In order that you may see what our distributing problem is, I want to quote a few figures to you.

For instance, California produces 150,000 tons of dried prunes, 190,000 tons of raisins, 14,500 tons of dried apricots, and 35,000 tons of dried peaches.

Now, I could go on down the list and show you, in addition to that, 13,450,000 cases of canned fruits and a number of other products. Now, up to the time of the destruction of the distributive system of the packers, by the 1st of January or the 1st of February, we had our packing houses cleaned up and the products were on the way to the consumers. And, by the way, I am a fruit grower out there

in California; I am a member of the organization that Mr. Campbell is the manager of. I have been associated with those associations and organizations there since I was a boy.

Now, when I left California 60 per cent of the crop was still in the packing houses, and in the southern end of my district the most beautiful lemons in the world were being thrown into ditches and could not be sold for any price. And then I arrived here in Washington. I paid 40 cents a dozen for lemons, or at the rate of $10 per box. I paid 10 cents apiece for apples here, or $15 to $20 a box, when out there those apples are absolutely being thrown away.

Now, gentlemen, it seems to me that it is time for courage on the part of this Congress. Since I have been here I have seen all sorts of destructive things. People want to do away with this tax and that tax and give you no other tax in its place. They want to take away one distributive system and give you nothing in its place. I perhaps ought not to say this, and I don't want it to be understood as perhaps it may sound, but, so far as we have been able to view the Federal Trade Commission from out there in California, it is absolutely destructive, and is giving us nothing constructive to take care of our problems. And you, the Agricultural Committee of this Congress, it seems to me, should take hold of this problem and see that we do get distribution.

Now, in order that you may understand this peddler-car system— perhaps you do let me explain it to you. This peddler-car system has been of great value to us there. They send out their salesman. They go around to the little groceries, to the little corner stores, and they take an order for so many hams and for so many slabs of bacon, so much mush, so much canned fruit, and all that sort of thing, and then they start a car out along that route, and along comes our stuff, and it is sold and distributed to the consumer.

Now if you want to solve this problem, gentlemen, put in this bill a rider to the effect that that consent decree shall be set aside so far as the distribution of those products is concerned and have these distributors distribute on a commission basis. There is the answer to the whole thing. Let the farmer own the product until it reaches the consumer, and the packer will distribute on a commission basis, and you will get the fruit, or whatever it is, distributed at a reasonable cost.

Now I don't want to take any more of your time, because I realize that you have a great many people to hear. But I just wanted to give you those facts.

Mr. CLAGUE. Go ahead.

The CHAIRMAN. We are very much interested in what you are saying. This is a very interesting question.

Mr. CLAGUE. Take all the time you want.

Mr. FREE. Let me illustrate to you another thing in California. As I was coming through from California to Washington I stopped in Minnesota. And I asked a retail grocer there what he was paying for onions, and he told me 10 cents a pound-$10 a sack. And, gentlemen, I saw some of the most beautiful onions out there in California that the United States could possibly grow plowed up and thrown away because we could not sell them. And the same is true of peaches, almonds, nuts, various fruits, grain, whatever line you go into; we haven't got the proper distributive system.

Now here is another thing about it. Some tears have been shed about the wholesale grocers. They are the biggest bunch of hold-up men in the world when it comes to California products. They wil absolutely prohibit a cooperative concern from selling to its own. members, and threaten to boycott it. And if you gentlemen want the literature I can show you where they advocate the boycott of a cooperative concern in California because they tried to sell to their own members at somewhere near cost.

Now you talk about this decree. I can see how that came. Here were the packers with a pistol against their heads, and what were they going to do? Were they going to go to jail, or were they going to submit to this thing? And they submitted. And now they have got them out of their best side line.

Now the vicious thing about the decree is the fact that there isn't one of these organizations that can take 1 pound of California product and send it to England or France or Italy or any other place. Now if you want to protect the thing at home here, for God's sake why prohibit us from distributing our goods abroad? To illustrate to you what it has meant to us let me say that we exported something like 60 per cent of the dried prunes of California to Europe heretofore, and this year we have not been able to export a single pound. We have exported 40 per cent of the canned goods up to this time, and this year we can not export a single pound. And I know that, because I am a member of the organization that Mr. Campbell belongs to, and we have got to go over to Europe and get a European concern to come over and try to handle some of our products, because no concern in the United States that has the facilities is able to do it.

Mr. CLARKE. Isn't the rate of exchange one of the answers to that question at the present time?

Mr. FREE. We are willing to take the chance on the rate of exchange, sir.

Mr. CLARKE. In other words, you will accept their paper?

Mr. FREE. Yes. Another trouble that we are up against in our fruit industry out there, gentlemen, is this: Our banker says to us, "You have your product sold and we will loan you money to put up your stuff." Now, we are canning our fruit. Let us see what goes into the can. There is the can itself, there is the labor, there is the fruit, there is the sugar, and there is the label. The farmer is willing to take his chance on the fruit, but he has got to pay for those other three items. The banker out there, because of the taking away of their distributive system, says, "You have got to have your stuff sold before we can loan you any money to pack it." You come on east here and try to get a contract for your fruit. I was talking to one of the members of the independent canneries, as we call them out there, and he tells me that he can not get a single contract for this coming year for the sale of his stuff. In other words, here is the wholesale grocer and the jobber saying, "I won't buy.' Here is your banker saying, "I won't loan you the money to pack until you have orders." With the result that this year, unless something heroic is done, the fruit in California is going to rot on the ground, while the people here in the east would like to eat the fruit, but they can not get it.

Now, I could continue talking along this line for a considerable time, but I don't want to take any more of your time.

Mr. TINCHER. We have been talking for years about packer legislation. This decree makes it absolutely necessary now that we do have some packer legislation, doesn't it?

Mr. FREE. Yes; to put them back in the business. I will tell you the objections that I have heard. I have talked about this thing to everybody whose ear I can get, because it affects A. M. Free financially; I own an orchard out there, and in addition to that I represent a good bunch of people out there. They will say, and the chairman of this committee may say the same, that you are going to create a big distributive system and make the consumer subject to that system. Suppose you do. Then you can regulate it, can't you, as we do the railroads? We can give them proper regulation, and, if necessary, put them under some department and see that they shall charge no greater commission for the distribution of these products than the Commissioner of Agriculture, or some other proper authority, would approve.

Now, we can put fruit into this market at less than half of what you are paying for it. We can put lemons here in this market at 15 cents a dozen, whereas you are now paying 40 cents a dozen. We can put in apples for you here to-day at $2 a box, where you are now paying $20 a box, and we would be mighty glad to do it.

Mr. CLARKE. Just a moment, Mr. Free. You have pooling associations out there, haven't you?

Mr. FREE. Yes.

Mr. CLARKE. Now, do these pooling associations take the entire product of different communities which are shipping it in here and put it in warehouses, and then regulate the price of it when it goes out?

Mr. FREE. No; there is one association in California that somewhat approaches that. That is the California Fruit Exchange. They handle the citrus fruits of California. They have an information bureau throughout the United States by which they know the markets, and they put the citrus fruits into the markets so there is never a surplus, and to a degree they fix the price.

Mr. CLARKE. In other words, they don't permit any surplus to get into the warehouses and get into the final distributors' hands? Mr. FREE. No.

Mr. CLARKE. Now, just a moment. I want to go a step further on that. Now, isn't the effect of that pooling association there that the cost of the fruit is higher? Doesn't the practical effect of it mean that we, as consumers, have to pay a good deal more?

Mr. FREE. No.

Mr. CLARKE. No?

Mr. FREE. No; you pay less.

Mr. CLARKE. That is what I want to know.

Mr. FREE. Those concerns out there realize that their salvation lies in selling at a moderate price, and if they can sell at a moderate price and cut out the waste and the extravagance, and if they were permitted to put the price on the article itself, they would be delighted to do it. They realize that their salvation is selling at a moderate price.

Now, another thing about it. There is no organization in California unless it be the Raisin Association that has the control of any one product. For instance, the concern that Mr. Campbell represents here; he represents, I think, about seven canneries.

Mr. CLARKE. My thought is this: Now then, with all of these different products of your State that we are paying so enormously high for here, and with all this going to waste out in your native State there, why shouldn't that wastage be brought into this market? Or could it be brought into this market.? Is there any practical answer to that question?

Mr. FREE. Yes. The trouble with the thing is that there is no organization there that is strong enough to finance distribution. If all the organizations were together they could do it.

Mr. CLARKE. Yes.

Mr. GERNERD. In other words, if you could combine these unrelated products into an organization like the fruit growers' organization of California, that would obviate the necessity of your going to the packers to have these products distributed?

Mr. FREE. Yes.

Mr. GERNERD. But you are not big enough, you are not strong enough, to be able to do that?

Mr. FREE. No, sir.

Mr. VOIGT. Now, you say that you can not sell in Europe this year and that you could sell in Europe last year. You don't attribute that to the fact that the distribution system has been broken down?

Mr. FREE. Yes; I attribute that to the breakdown of the distribution system-part of it. The market in Europe is picking up. I know one concern in California, the entire output of which, or practically the entire output, Armour & Co. would take and market for them in England this coming year, but, by reason of this decree, they are not able to do it, because they can not indulge in either internal or external trade.

Mr. VOIGT. The southern cotton growers claim to be in a fix because they can not sell their cotton to Europe.

Mr. FREE. Well, understand me, I don't minimize the exchange situation at all.

Mr. VOIGT. Their cotton is not handled by the packers?

Mr. FREE. No. Now, I don't minimize the exchange situation at all, but I do say that there are markets in places, and if some of these local concerns we are putting out of business were permitted to operate, they could utilize them. Take a concern like Armour & Co. I was told at one time that they have something like 1,700 distributing points throughout the world. Now, they would send our products down into Argentina, into South America; they would send them even over to China, to Japan, Australia, and other parts of the world. Now we can not take advantage of that system even outside of the United States.

The CHAIRMAN. Aren't there others engaged in the business of distributing fruits?

Mr. FREE. You only have your jobbers and your wholesale grocers, and they have operated on this plan, that they buy and sell, and owing to the fact that there is a falling market they refuse to buy in a year like this.