Secretary WICKARD. I should like to see it made more definite, if possible, so that the Administrator, as I said, should know exactly what Congress wants and, if he has to choose between obtaining the highest return for the Government, or some other objective, that he might have some idea as to what Congress wanted him to do.

I do not know. I think that those objectives are ones with which I am in total agreement as they are stated; but I am not sure there won't be opportunities or won't be places, at least, where it is going to be pretty hard for anyone to be specific as to what organization should be taken care of, as to what should be done.

Mr. WHITTINGTON. I wonder. It certainly would cut out the farmers generally, and that would include you, Mr. Zimmerman, and myself.

The CHAIRMAN. What I was thinking about was if we give priority to cooperatives, a large number of farmers in the United States do not belong to cooperatives, and you would be cutting them out of the surplus market.

Secretary WICKARD. Well, I do not believe the farmers would be in any position-that a single farmer would be in any position-to take over facilities. I was thinking there about cooperatives, and perhaps it should be made more explicit. I refer to the operation of facilities, in acquiring equipment, rather than tools which the individual farmers may need. I feel that program is working out splendidly at the present time.

The CHAIRMAN. What you mean is dehydrating plants?

Secretary WICKARD. Yes, I mean dehydrating plants. The most of those dehydrating plants, the milk-dehydrating plants particularly, are operated now by cooperatives, and I think under their present plan of amortization, and so on, these cooperatives will have a chance to acquire them. If they did not, there might be some cooperative set-up which would be interested in acquiring them. I think that policy should be carried out--and I think it would be in the interest of the farmers-through cooperatives.

The CHAIRMAN. I might state, Mr. Secretary, that the full committee is unanimously of the opinion to place you on this board.

Secretary WICKARD. I appreciate that; but I do hope, if I am to be on the Board, that I know, as I have said, what the Congress wishes to be done in some of these illustrations and problems I have talked about this morning.

Mr. WHITTINGTON. The Secretary has been very helpful in his statement.

The CHAIRMAN. I believe you said a few moments ago there was a representative here of the War Food Administration who would like to be heard and, if there are no further questions of you and you have no further statement, we will be glad to hear him. We appreciate your coming and giving us a very informative statement.

Secretary WICKARD. Mr. Stambaugh is here to talk about how we are disposing of trucks and plan to dispose of tractors direct to farmers, at the present time.

The CHAIRMAN. We want one representative to give us all the information, because we have a full schedule this afternoon.

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Secretary WICKARD. Colonel Olmsted, I believe, and Mr. Hutson, were going to come up and talk about food and other agricultural products.

STATEMENT OF J. B. HUTSON, PRESIDENT, COMMODITY CREDIT CORPORATION, ACCOMPANIED BY ROBERT H. SHIELDS, SOLICITOR, DEPARTMENT OF AGRICULTURE, AND LT. COL. R. W. OLMSTEAD, DEPUTY DIRECTOR FOR SUPPLY, WAR FOOD ADMINISTRATION

The CHAIRMAN. We have with us at this time Mr. J. B. Hutson, President of the Commodity Credit Corporation, and also Mr. Robert H. Shields, solicitor of the Department of Agriculture, and Colonel Olmstead, of the Office of Distribution, War Food Administration.

Mr. Hutson desires to make a statement for the benefit of the representatives from agricultural States.

We will be glad to have you proceed, Mr. Hutson.

Mr. HUTSON. Mr. Chairman, I have no prepared statement. Colonel Olmstead, Mr. Shields and I are here to answer any question that any members of the committee may want to ask us with respect to any of the matters with which you are concerned in connection with this proposed legislation.

The CHAIRMAN. I have in mind one or two questions. Have you read this bill, H. R. 5125?

Mr. HUTSON. Yes, I read it some time ago. I do not know whether it has been changed since I read it.

The CHAIRMAN. I have been disturbed over the question as to whether or not the Surplus Property Administrator would have authority, under the provisions of this bill, in section 7, after the war ends, to tell you that certain commodities which you hold are surplus. Section 7 provides:

Each owning agency shall have the duty and responsibility continuously to survey the property in its control/and to determine which of such property is surplus to its needs and responsibilities. For the duration of hostilities in the present war, such determination shall be the exclusive province of the owning agencies, but thereafter the Administrator shall have the power to require such a determination upon a finding by him that any property is surplus to the needs and responsibilities of an owning agency.

I have been disturbed over the question whether he could then, after the war is over, come to the Commodity Credit Corporation and tell you that the cotton, or wheat, or corn held by your Corporation is surplus. Of course, it is surplus, or it would not be there. My question was whether he could force you to sell that under the provisions of this bill. That language begins at line 21 on page 7 of the bill we have under consideration, H. R. 5125.

Mr. HUTSON. Mr. Chairman, if I may, I would like to have Mr. Shields answer that question.

it.

The CHAIRMAN. We would be very glad to have Mr. Shields answer

Mr. SHIELDS. Mr. Chairman, I do not believe that under this section the Surplus War Property Administrator could do that; that is, could declare that the stocks of the Commodity Credit Corporation are surplus to the needs of that Corporation; but I do not think that the language is clear.

The reason I do not think he could do that is that the very purpose of the Commodity Credit Corporation is to hold surplus stocks for the purpose of sustaining food prices. While it is surplus in one sense, I do not think it is surplus to the needs of the agency, the purpose of which is to hold surplus stocks.

I have discussed this matter informally with the general counsel of the Surplus War Property Administration, and I think he is generally of that view. Although the language is not clear I think that would be a fair and sound construction of the language.

Mr. WHITTINGTON. In other words, the words "needs and responsibilities" would be limiting words?

Mr. SHIELDS. That is right. There will probably be no problem, except for that last sentence, because during the war, the owning agency itself declares whether it has any surplus. But with this last sentence in section 7 there is a problem.

The CHAIRMAN. We have had quite a lot of experience in connection with the intent of Congress being changed by regulation, and I would like to be clear as to whether that covers the intent of Congress. Mr. SHIELDS. I do not think it is clear, but I think if you put all the applicable provisions together, you would get the answer as to what the intent is.

The CHAIRMAN. Do you not think, as a lawyer, that you can construe that language in almost any way you desire?

Mr. SHIELDS. I think I could make a very good case contrary to the views I have expressed.

The CHAIRMAN. That is also my view about it; I think that is true. Mr. SHIELDS. I think it would be desirable to clarify that language so there will be no question about it. We shall probably have more surpluses in the Commodity Credit Corporation in the future.

The CHAIRMAN. Mr. Hutson, affecting the Commodity Credit Corporation, Congress from time to time passes legislation telling you when you can or cannot sell cotton, corn, and so forth, and in connection with the disposition of your surpluses, these surpluses you are holding now are not necessarily war surpluses, are they? You have been holding surpluses for years?

Mr. HUTSON. Our stocks are some less and have been some less each year during the war of the so-called storable commodities.

The CHAIRMAN. And under the legislation providing for your Corporation, the Corporation will have authority to dispose of your surpluses, unless restricted by congressional action.

Mr. HUTSON. That is right. The limitations placed upon us are that we cannot sell for less than parity, except when the commodity deteriorates, and except in the case of grain crops which are sold for feed, and there the action is taken in connection with small grain for feed, and in that case they are sold at corn parity.

That is a matter that has been discussed at some length by Congress, and we are certainly limited as to sales. I am not sure that it has been the intent of Congress to limit it to export sales. I do not know whether that has been considered as a separate item, but the act does prohibit us from selling for export at less than parity. There has been some question in reference to the authority given us by Congress to do that.

Mr. SHIELDS. I would like to say a word about the problem you raised, Mr. Chairman. The Commodity Credit Corporation cannot

sell farm commodities below parity except in certain cases, and if the War Food Administration is the disposal agency for food under this bill there is a question whether there are any limitations on the disposal of food by the War Food Administration as the disposal agency under this bill; in other words, whether the Commodity Credit restrictions would apply if it was selling as a disposal agency.

The CHAIRMAN. Do you mean by that commodities owned by the Commodity Credit Corporation, or commodities turned over to the Commodity Credit Corporation as surpluses to the War Food Administration?

Mr. SHIELDS. I mean the latter, Mr. Chairman. Say, when the war ends, some organization has some wheat or corn and it is declared surplus to the War Food Administration under this bill. Then, query, are the Commodity Credit restrictions on the disposal of these commodities applicable to the War Food Administration? I think the answer is "No." I think the limitations are technically applicable only to Commodity Credit stocks. However, it is a rather difficult question.

The CHAIRMAN. Have you any suggested amendment that would cure that difficulty?

Mr. SHIELDS. I think it is a question of policy as to whether surplus food under this bill, surplus food commodities, should be available for export at less than parity, or available for distribution for relief because of the nature of their source.

Right now, Commodity Credit stocks cannot be sold for export or for relief below parity. Under this bill, I think "surplus war stocks" could be.

The problems may be put this way: The War Food Administrator may find himself trying to comply with one mandate from Congress in connection with the sale of food acquired under one authority and a conflicting mandate from Congress with respect to the same food acquired under another authority.

Mr. WHITTINGTON. Could you leave with the committee any language which you think would perfect section 7, or any part of it? Mr. SHIELDS. Yes, I will be glad to do that.

The CHAIRMAN. We also have present this morning Col. Ralph W. Olmstead, Deputy Director of the Office of Distribution, of the War Food Administration. What is your position, Colonel?

Colonel OLMSTEAD. I am Deputy Director of the Office of Distribution.

The CHAIRMAN. Do you have a statement you would like to make to the committee?

Colonel OLMSTEAD. A very brief one, Mr. Chairman, because the Office of Distribution has been working on the disposition of food items, more of the processed character, and the Steagall Act commodities in the past few months.

Our problem divides itself into two parts. The first is the necessity that has existed during the war to build up excessive reserves, and by that I mean excessive as related to peacetime conditions. That is true of the Office of Distribution and it is true of the Ministry of Food of Great Britain, and it is also true of the Free French in North Africa, looking at it in terms of post-war conditions.

It has been necessary, for example, to build up big stocks in the United Kingdom up to about four times the amount that would be

normally carried. That has been done because of the danger of submarine activity, the blitz, and the possibility of inflation.

At the end of the war there will be those stock piles still in reserve, of necessity, until the war is over, and when it is over the big problem that will confront the War Food Administration, or its successors in interest, is to dispose of those large stocks in an orderly way without breaking the supporting price.

If I may use a specific example, one commodity that has been prominent in the discussion has been dried eggs. As you know, there was some difficulty in the matter of price support on eggs this year because of the problems of supply. We are buying 1,850,000 pounds of dried eggs to be moved, and about 50,000,000 pounds are in inventory; that is, in the processing plants or in packing plants or export storage on our side.

In Great Britain you will find, roughly 6 months' stocks for distribution in the stocks of the Ministry of Food. If the war should terminate tomorrow, the day after tomorrow people in Britain will want shell eggs, and the problem becomes doubly difficult because the dried-egg production has been stepped up.

I think that point is important with respect to section 22 (b), in which it is provided that nothing in this act shall impair or affect the provisions of section 301 of the Second War Powers Act of 1942, and we take that to be a continuation of the authority and other various devices of international cooperation that the War Food Administration exercises at a central point; that is, the allocation authority with respect to food.

It would be highly desirable, in our opinion, that at the termination of the war, when the surplus problem becomes acute, some central agency of the Government shall be able to be sure that allocations are made in such fashion that there is no duplication of supplies from this country to foreign countries, because there are instances in the last war that I have heard about where a lot of supplies were shipped under a sort of hazy requirement and some of them were reshipped from the foreign country to the United States, where they tended to break prices, while the problem is the problem of keeping inventories clean, and in a supply job like that of the Office of Distribution, where it is handling half a million tons of food a month with a 2,000,000-ton inventory, it is not infrequent that a small lot of food, canned goods or dried milk, will be displaced. In cases where the bulk schedules do not measure up to expectations it is highly desirable that the stuff be sold quickly and sold while the country has a lot of purchasing power and desires to secure the commodity. Otherwise it becomes an accumulation where it might be a sizable factor.

To illustrate that I think it appropriate to say to the committee that in the last 3 months we have had an inventory-control committee in operation and they have examined each commodity in storage, and when it is determined that the food has been in storage long enough so that it is no longer desired, then it is determined that it be sold commercially.

Those sales have been something like $15,000,000 in 3 months. That, I think, illustrates the point that if they were not made it would be easy at the end of war to come up with a surplus of maybe $100,000,000 that should be avoided with craeful management.

The CHAIRMAN. Do you have any suggestions to make for that?