Senator WATKINS. Take the general principle, for instance. Supse the President has the power, through some executive agency, to ocate so much for the feeding of animals, dairy animals, eliminate to ertain extent the feeding of poultry and eliminate the use of wheat feeding beef cattle, all that sort of thing, and hogs. How would at affect the operation of your exchange in the trading if that were ne? Mr. MCCLINTOCK. If it were limited to wheat it would destroy the eat-marketing system. If it was extended to corn it would destroy at. Senator WATKINS. It would destroy the market you now have? Mr. MCCLINTOCK. Because it assumes the responsibilities and purses of the exchange. Senator WATKINS. Does the exchange have, or do you have, men no have been in this business for many years, any program now ich will assure the country, or get to the necessary people, the mount of wheat that we now have in the world in our country for port and for the use in this country? Mr. MCCLINTOCK. Do we have any program for it? Senator WATKINS. What alternative do you present for the distribuon of what we have? It is short, it is admitted, and we are probably ing to have a short crop for next year, the way things are going. Mr. MCCLINTOCK. I think the position of the trade is that we are ot at this time objecting to the allocation from the seaboard on. nd think there is no excuse for allocation and distribution of the pply by the Government for domestic purposes. Senator WATKINS. Why? Mr. MCCLINTOCK. Because we think it will be done for the purpose I conservation, I would assume. Senator WATKINS. Of course, it will be done for the purpose of onservation. We already admit we have a short wheat crop. Supose the crop drops off next year dramatically from what it has been. his year. Suppose we only have half a wheat crop next year, and it ould easily happen under the conditions that prevail in the Middle West and far West. Suppose that should happen? How would you ee to it that wheat was used for the things that it ought to be used for nder a free market system such as you have? Mr. MCCLINTOCK. I think the factor of price is the best rationing ystem that exists. Senator WATKINS. In other words, the price would have to advance o high that feeders of poultry could not feed it, and feeders of beef nd hogs could not use it? Is that what you mean? Mr. MCCLINTOCK. I mean that if the conversion value of grainnimal poultry products of the country are the largest consumers of rain-if the price of raw materials such as grain becomes high enough, igher than the conversion value as determined by the product that hey create corn, beef, mutton, cheese, or whatever it might behat that is the most effective matter in determining the use of the raw material. Senator WATKINS. In other words, it is what I said a moment ago, hat the price factor would be the real thing that would keep them rom using it for these various purposes. Mr. MCCLINTOCK. That is right. Senator WATKINS. How high would that price have to go unde present conditions? Mr. MCCLINTOCK. Under present conditions? Senator WATKINS. We are facing now a high price level that i apparently very oppressive to many people in the country and it he been going up constantly. Mr. MCCLINTOCK. The difficulty is we have our domestic situation and our international situation all mixed up. Senator WATKINS. It will have to be mixed up if we are going t carry out this program of helping Europe. Mr. MCCLINTOCK. Then in just a short answer to you, sir, I thin one thing that would make it possible for them to fulfill their commit ment this year is because we have had high prices. If you have ha wheat and cheap corn the supply would have been consumed before ever reached Chicago, to say nothing about Liverpool, in the form poultry and animal feed. Senator WATKINS. In other words, high prices would have the effec of operating already. Mr. MCCLINTOCK. That is right. And that is the best method i my opinion. Senator WATKINS. Are we using any less now? Let us test that ou Are we using any less now for feeding animals and people in the Unite States than we did in the years when we had short crops? Mr. MCCLINTOCK. I do not know if there are any official figure I think the Government has estimated that the use of wheat in th first quarter of this year was somewhat less than it was the fir quarter of last year. I think they are figuring around 60,000,00 bushels of wheat was consumed in the first quarter of this year. Senator WATKINS. As a matter of fact, are not the extra bushels w produced this year that have been going abroad, and not any cuttin down by local consumers, the cause of the high prices? Mr. MCCLINTOCK. Of course. If you are talking about wheat, course, if it had not been for the extraordinary production this yea we would most certainly have had to curtail our shipments abroa a long, long while ago. Senator WATKINS. Of course, you know the use of grain, the liquo industry has been stopped. That had some effect, did it not? Mr. MCCLINTOCK. Yes; 15 percent of what I think is indicated. am not arguing the question of whether it did or not, but the point that a substantial part of the grain that goes to the distillers com back in the way of feed. Senator WATKINS. I understand there is some recovery on th amount of refuse. Mr. MCCLINTOCK. Yes. Quite substantial. Senator WATKINS. What I am trying to get at is this, under th conditions as we have them today: Do you think there has been an reduction, actually, in the use of wheat for feeds by reason of th price? Mr. MCCLINTOCK. I think there has. Senator WATKINS. How much would you estimate it to be? Mr. MCCLINTOCK. I could not estimate that. I can go only b what I see and visualize in a small area and the contacts that I estab lished. It is a big country. I would not attempt to assume how much I think it might be considerable. I think there will be considerab wheat saved through the price system this year. Senator WATKINS. As a matter of fact we are not shipping abroad Mr. MCCLINTOCK. The question involves how much wheat it Senator WATKINS. Suppose we have a short crop next year, do you ink that a free market system will protect the country sufficiently y reason of the extreme high price so that there will be enough wheat or human consumption and for such animals as we must feed in order o get foods for other people, and for the use of Europe? Mr. MCCLINTOCK. Senator, we have had experience with short crops efore. We have had in the thirties two extremely short crops, Senator WATKINS. We did not have any heavy demand from Europe t that time, did we? Mr. MCCLINTOCK. No. I do not think we did. As a matter of act, I think we were required to import some. Senator WATKINS. That is as I recall it. Mr. MCCLINTOCK. But this shortage was primarily in the coarse rains-corn and oats. Some shortage in wheat. We may have had o import some wheat under those conditions. But our experience has never been such that anybody runs into serious trouble, or any one was ever terrifically imposed upon through the price system as a result of those conditions. If we come into a short crop then we simply cannot ship as much stuff to Europe. Maybe it will get to a place where we cannot ship any to Europe. Who knows? It all depends on what nature does for us. Senator WATKINS. People will bid it up if we have the free price system working at that time, they will bid it up until they do get some. People are not going to get hungry no matter what it costs. Mr. MCCLINTOCK. You have control under the allocations permit system at the seaboard as to whether any wheat should go out of this country or not. Of course, if we are only going to raise enough wheat for our own consumption and then attempt to feed Europe as well Senator WATKINS. That could easily happen next year with the present crop conditions. Mr. MCCLINTOCK. I cannot conceive that it would, but I cannot conceive of Congress letting it happen. Senator WATKINS. We cannot control the weather and the climate, and what has been planted and all that sort of thing. That is obvious. Mr. MCCLINTOCK. I think when it comes to a question of serving your own people or serving Europe, you will certainly serve your own people. Senator WATKINS. We will serve our own people but we will certainly tighten our belts before we let people starve. And that, of course, will increase the price. And do you have any idea what the price might run to next year if that condition prevails? It is now better than $3 wheat. Mr. MCCLINTOCK. No. I could not tell you because I am not able to anticipate what we are going to raise. We talked here in uncertain terms about short crops and small production. But they are rather meaningless. They are just terms. If you would say what a half crop would amount to we might arrive at some reasonable consideration. I do not know what those circumstances are going to be any more than any one. But I am convinced of one thing, that the price is the best element to distribute that thing where every one has an opportunity to get their share of it. Senator WATKINS. That would be your solution of the problem? Mr. MCCLINTOCK. Yes, sir. Senator WATKINS. Could you operate at all if there were a tight allocation system adopted? I mean the exchanges. Would they be able to operate at all? Mr. MCCLINTOCK. Over any extended period, I would say "No". Senator WATKINS. Say for the next 2 years? Mr. MCCLINTOCK. No. I am sure not. Senator WATKINS. What hardship would be worked on anybody if that condition were actually brought about? How many people would be put out of work who could not get employment elsewhere, and so on. I would like to know. Mr. MCCLINTOCK. I cannot give you those figures. We have not gone into this matter with the idea of what would happen in the event the Government was given such authority as to close our exchanges. The damage would result probably not from the number of people that it might affect, or change their occupation, the damage would be done by destroying the marketing system that has served this country for a hundred years and whether it could ever be reconstructed again. Senator WATKINS. You remember the experience of the First World War, do you not? Mr. MCCLINTOCK. I do remember. Senator WATKINS. You remember that the Government practically took over the complete control of wheat during the First World War by setting a price at which it would buy all the wheat offered and licensing those who could do business with it, and guaranteeing them against loss. Mr. MCCLINTOCK. There was a period when that took place. Senator WATKINS. And the market did recover after that, and the exchange went to work just as well as it ever did, shortly after those controls were taken off. Mr. MCCLINTOCK. I think it was a little more dangerous than under present circumstances. Senator WATKINS. Why? Mr. MCCLINTOCK. The statements that came from the White House and the statements that came from our Attorney General show general hostility, I would say, against the grain exchanges. And I am convinced that if you ever grant the Government authority to close the exchange we will not be favored with the same climate that permitted us to open following the First World War, as we have now. Senator WATKINS. Did you say climate? Mr. MCCLINTOCK. That is what I said. Senator WATKINS. What did you mean by climate? Senator WATKINS. You mean the attitude of the people? Mr. MCCLINTOCK. Yes. That is right. Well, the attitude of I political forces. Senator WATKINS. Under the request of the program of the administion to contemplate at least the power to fix prices and also the wer to roll back prices. What would be the effect on those who have en dealing in grains if prices were rolled back from their present el? Mr. MCCLINTOCK. You mean the financial effect? Senator WATKINS. Yes. What would be the financial effect? ngress would like to know if these powers are given, and they are d, just what is going to happen to the country. We would like to ow if it is going to have any disastrous effect or not, or if it is going be slight. It might have no effect whatever, to hurt anybody. Mr. MCCLINTOCK. The effect on me might be completely different an it would affect some other individual. Senator WATKINS, I mean the business. Mr. MCCLINTOCK. I think the important thing is not how it affects e individuals in the grain trade as how it affects our total economy. e are not concerned, Senator, with a selfish matter on this proption. Senator WATKINS. I really would like to know, as one Member of ongress, what would happen, because it has been suggested, and there ay be some sort of controls or allocations authorized. Before we that we ought to know from men who are in the business what ects it will have upon the economy of the United States. You ay state it generally, or you may be specific as to any industry or any siness. Mr. MCCLINTOCK. Just getting down to a small detail, if the Govnment should attempt to roll back prices it would be the same in our usiness as any other, that the commodity that you had on hand, on hich you had paid a competitive value for, you certainly would be maged in a monetary way.. Senator WATKINS. There would be some losses? Mr. MCCLINTOCK. There would be some losses. Senator WATKINS. By people who bought at higher prices. Mr. MCCLINTOCK. That would be determined, the degree, by your ommitment. They are undeterminable. Our views are not so much on that as the fact that it destroys a way life in this country in which we think the pattern of our marketing stem fits into so completely. Senator WATKINS. You do recognize there are emergencies somemes requiring extreme measures for short periods. Mr. McCLINTOCK. Well, we do not deny that such a condition hight prevail. We do not think any such condition prevails at the moment, not by a long shot, and we do not see anything in the immedte future that would cause such alarm as that. Senator WATKINS. You think wheat has advanced as far as it will? Mr. MCCLINTOCK. No. I do not mean to say that. Senator WATKINS. If it goes higher you can recognize it would cause lot of distress to people who have to buy. It affects so many other pods besides wheat and wheat products. Mr. MCCLINTOCK. That is a question of whether you want to exerise the authority which the government already has to limit your 69371-48- -20 |