didn't spell out what was involved. We have never claimed a saving beyond what the facts were; and I will stand by that. We are also in favor of savings when we don't run the risk of greater losses, perhaps in going downhill in protecting our country or in other ways. One of the things that has been called to my attention is that you are now trying to save money by carrying your own insurance on CCC commodities. How much saving is that supposed to bring about; or would you know? Mr. GRANT. I do not recall offhand. I will put it in the record. (The information requested follows:) ESTIMATE OF NET SAVINGS REALIZED BY CCC ON OWNED (NONINSURED) COTTON JULY 1, 1958, THROUGH JUNE 30, 1963 Insurance deductions credits (premiums saved)....... Estimated net savings on owned (noninsured) cotton-----. Estimated annual net savings.---. $5, 504, 518 ESTIMATE OF NET SAVINGS TO CCC BY ELIMINATION OF INSURANCE Estimated net savings on owned (noninsured) cotton, July 1, 1958, Average number of CCC-owned bales of cotton during period.. Estimated net savings per bale during a 9-month loan period---- Average number of bales of loan cotton acquired per year.. Estimated annual net savings to CCC by elimination of insurance on loan cotton (3,982,756X $0.148156) --- $3, 569, 575 3, 614, 000 $0. 0987708 $197, 542 $0.148156 7,965, 513 3, 982, 756 $590,000 1 Fire hazards and insurance premiums in warehouses where producers normally store their cotton are greater than in those warehouses where CCC reconcentrates its cotton. Therefore, it is logical to assume that our computation of the net savings on loan cotton is conservative. ESTIMATE OF GROSS SAVINGS TO CCC ASSUMING GRAINS STORED UNDER THE UNIFORM GRAIN STORAGE AGREEMENT WERE NOT INSURED FISCAL YEARS 1962 AND 1963 Estimated insurance premiums paid by warehousemen on CCCowned grain.... Collections on insured losses of stored grains____ Estimated gross savings 1962 and 1963--- Estimated average annual gross savings 1. $12, 353, 000 3, 290, 000 9, 063, 000 4, 531, 000 1 The computation of estimated gross savings did not take into consideration the administrative, investigative, or other overhead cost which would be paid by CCC as a result of assuming its own risk of loss, nor does it take into consideration the amount CCC may realize from salvage of damaged grain. Mr. WHITTEN. The question is, if the Government, as big as it is, should carry its own insurance on its own commodities? That, of course, would be for the Government to decide. Those writing insurance would naturally write insurance on it. I can understand that the Government, like most railroad companies, doesn't carry liability insurance. They are big enough to spread the risk. Tell me where the authority is for you to carry insurance on my cotton where I borrow money from you and the cotton doesn't belong to you. Where is the authority for you to carry insurance on the other fellow's cotton? Mr. GRANT. It is my understanding that this decision is based on the Commodity Credit Corporation Charter Act. I will have to get the specific section. (The information referred to follows:) Under its new policy, Commodity Credit Corporation no longer requires insurance to be carried on commodities owned by Commodity Credit Corporation or on commodities which are security for price support loans. In both situations, Commodity Credit Corporation will assume the risk of loss to the extent of its interest in the commodities, in the event of fire or other casualty losses on which insurance is normally obtained. In the case of any such loss to a commodity which is security for a price-support loan, this means that Commodity Credit Corporation will relieve the producer of the obligation of repaying the price-support proceeds received on the commodity. Commodity Credit Corporation will not, however, pay the producer for any amount by which the market value may exceed the price-support value of the commodity. If the producer wishes to protect his equity in the commodity, he may make separate arrangements to obtain insurance on such value. Legal authority for the proposed policy is contained in the Commodity Credit Corporation Charter Act, as amended, particularly in the following provisions: (a) Section 4(d) which states that "*** (The Corporation) may adopt, amend and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and the powers vested in it may be exercised." (b) Section 4(g) which states that "*** (The Corporation) may enter into and carry out such contracts or agreements as are necessary in the conduct of its business ***" (c) Section 4(j) which states that "* ** (The Corporation) shall determine the character of and the necessity for its obligations and expenditures and the manner in which they shall be incurred, allowed and paid." In addition, authority for the policy on commodities under loan to Commodity Credit Corporation is contained in section 401(b) of the Agricultural Act of 1949, as amended, which authorizes the Secretary (except as otherwise provided in the act) to determine or approve the terms and conditions of price-support operations. Mr. WHITTEN. The question has been raised with me that, prior to the actual taking over of title, there is real doubt as to whether the authority exists. In other words, if I borrow money from you and something happens to my commodity, the price goes up and I want to redeem it but it is gone. Where is the authority to pay me for my profits the difference between what I borrowed on it and what I could have gotten on it? You may have a little difficulty in finding such a law. You are not aware of any? Mr. GRANT. I am not, offhand. I will check with the General Counsel's Office on it. Mr. WHITTEN. You might proceed to the next item. Can you give us the number of man-years you have cut out, as you go along on the items that you mentioned. Mr. GRANT. Yes, sir. Only the one involving the Standard Container, Naval Stores, Tobacco Seed Export, and Wool Standards Acts affects numbers of people. Mr. WHITTEN. How many people would be involved? Mr. GRANT. About 11 people in those 4 items. They are very small activities. The other changes we talked about will reduce expenditures from the general fund of the Treasury but will not affect employment. REA DIRECT LOAN ACCOUNT PROPOSED The next item involving a reduction is the proposal to establish a direct loan account for the Rural Electrification Administration similar to the one that we have now for the Farmers Home Administration whereby the receipts are deposited in the fund. Mr. WHITTEN. Has that bill passed the House and Senate? Mr. WHITTEN. How far has it gotten? Has anybody introduced it yet? Mr. GRANT. The bill has been introduced in the Senate. Mr. WHITTEN. Mr. Grant, you folks are the most optimistic people about the speed with which Congress will act on controversial legislation of any group I ever saw. Are you going to introduce the bill on both sides in an effort to speed it up? Mr. GRANT. I am sure the legislation has been submitted to both the House and the Senate, but it has been introduced in the Senate only. Mr. WHITTEN. How long have you been working on getting it introduced? Mr. GRANT. Two or three years. Mr. WHITTEN. Would you like for yours and Mr. Robertson's salary and the appropriations for your Department, to wait on the passage of that act? Mr. GRANT. Personally, I would not. Mr. WHITTEN. All right. Proceed. Mr. GRANT. As I indicated, table 1 shows appropriations for 1964, and budget estimates for 1965, and the increases and decreases in 1965 as compared with 1964. PAY ACT COSTS Of the total increase there is an amount of $10,573,575 for additional pay act costs. I will not mention this element in connection with each individual item. It represents the cost of placing on a full year basis the last step of the pay act which went into effect in January of 1964. Mr. WHITTEN. Do you think we ought to pay that in view of the relief we are going to get by reducing taxes? Mr. GRANT. I feel, Mr. Chairman, we have no alternative but to pay it under the law as it is now on the books. Mr. WHITTEN. I agree with you. I just wanted to get your idea. Proceed. AGRICULTURAL RESEARCH SERVICE RESEARCH Mr. GRANT. Proceeding then with the first item, Agricultural Research Service, the increase of I will be following the "Other" column which excludes increases for pay act costs. It is the next to the last column. Mr. WHITTEN. That is good. I want it clear. Mr. GRANT. An increase of $5,880,330 for research. That figure consists of $1.5 million to staff new laboratories that were recently authorized; $1.5 million for additional research in connection with pesticide residues; $500,000 for strengthening research on foot-andmouth disease at Plum Island, N.Y.; $250,000 for food science research; and two construction items: $1 million for a sugarbeet pasture and range research facility at Fort Collins, Colo., where we are now in some quonset huts on the campus which the college is taking over for dormitory space. However, they are giving us other land on the campus on which to construct this building; $1,394,300 for construction, alterations, and improvement of facilities at the Beltsville Research Center. There is also here a decrease of $264,000 to reduce or to eliminate work at some small field stations where the work is of lower priority than other activities. PLANT AND ANIMAL DISEASE AND PEST CONTROL In the plant and animal disease pest control item, there is a net increase of $700,000. This includes $405,000 for plant quarantine inspection and animal inspection at ports of entry, $195,000 to assure safety and potency of veterinary biologics, $800,000 for additional work in connection with the registration and regulation of insecticides and pesticides, and a decrease of $650,000 to eliminate the screwworm inspection activities in the Southeast. This involves the elimination of the quarantine on the Mississippi border-Mississippi River— where the quarantine is now maintained. With the continuing success of the screw-worm program in the Southwest, it is felt that this quarantine can now be removed. There is also a reduction of $50,000 in the program for fire ant control and eradication. MEAT INSPECTION Meat inspection, an increase of $2,244,000, consisting of $1,383,000 to meet the continuing requirements for additional inspectors and an increase of $861,000 for reclassification of nonveterinarian meat inspector positions. I don't know whether you want to consider this now or not, but there is a 1964 supplemental estimate pending of $500,000 for increased meat inspection workload and $90,000 for the reclassification of inspectors. This supplemental estimate Mr. WHITTEN. In case the Congress should not get around to acting on that supplemental, what would be the effect? Wouldn't the effect be to pass these increased costs on to the packers? Mr. GRANT. No, sir. Mr. WHITTEN. Don't they have the amount of inspection that you provide them, and if they want more than that, they pay it? Mr. GRANT. If it involves additional shifts at the plant; yes. In other words, if it means a man working overtime; that is right. Mr. WHITTEN. If you have inspectors and they work overtime in order to do the job, then the packers pay you; don't they? Mr. GRANT. That is right. Mr. WHITTEN. So if you believe it is sound next year for the packers to pay it all, why is it wrong for the packers to pay a little of it this year? Mr. GRANT. It is not wrong for them to pay overtime Mr. WHITTEN. Why have a supplemental, asking us to pick up additional cost this year. Mr. GRANT. Many of these meatpacking plants, Mr. Chairman, are relatively small, with one, two, three, or four inspectors, and it is not a question of overtime. These additional costs come about primarily because of the need to meet requests for inspection service at an increasing number of new locations, and enlargements of existing plants. We are only authorized to bill the packer at the present time where our man actually works beyond the 8 hours a day or 40 hours a week. Mr. WHITTEN. You may proceed. FOREIGN CURRENCY PROGRAM Mr. GRANT. Next is the foreign currency appropriation. There is an increase of $3,750,000 in the appropriation for payments in foreign currencies for research abroad under Public Law 480. Mr. WHITTEN. That money is taken out of one pocket and put into another. Mr. GRANT. Yes, sir. As these currencies are purchased, the dollars flow back to the Commodity Credit Corporation and thereby reduce the appropriation subsequently required for Public Law 480. COOPERATIVE STATE RESEARCH SERVICE For the Cooperative State Research Service, there is an increase in payments to States of $1 million. This is actually a net increase. Under the Hatch Act formula, there is an increase of $1,500,000, and a reduction of $500,000 in payments under title II of the Agricultural Marketing Act of 1946. Mr. WHITTEN. What work is eliminated? Mr. GRANT. There would be some shifting of marketing research projects at the State experiment stations from the Marketing Act funds to the Hatch Act funds. It would not necessarily eliminate any work, but would be a matter of shifting from one source of funds to another. Mr. WHITTEN. Mr. Grant, if you cut out $500,000, you say that it just shifts from one place to another, but no work is eliminated. Mr. GRANT. Because marketing research projects will continue to be financed under the Hatch Act funds. Mr. WHITTEN. So the Hatch Act funds have been raised enough to offset the $500,000? Mr. GRANT. It would be partially offset. I don't want to leave the impression that there would not be some adjustments within particular States. There probably would be, because this money would be distributed under the Hatch Act formula, |