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Mr. HUTTON. No. The shade-grown tobacco currently is not under the price-support program and is not affected by any price-support operations.
Senator HOLLAND. The shade-grown tobacco of the Connecticut Valley, that is, Connecticut and Massachusetts, and certain counties in Florida and Georgia, is not under the price-support program. It is not asking to be under it and does not want to be under it; is that correct? Mr. HUTTON. That is right.
Senator HOLLAND. The price per acre production there, including the furnishing of the shade and all of the other things to produce a completely perfect wrapper leaf puts that industry in a class by itself for the per acre cost of production, does it not?
Mr. HUTTON. Pretty much. I would say roughly the cost of producing an acre of shade was between 3 and 4 times the cost of producing an acre of binder tobacco.
Senator HOLLAND. The point that you are making about synthesized binders is that they have not yet interfered with the wrapper leaf tobacco?
Mr. HUTTON. That is correct, but these things happen suddenly. I think as recently as 3 months ago you had suggested to the Broadleaf farmers that anything like this could happen to them, they would have said it could not happen here, but it did happen—it happened very suddenly.
We always felt there was a beautiful balance between production and disappearance under use in our Broadleaf area. All of a sudden this thing hit us like that, just about a month ago.
Senator HOLLAND. Do you suggest that Congress pass a law requiring that all cigars made from those cheap synthesized binders be labeled “cheroots” or something like that to clearly identify such cigars?
Mr. HUTTON. Actually, the manufacturers are identifying them. They are using it as a publicity measure. Actually, they are trying to encourage the use of the homogenized binder, pointing out that they feel it has merit.
Senator HOLLAND. Mr. Chairman, if I might just make one short comment off the record.
The CHAIRMAN. Very well. (Discussion off the record.) Mr. HUTTON. I would like to make one additional comment that I did not have in my report, if I might. It is a matter of opinion, too. One of the reasons that the tobacco program has operated so successfully is because direct loans are not made. Loans are made through a cooperative. Then the cooperative handles the tobaccoo any way that it sees fit, makes decisions as to how it shall be handled and stored and marketed. The Commodity Credit Corporation in our case simply acts as the financing agent. The board of directors of that cooperative are just as anxious to get the last penny out of that tobacco as they would be if it was their own crop that they were handling. I do not know whether that is significant or not.
The CHAIRMAN. Thank you, sir.
Mr. Newberry is next. Have you anything to add to what has been said in relation to tobacco ?
STATEMENT OF ELLSWORTH S. NEWBERRY, SOUTH WINDSOR,
Mr. NEWBERRY. Mr. Chairman, no, sir; but I am not in entire agreement, may I say.
The CHAIRMAN. I hope that you are not opposing 90-percent price support? Mr. NEWBERRY. Yes, sir; I am.
By way of introduction I would like to identify myself as a small producer-10 acres of Broadleaf tobacco in the Hartford, Conn., area of the Connecticut Valley. I represent myself individually as the sixth generation of my family which has produced tobacco on the same
sixth for over member of refer to i
I also am a member of a cooperative. I own a share of stock in it. May I be permitted to refer to something that you just spoke ofI beg your pardon, Senator Holland spoke of a few moments ago?
The CHAIRMAN. Certainly. Mr. NEWBERRY. Mention was made of that more or less facetiously so far as Senator Aiken was concerned, and it involved the friendly discussion of 1936. I have been thinking about that for some hours since then and I am curious about getting straight on something.
You again mention it here, you said the fact that tobacco was in a class my itself, apparently was, because of this tax situation. I believe you specified last night that when you said "tax" on that, you referred not to the property taxes that the owners of the farms paid, but the excise and the other types, the stamp taxes, on the package of cigarettes and the cigars. Am I right?
Senator HOLLAND. That is right. On every agricultural commodity the property and business taxes at one time or another, and the excise tax on tobacco, are a major item of public revenue, both Federal and State.
Mr. NEWBERRY. Yes, sir. I know you made the remark that because of that situation you felt that it was proper to regulate it and that probably most of the people in the country had no brief with that and felt that it was proper to regulate it. I just wondered, sir, if I may ask just what relationship the production of tobacco, whether it be below demand or above demand, might conceivably have with the tax take? In my humble opinion, sir, the tax take has reference and goes back only to the consumer, the ultimate consumer sales. You buy the cigars, you buy the cigarettes, all of us buy them, and so forth and so on, and from that is derived this tax income to the Government. Am I correct? In other words, production, be it below or above, has little if any relationship or bearing to that tax take.
(Discussion off the record.)
Senator HOLLAND. If you have a statement to make as to why you think tobacco should not be entitled to 90 percent, we would be very glad to hear it and have it in the record, but my statement on the matter awhile ago was simply for the information of the people here who may feel that their industry is just as important or even vastly more important than tobacco. They might not be familiar with the reasons for the action that has been taken traditionally throughout the years. I did not place it in the record for that reason, and if you have reasons why you think that 90 percent support price for tobacco, that is, most tobacco, is not desirable, we will be mighty glad to hear those reasons and have them placed in the record. Mr. NEWBERRY. No, sir; I do not have any.
The CHAIRMAN. What you are saying is whether we have the 90percent support price or not, that would not deter the Government from collecting the tax on the tobacco ? Mr. NEWBERRY. Exactly, sir.
The CHAIRMAN. If you had cheaper tobacco and cheaper cigarettes by virtue of getting production down, you might get more revenue? Mr. NEWBERRY. Yes, sir.
The CHAIRMAN. Whether that is true or not, I am not here to argue, but that is what I understood you meant to say. Mr. NEWBERRY. Yes, sir.
The CHAIRMAN. One of the chief reasons advanced, as I recall it, to continue this support-price program with respect to the tobacco growers was that it was not a burden on the Government; that the tobacco growers were comparably few in number—tobacco is grown only in small parts of the country, and because of the fact that the tobacco grower was able to control production and not make it burdensome for the country, that was one of the main reasons, or the compelling reason, I would say, that caused it to not suffer the same support that other basic commodities got. In other words, the argument was that the tobacco growers had controlled themselves. The tobacco industry has not lost a penny. Therefore, no reason why we could not continue the supports
Mr. NEWBERRY. Except, sir, I was going to suggest that high price supports if they tend to keep the price of tobacco up, and if they do not tend to keep the price up, there would seem to be little justification for the high price supports. And if they do keep the prices of tobacco up and as a consequence the ultimate end products are increased in price to the consuming public and they, therefore, buy less the Government will take less money.
The CHAIRMAN. Will you proceed and give us your views on it, please, because we have other witnesses ? . Mr. NEWBERRY. Yes; I know.
I have already identified myself. I am also chairman of this special tobacco committee in the Connecticut Valley that was charged with investigating the so-called homogenized, or we prefer to call it manufactured, leaf binder that Mr. Hutton just spoke about. I wish to make it clear that I am speaking as an individual small tobacco grower · and as a representative of that group.
May I go on record immediately as being basically and fundamentally opposed to Government programs generally and our tobacco program specifically. We have now been through 3 years of price support at 90 percent of parity coupled with acreage allotment—so my views are based on local practical experience.
That takes into account there was a year when we voted it out.
It has just been stated that the tobacco program is self-sustaining. I question whether that or any other similar program is actually self-sustaining if all expenses involved in connection with it were to be added up—were it possible to do that,for instance, I know that there are certain expenses in the operation of the Connecticut-Massachusetts tobacco cooperative that are not included. I know furthermore that the expenses of the Tobacco Branch in Washington—and
I have been there and I know they must be considerable, the salaries are tremendous when taken collectively—they are not included in that. I have not any way of knowing what they are or should be. So I cannot argue too much on the point, except to say that I do not think it is justifiable for a person to make the statement that any program of that type is completely self-sustaining unless they take into account these other factors which are difficult to arrive at. My opposition is for the following reasons:
1. I do not believe any group should be subsidized at the expense of taxpayers in general.
2. The program has maintained high level production on marginal land basically unsuited to the production of high quality tobacco.
3. By the same token it has reduced production on the best land which has over the years produced the best quality tobacco.
4. The net result is an across-the-board reduction in the average quality of product.
5. Price support and allotments have kept in business numbers of inefficient and temperamentally unsuited farmers who were attracted by high wartime prices and who now would have been in other fields of activity.
6. The program has rendered ineffective the old law of supply and demand and the survival of the fittest, which principles, if allowed to function, would have minimized our present problem of oversupply.
7. Enforcement of acreage restrictions is difficult to the point of being impossible in many cases.
And if you wish to spend the time, I should like to elaborate a little on a further point.
The CHAIRMAN. What do you think tobacco would be selling for now per pound by the farmer without price supports ?
Mr. NEWBERRY. I do not know. Everything else in the country has gone up since then. It has not improved the price. In fact, it has reduced the price to us as growers over the past 2 or 3 years in small amounts like 3 cents, 4 cents, 5 cents a pound each year for the last 2 or 3 years. And this year we do not know because of the special situation to which Mr. Hutton referred.
The CHAIRMAN. I dislike to contemplate how much tobacco we would have on hand without acreage restrictions. With acreage restricted as it has been by virtue of the farmers themselves voting it, we have a tobacco supply of over 31/2 years. It is true that you have a carryover, a 2 years' supply, but there is now a year plus of supply on hand. And all that has been accomplished with more or less restricted acreage controls imposed by the farmers themselves.
Mr. NEWBERRY. I gather, sir, from your remarks that you would like to elaborate on No. 7.
The CHAIRMAN. No, no.
Mr. NEWBERRY. The enforcement of acreage restrictions is difficult 'to the point of being impossible in many cases.
The CHAIRMAN. That may be in Connecticut, but you would not find it in North Carolina or Virginia or Kentucky.
Mr. NEWBERRY. Yes, sir. I will not harp on it, sir, but as a 10-acre grower it has not been easy for me to reconcile myself to my next door neighbor who grows 3 times as much as I do who has never in the history of this program cut 1 acre—not 1—that is just 1 case.
The CHAIRMAN. Are you folks under restrictions now?
Mr. NEWBERRY. Yes; we are. We voted it 2 years ago for a 3-year period and we have 1 year to go.
The CHAIRMAN. How did he get by with that?
The CHAIRMAN. Give me the name of the fellow who is collecting and producing all of this tobacco and not complying with it-give us the name and the address. Mr. NEWBERRY. I cannot do it. I will tell you why.
The CHAIRMAN. Well, forget about it. Do not make any charge here against anybody unless you want to give us the name. Do not complain about it. I would have tried to help to get these fellows that are violating the law. I do not think it is fair. Mr. NEWBERRY. May I say,
The CHAIRMAN. You are making the complaint. I would like to get the name of anyone violating a program. If you do not give it, we might as well strike the rest of your testimony from the record.
Mr. NEWBERRY. That is why I dislike this program, sir, for one reason. Sitting over here and two gentlemen that have direct connections with Washington on this thing and they sit in authority. And were I to disclose the name of that individual right now, particularly the authority that one of them has, sir, it would put me in a very bad spot.
The CHAIRMAN. Why do you say that-do you think you would be punished for telling the truth or for making the charge or helping the Government to weed out nonconformers who should follow the law?
Mr. NEWBERRY. I am unpopular enough for a stand that I am taking here that seems to be fairly unpopular among certain of my compatriots.
The CHAIRMAN. I want to be frank and saying with you that you are the first man who has appeared as a witness since October 24 who is against price support for tobacco. I think the record will show that.
Mr. NEWBERRY. I do not know whether I should thank you or not, but I do.
The CHAIRMAN. I want you to because it takes a brave man to do that. Mr. NEWBERRY. May I proceed. The CHAIRMAN. Surely.
Mr. NEWBERRY. I would like to add at this point that I recognize the necessity of such programs to encourage production during wartime but I am very much opposed to continuing them in peacetime.
It is, of course, true, that two-thirds of growers entitled to vote in a referendum must vote in favor of the program to have it be effective. This happened 2 years ago when it was voted in for 3 consecutive years. In this connection may I make the following points:
1. Turning to the Federal Government for help is an insidious thing that grows like a cancer.