Mr. HART. I will be glad to have it.

Dr. MOHLER. Our figures show that at the Chicago stockyards the commission men received $3,200,000 in commission charges. This 20 to 25 percent reduction will cost them upward of $700,000 in commission rates. As 13,700,000 animals were handled last year the commission would be decreased a little over 5 cents per animal.

Mr. HART. Of course, if they can save only a nickel that the commission man is not entitled to, it should be saved. The point I want to make there is this, that that saving per head will not be the solution of the marketing problem. That is not going to appreciably diminish the spread between what the farmer receives for his livestock and what the meat is ultimately sold for.

Dr. MOHLER. That is very true.

Mr. HART. On the other hand, if you take $700,000 away from the commission man, and it cripples his organization, or if you get him down to the point where he is losing money, or practically so, it will not help at all. If he is losing money, the service will be proportionately affected.

Dr. MOHLER. That is true.

Mr. HART. I know some commission men who are dealing with farmers. Some of them are good and some of them are not so good. The commission man who knows his business and who aims to build up a clientele does it in the same way that a doctor or a lawyer would do. If he renders a good service to me, so that when I give him an order to buy a carload of cattle he gives me the grade and quality of cattle asked for, he is worth all of his hire. I do not believe in chiseling his commissions where they are reasonable.

Dr. MOHLER. We have received all kinds of criticisms about the high rates.

Mr. HART. You realize that no matter how low stock may go, he has his fixed charges. He has expenses in the city which do not change in proportion with the drop in the price of cattle.

Dr. MOHLER. That is true.

Mr. HART. He has to meet those fixed expenses. He must meet his expenses under the living conditions in the city. His rent charges and his salary expenses do not change.

Mr. THURSTON. At the same time the basis for the service should be on a fair level.

Mr. HART. If it is above a fair level, it should be trimmed; but, on the other hand, if you cut him down to where he cannot furnish a good service, it will really be a detriment to the cattle producer.

Mr. THURSTON. It should be based upon a reasonable charge for the service.

Mr. HART. It is human nature where a man is trying to do something for the farmer to attack a man that the farmer can see. The farmer can see this man; he knows that this man gets something from his produce, and it seems to be human nature for the agencies that are trying to assist the farmer to attack this man that the farmer can see, in explaining the immense spread in the price of his products. It may be due to transportation charges, which are pretty heavy, and to many things. I have gone down here and paid 80 cents per pound for steak, when I have sold it for 32 cents per pound on the farm. Now, the stockyard commission did not affect that very much.

COMMISSION RATE CASES

Orders were issued by the Secretary during the past fiscal year prescribing schedules of reasonable commission rates to be charged by the agencies at the National Stockyards, Ill., and the Kansas City, (Mo.) stockyards. The commission firms at the first-named market put the rates prescribed by the Secretary into effect, but those agencies which are members of the livestock exchange, about 75 in number, at the latter market asked for and were granted an order by a Federal statutory court temporarily restraining the enforcement of the rates prescribed by the Secretary. The two cooperative agencies at that market, however, did not join in this action, but adopted and put into effect the Secretary's rates. The Bureau is assisting the Department of Justice, which handles these cases in the courts, in preparation for the final hearing.

A hearing on the reasonableness of the commission rates at the Chicago (Ill.) stockyards, the largest in the country, where more than 140 commission men are engaged in business, was started in May 1933 and has just been completed. The Secretary issued his order early this month which reduced commission rates about 20 to 25 percent and amounted to over $700,000.

Audits and tabulations of the books and records of commission firms at the Denver (Colo.) stockyards were made by the Bureau in the past year, and conferences were held with representatives of the firms in an effort to adjust the rate schedules in such a way as to make it unnecessary to hold a hearing, but these efforts were unsuccessful. It was, therefore, found necessary to bring our information up to date by including operations for the calendar year 1933, and this is now being done with the expectation that a hearing will be held early in March of this year. In the meantime the commission firms have agreed to continue in effect emergency rates substantially lower than those provided for in the tariff which they have on file with the Bureau.

There are still a number of livestock markets of considerable size, such as the one at Fort Worth, Tex., and some of the principal markets in the Eastern States, where we plan to hold hearings in order to determine whether the commission rates are reasonable. It is estimated that the lower schedules of charges and commissions now in effect will save livestock producers fully $2,000,000 a year as compared with rates in effect a few years ago.

STOCKYARD RATE CASES

An order was issued by the Secretary during the past year prescribing reasonable rates to be charged at the stockyards in Omaha, Nebr., one of the largest in the country. The company, however, asked for and obtained an order from a Federal statutory court temporarily restraining the enforcement of the new rates and the Bureau assisted the Department of Justice in a hearing before a master appointed by the court and in preparation for final hearings on the merits of the case.

A rehearing, necessitated by an adverse court decision with respect to a previous order of the Secretary, was held in the St. Joseph (Mo.) stockyard rate case during the year and preparations are being made to present oral argument to the Secretary.

The appraisal and auditing work in preparation for a hearing on stockyard rates at the Sioux City (Iowa) market was completed and a hearing commenced which was under way at the close of the

year.

It is planned to proceed with the work at other markets just as rapidly as available funds and personnel will permit.

GENERAL ACTIVITIES

A great many complaints, formal and informal in character, alleging violations of both titles II and III of the act, have been received and investigated by the Bureau. Some of the matters complained of were such that it was possible to settle them without hearings. Others, however, were of a character and extent which made it necessary to hold formal hearings. Where hearings have been held the Bureau has done everything possible to dispose of them with the least possible expense, not only in the interest of the Government but of the parties involved in the proceedings as well.

Sixteen formal dockets were pending on July 1, 1932, and 29 were instituted and reopened and 36 were disposed of during the fiscal year 1933, leaving 9 pending at the beginning of this fiscal year. In the same period Bureau accountants made detailed audits and analyses of the books and records of two stockyard companies and of approximately 200 market agencies in connection with rate cases. In addition, financial and trade-practice audits were made of the records of approximately 100 commission firms and dealers at various markets. During the year 6 stockyards were posted as coming within the jurisdiction of the act and 6 were released, leaving 93 stockyards posted at the close of the year.

SPECIFIC COMMISSION RATE CASES

The first regular commission rate case of major importance was the Omaha one, involving a reduction of $200,000. The Supreme Court upheld the order prescribed by the Secretary in this case in February 1930. Since then rates have been adjusted with material savings to the livestock shippers by formal orders at Sioux City, Iowa, involving a reduction of $150,000; the National Stock Yards, Ill., involving a reduction of $175,000; Kansas City, involving a reduction of $400,000, and Chicago, involving a reduction of $700,000; and by informal means at South St. Paul, Minn., involving a reduction of $100,000; Wichita, Kans., involving a reduction of $50,000; Oklahoma City, Okla., involving a reduction of $40,000; Denver, Colo., involving a reduction of $60,000; and a number of less-important markets, including Cleveland, Louisville, Detroit, and Fort Worth. The decision of the Secretary in the Kansas City commission rate case has been appealed to the court.

SPECIFIC STOCKYARD RATE CASES

Dr. MOHLER. Hearings have been held in stockyard rate cases at Nashville, Tenn.; St. Joseph, Mo.; Denver, Colo.; Kansas City, Mo.; National Stockyards, Ill.; Omaha, Nebr.; and Sioux City, Iowa.

On an order prescribed by the Secretary, lower rates were put into effect at Nashville. Orders in the Denver and the St. Joseph cases,

which prescribed lower rates, were appealed to the courts and decisions adverse to the Government were rendered in each case. A rehearing was held in the St. Joseph case to comply with the finding of the court that such action should be taken on account of changing conditions, and the case is now before the Secretary for oral argument. Because of the legal issues raised in this case, it is apparently going to be necessary to reopen the Kansas City and the National Stockyards cases. The order which was issued at the Omaha case was attacked by the stockyard company, and is now set for a final hearing before a statuory court of three judges on the 29th of this month. The hearing in the Sioux City stockyard rate case was completed in December, and preparations are now being made for the oral argument before the Secretary.

A hearing is scheduled to begin at Cleveland just as soon as the necessary engineering and auditing material can be completed which should be within the next few months.

Hearings at other stockyards will be held as rapidly as available funds and personnel will permit.

Two important cases (boycott cases) which had been of great benefit to the cooperatives in establishing their rights to conduct business on terminal markets without discrimination are the Oklahoma City case, which was carried to the Supreme Court of the United States and decided in favor of the Government, and the National Stockyards case in which a statutory court of three judges rendered a sweeping decision upholding an order issued by the Secretary.

Mr. HART. In those cases, you audit the books and appraise the property with the idea of giving them a fair return, do you not?

Dr. MOHLER. Yes, sir; they show everything that they have spent money for during the year and we take an inventory and appraise all their equipment. They have their own machinery set up, and we go in, audit their books, consult their bookkeepers and try to arrive at some fair and proper basis.

CHARGES MADE TO SHIPPERS

Mr. THURSTON. Does your bureau authorize the commission houses to make a charge against the shipper for fire insurance, or to make a charge for fire insurance against the shipper who sends into the market livestock that under no circumstances could be burned.

Dr. MOHLER. Do you mean while the livestock is en route?

Mr. THURSTON. No. I mean where a shipper would have hogs hauled in by truck to the stockyards, and where the commission merchant lists as an expense an item of fire insurance that he would charge to the owner of the livestock. Have you gone into that, or do you permit such charges as that?

Dr. MOHLER. That is the practice.

Mr. THURSTON. What is the justification for it?

Dr. MOHLER. Because there have been a number of fires in the stockyards where animals were burned up or were lost by mixing. It is a very moderate charge. The maximum is 15 cents per carload at Omaha and only 7 cents per carload in Chicago, and at the Kansas City stockyards. At the latter markets the packers and

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traders pay an additional amount to bring the rate up to 15 cents per car. The rate on hogs by truck is on a headage basis, prorated in such a way that it averages about the same as on rail shipments. This insurance not only protects the owners from fire losses but also from mixing on account of fire while in the yards.

Mr. THURSTON. It would exceed the amount of the premium, how

ever.

Dr. MOHLER. That is probably true. It is like a blanket insurance policy that the builder puts on his workmen. One of his workmen may break his leg, and he would receive compensation, although he may not have paid anything for it. We have our share of complaints about many things, but we have had only one complaint about the matter you refer to, and that is where a man paid 7 cents on a truck load of livestock. He complained and said he thought he was paying some sort of life insurance.

Mr. THURSTON. There is a charge made, or a fee assessed for the cost of some propaganda in reference to the use of meat.

Dr. MOHLER. Yes, sir.

Mr. THURSTON. Do you authorize that?

Dr. MOHLER. No, sir; except with the consent of the man who is paying for it.

Mr. THURSTON. But he has never been asked whether he wants it, or not.

Dr. MOHLER. He does not have to pay it unless he wants to. Mr. THURSTON. He has to write a letter in order to obtain a refund. Do you think that practice is justified?

Dr. MOHLER. It is entirely voluntary. If he objects to it, he does not have to pay it.

Mr. THURSTON. If you sell wheat or other grain, they do not put a charge in there for giving publicity to the use of wheat and other grain, do they?

Dr. MOHLER. No, sir. It is entirely voluntary on the part of the shipper and, if anybody objects, he does not have to pay it.

Mr. THURSTON. Do you not think it is an awfully small practice on the part of the Government to authorize those stockyard selling agencies to make those charges?

Dr. MOHLER. Do you know where that plan originated? The request for it came first from the livestock people themselves. It came from the Kansas Livestock Association, the American National Livestock Association, the National Wool Growers Association, the National Swine Growers Association, and various State stock growers' associations. The National Livestock and Meat Board was formed, which now consists of Charles Carey as chairman, your friend Mr. Sykes of Iowa, Joe Mercer of Kansas, and 10 others representing producers, 2 representing packers, 3 representing marketing agencies, and 2 representing retailers.

Mr. THURSTON. Was it not done by the buying, packing, and shipping concerns?

Dr. MOHLER. I do not think it was the buyers and packers. In fact, the latter did not agree to the plan at the beginning, and the commission men hesitated to accept the burden of collecting the fees.

Mr. THURSTON. Has there been any showing made to your Bureau that any result has come from that?