I can explain that. It is a very simple transaction. There was a sale made by one of our exporters in New York-and he has the letters to substantiate these figures-of 15,000 tons of No. 1 hard winter wheat at $2.34 a bushel. That trade was canceled at $2.313%. So the Danes lost money, but they had to cancel because otherwise they would not get the allocations, and you could not get an export permit without them.

The Commodity Credit Corporation made a delivery of this wheat, then, to the Danes at $2.40% a bushel, plus 2 percent mark up-that is the Commodity Credit Corporation profit on these transactions, which of course amounts to, with wheat at $2.40, nearly 5 cents a bushel.

Then there were 321,000 bushels delivered against this 15,000 tons by the Commodity Credit Corporation, and the price was $3.23% a bushel, plus the 2 percent, which was then practically 62 cents a bushel. So the original sale of $2.34 made by the private trade was canceled and it was sold by Commodity Credit at $2.40% and $3.2378. I will not take up the time of the committee by going into this somewhat intricate deal, but in order that it may be easily identified, this transaction involved shipments of wheat on the Steamship Louisiana and the Steamship Edvard Greig, respectively, loaded August 29, 1947, and October 30, 1947. If the committee is interested in pursuing the matter further, the specific information given here will enable the committee to call for the pertinent records from the files of the Commodity Credit Corporation.

Assuming, for the sake of argument, that it is necessary to have allocations for a reasonable length of time, there is no reason why the export business cannot be returned to private industry, with Government continuing to exercise lawful controls through allocations and licensing as in the case of the corn-oat program of 1946-47.

We use the word "lawful" advisedly, but the wielding of the tremendous powers of allocations should not be exercised by the Government except in the way and manner prescribed and set out by Congress.

The procurement and exporting of grain by Commodity Credit Corporation to the exclusion of private business is contrary to our conception of Government, and is inefficient and expensive when contrasted with the private handling of grain. The determination of the Government to make this system of state trading permanent is illustrated by numerous instances since 1941. The Government, with many evasions, has insisted upon keeping this business as a state monopoly.

From the early days of the Surplus Marketing Administration, followed by Lend-Lease Administration, it has apparently been the policy of the Government to treat the handling of grain exports as a state monopoly. The private industry, specifically the members of the North American Export Grain Association, have at every turn of the road beseeched the various Government agencies to permit the private trade to handle the export grain business and, with the exception of few and short intervals, without success. In the early days of lend-lease, the Government turned over the procurement of grain to Commodity Credit Corporation with no explanation.

When UNRRA began to function on a large scale, our association attempted to enter the field, and Mr. Dewey Anderson, of that organization, was favorable to our proposal, but, in some way or man

ner, he was overruled, but he gave us to understand that Commodity Credit Corporation insisted on supplying the grain.

At that particular time we came down to Washington and met Mr. Anderson. We proposed to handle that grain for UNRRA for fiveeighths of a cent a bushel. That is, move it from the interior, with all charges, we put it on the ship, and all that we were to get was fiveeighths of a cent a bushel. That was turned down.

In a further effort to be helpful to the Government, as well as in an effort to save the business of its members, the North American Association in October 1944 made a proposal that it set up a committee to cooperate between the Government and the grain trade. The plan was tentatively accepted by the Government, but nothing came of the proposal.

At a later date-October 1945-the trade again asked to be permitted to participate, and presented such an airtight proposal that it was made the basis of an agreement; but the Government contended that, under the law, only a Government agency could purchase grain for the military and UNRRA. We do not at this point pass upon the accuracy or inaccuracy of this interpretation. Assuming it is true, we submit that it illustrates the necessity of writing a law that will not permit a recurrence of this type of situation.

At that time we came down and made a proposal to take the grain from any location at all in the interior, put it at the seaboard, just as above, paying all charges-railroad transportation, and so onregular charges which everyone has to pay-for one-quarter of a cent a bushel. We wanted to do that business. We were turned down.

As stated before, the grain business is highly competitive and the margin of profit in private trade is always small. Commodity Credit Corporation, on the other hand, not only requires the claimant nations of Europe to purchase grain at a price that takes into consideration acquisition cost, freight, and so forth, but, in addition, adds a mark-up or overriding charge of 2 percent which, in the case of $2.50 wheat, is 5 cents per bushel, or several times the margin of profit experienced by the private trade.

Obviously, this requirement, among other things, forces the claimant nations to exhaust their resources or credits far more rapidly than if they were permitted to deal freely on the open market, and is therefore unsound. It naturally follows in the highly competitive grainexport business that only the efficient operator survives for any period of time, with the result that the ultimate purchaser, whether it be a private firm or foreign government, secures the benefit of this efficiency.

In conclusion, the future of the industry which we represent is in your hands. If it is the policy of the Congress to destroy a private business necessary for foreign trade and commerce, we are, of course, helpless. On the other hand, we do not believe that this Congress holds these views. But, again, we point out that we are presently being destroyed by departmental fiat just as effectively as though Congress had written this provision into the law of the land.

We can, if permitted, procure and export grain to fulfill our foreign commitments, our ability being attested and demonstrated by the testimony of an authoritative and disinterested witness, Captain Conway.

We ask this committee, in the bill which you write. to provide words similar to the so-called George amendment in the ERP bill which, in

substance, will require the Commodity Credit Corporation to utilize private and existing channels of trade.

We are confident that, when the Congress spells out its intent, no Government bureau will dare to defy the expressed policy of the highest lawmaking body in the land.

Heretofore, Mr. H. E. Sanford, representing the National Grain Trade Council, has presented a draft of a bill to grant Commodity Credit Corporation a Federal charter. We adopt and approve this draft and we respectfully submit that if this committee will write into the charter an amendment such as we submit below, the private grain export trade will be protected against the State trading now prevailing:

In the Corporation's purchasing and selling operations with respect to agricultural commodities (except sales to other Government agencies), and in the warehousing, transporting, processing, exporting, or handling of agricultural commodities, the Corporation shall utilize the usual and customary channels, facilities, and arrangements of private trade and commerce.

The CHAIRMAN. Thank you, Mr. Crofton.

Are there questions of Mr. Crofton?

Mr. SMITH. Mr. Chairman.

The CHAIRMAN. Dr. Smith.

Mr. SMITH. Do I understand that the situation is such that you could trade only with governments abroad?

Mr. CROFTON. We are not allowed to trade with governments abroad.

Mr. SMITH. Assuming that you were given this charter, with whom could you deal? In Great Britain, for example, you would have to deal with the Government?

Mr. CROFTON. That is right.

Mr. SMITH. And you said you did so in Italy?

Mr. CROFTON. That is right.

Mr. SMITH. Would that be true with respect to all countries?

Mr. CROFTON. In France we could deal with the French Government; we could deal with the Dutch government; we could deal with the Belgian Government.

Mr. SMITH. Could you deal with any French private buyers?

Mr. CROFTON. With any French buyer who had the dollars to pay, and if what they wanted to buy came under the allocation, yes, that would be in order.

Mr. SMITH. Would there be such to trade with? That is what I am trying to get at. Is the market closed by the governments of Europe in such a way that you can only deal with such governments?

Mr. CROFTON. For the time being, I presume, Congressman, that when this European recovery program money is given to these goyernments, they will be told how they can spend it. So we will probably be dealing with the governments. But we have been dealing with governments for many years. After the First World War, when the French Government was in a tough spot for dollars, our own firm loaned them millions of dollars, which allowed them to finance their purchases.

Mr. SMITH. As I understand, the ITO-International Trade Organization-will virtually make it impossible for private trading between any two nations, so it seems we not only have your propo