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Mr. HUTSON. That is true.

Mr. TABER. It is not like the ordinary business enterprise.
Mr. HUTSON. No; that is correct.

PURCHASES OF DOMESTIC COMMODITIES BETWEEN JANUARY 1 AND AUGUST 31, 1942

Mr. TABER. I would like to have you put in the record a memorandum of everything that you have bought, showing so many pounds or tons of beef, pork, ham, mutton, or anything else.

Mr. HUTSON. I will be glad to do that.

Mr. TABER. You have got a schedule there showing just what you are buying in foreign countries.

Mr. HUTSON. Yes.

Mr. TABER. I would like to have you put in a complete schedule so we can see just what is going to be done.

Mr. HUTSON. Yes.

Mr. TABER. I would like also to have you supply for the record a schedule showing what is being bought.

Mr. HUTSON. You mean both foreign and domestic?

Mr. TABER. Both foreign and domestic.

Mr. HUTSON. The statement on domestic purchases is supplied herewith, and the statement on foreign purchases will be supplied to the committee.

Purchases of domestic commodities by Commodity Credit Corporation Jan. 1, to Aug. 31, 1942

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Proposed purchases under this program include burlap and cotton fabrics, cotton bagging, peanut bags, flax fiber, flax straw and flax-processing equipment, hempseed and hempseed harvesters and processing equipment, hybrid seed corn, special long-staple cotton, grain storage bins, peanut pickers and peanut warehousing equipment, portable grain-loading elevators, pyrethrum seed, sorgo, oil-bearing seed and oil-bearing seed products.

Mr. TABER. I would also like you to supply us with a memorandum indicating the sales and also the gratuitous distribution or stamp distribution or whatever it is.

Mr. HUTSON. We do not have any.

Mr. TABER. You do not have any that is given away?

Mr. HUTSON. No.

Mr. TABER. That is gratuitously distributed?

Mr. HUTSON. No; we sell all of it.

Mr. TABER. Who does make the distribution?

Mr. MAYCOCK. That is the Agricultural Market Administration. That is a different administration than the one Mr. Hutson is connected with.

Mr. TABER. But you buy the stuff they distribute or handle? Mr. MAYCOCK. No; the Agricultural Marketing Administration buys it.

Mr. TABER. And distributes it?

Mr. MAYCOCK. Yes, sir.

JUSTIFICATION OF ESTIMATE

Mr. HUTSON. I offer for the record the justification for this estimate. EMERGENCY PROgrams DirectLY CONNECTED WITH THE WAR EFFORT INCLUDING THE FOREIGN PURCHASE AND OTHER PROGRAMS

General.-Directive No. 2, dated May 16, 1942, issued by the Executive Director of the Board of Economic Warfare, as revised on June 20, 1942, reads in part as follows: "Except as to purchases by the United States Commercial Company, on and after May 20, 1942. Commodity Credit Corporation, an agency of the United States in the United States Department of Agriculture, shall be the sole and exclusive agency for the negotiation and conclusion or amendment, subject to the prior approval of, or as may hereafter be directed by, the Board of Economic Warfare, of all imported materials contracts for agricultural commodities.”

Directive No. 7, dated August 15, 1942, issued by the Acting Chairman of the War Production Board, reads in part as follows:

"Commodity Credit Corporation is authorized, from and after the effective date of this directive, to perform the functions and exercise the power, authority, and discretion conferred upon the President by section 2 (a) of the act of June 28, 1940 (Public No. 671, 76th Cong., 54 Stat. 676), as amended by the act of May 31, 1941 (Public No. 89, 77th Cong., 55 Stat. 236), with respect to the allocation of vegetable oilseeds and oilseed products, and more particularly, without limiting the generality of the foregoing, (1) to direct the kinds, quantities, and conditions of purchase and sale of any vegetable oilseeds to be received or crushed by any crusher, and the kinds, quantities, and conditions of purchase and sale of oilseed products to be received or first processed by any refiner or bleacher, (2) to direct the kinds and quantities of vegetable oilseeds and oilseed products to be stored, (3) to direct the type and method of operation of crushing facilities suitable for the crushing of vegetable oilseeds, (4) to direct the area within which vegetable oilseeds and oilseed products may be purchased or not purchased, all in such manner and to such extent as it may deem necessary, in the public interest and to promote the national defense, for assuring the production of sufficient oil and linters from vegetable oilseeds and the efficient use of processing facilities." Objectives.—Õbjectives of the emergency programs of Commodity Credit Corporation are: (1) To increase the supply of strategic agricultural commodities which are essential to the prosecution of the war, or necessary to supply civilian demands, and (2) to carry out the agreement made at the Pan-American Conference at Rio de Janeiro, whereby this country pledged to support the economy of such of the Latin-American countries as might be jeopardized by the loss of normal export outlets for their products as a consequence of the war, and 3, to obtain from the Tongass National Forest in Alaska spruce logs suitable for airplane lumber and to sell the logs to mills capable of producing the largest quantity of airplane lumber therefrom.

The problem and its significance.-Because of the increased demand arising from the war effort and the loss of certain normal import sources of foreign agricultural products, particularly in the Far East, shortages have developed in certain types of agricultural commodities. The situation has been made more acute by a shortage of shipping facilities. In order to replace supplies which have been cut off, programs are under way which have as their objects (1, an increase of domestic supplies and 2 increase of imports from foreign, soirees which are still available. Some of the nations friendly to this country have been faced with difficulties because of the loss of normal export marketa, This country, some time ago agreed to support the economies of such countries through the purchase of surplus, table showing the estimated tonnage and value of commodities to be purebased

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for shipment from foreign countries appears on the following page. There is an acute need to supplement the supply of lumber suitable for the manufacture of training planes and gliders which is now obtained from Washington and Oregon. Plan of work.-Officials of Commodity Credit Corporation collaborate with representatives of the Board of Economic Warfare, War Production Board, and the Department of State in establishing policies regarding the purchase and import of commodities. A Foreign Purchase Division has been established in Commodity Credit Corporation to administer the acquisition of foreign agricultural commodities. The vegetable oilseeds program and other domestic programs of an emergency nature will be handled for the most part through the addition of new sections to existing divisions of the Corporation and the employment of experts who have had specialized experience in the processing or marketing of the commodities of which an increased supply is desired. A major portion of the work in connection with the Alaska spruce program will be performed by employees of the Forest Service, whose services are being made available to Commodity Credit Corporation on a reimbursable basis.

The Foreign Purchase Division is at present composed of the Office of the Director and six sections, as follows: Sugar Section, Special Commodities Section, Fats and Oils Section, Cotton Section, Contract Service Section, and Transportation and Storage Section. An office has been established in New York City to carry out the procedures and fiscal functions necessary to the successful and efficient handling of the business transactions involved in the numerous contracts, purchase, transportation, storage, and sales agreements. The Corporation will have representatives in foreign countries to arrange for the purchase of commodities and the care and storage of such commodities until facilities for shipment to this country are available or other arrangements for disposition of the stock is made. Representatives of the Corporation are operating in this capacity in Lima, Peru, and Rio de Janeiro, Brazil. It may be necessary to send representatives to other foreign countries as the operation of the purchase programs progresses.

Financial requirements.—It is difficult to forecast accurately the amount which will be required in the fiscal year 1943 to defray the administrative expenses of the Foreign Purchase Division and the other emergency activities of Commodity Credit Corporation. Because of the variety of commodities to be handled, it is not possible to establish one procedure which will be followed in all of the operations. For example, it may be practicable for one commodity or group of commodities to have inspection performed on a contract basis, in which event the cost is paid from the capital fund of the Corporation. For other commodities, it may be necessary to have inspections performed by employees of the Corporation whose salaries and travel expenses are paid from administrative funds. It now appears that $625,000 will be sufficient to defray the expenses of the emergency activities in fiscal year 1943. If it should be possible to expand operations rapidly, then the expenditures in the next few months may be greater than are anticipated and the total cost may exceed $625,000. On the other hand, if the shipping situation should change materially or operations should be delayed or other reasons, then the actual administrative expenses for the current fiscal year will probably be less than the estimated amount.

The CHAIRMAN. Thank you, Mr. Hutson.

TUESDAY, SEPTEMBER 22, 1942.

DEPARTMENT OF COMMERCE

EXPORT-IMPORT BANK OF WASHINGTON

STATEMENT OF WARREN LEE PIERSON, PRESIDENT, ACCOMPANIED BY DAVID B. GRIFFIN, ASSISTANT TREASURER, AND HAWTHORNE AREY, SECRETARY

ADMINISTRATION EXPENSES, 1943

The CHAIRMAN. There is pending an estimate in House Document No. 856 of $60,000 for an additional amount for administrative expenses of the Export-Import Bank of Washington, fiscal year 1943.

I will say to the committee that this estimate has not yet been received by the House, but Mr. Pierson is leaving town on business and, in view of the fact that he is leaving, we thought it best to have the benefit of the information that he can give us at this time. Therefore, we are having this hearing a little bit in advance of the formal reception of the estimate.

Mr. Pierson, will you give us a general statement of your situation down there?

GENERAL STATEMENT: ADMINISTRATIVE EXPENSES

Mr. PIERSON. Mr. Chairman, I assume that what appears in this mimeographed statement will become a part of your record.

The CHAIRMAN. Yes.

Mr. PIERSON. The Export-Import Bank of Washington meets all of its administrative expenses out of earnings and, accordingly, this is a justification of a request for a supplemental allocation of its own funds rather than for a supplemental appropriation.

For the fiscal year ending June 30, 1943, the bank requested an allocation for administrative expenses in the amount of $270,500. The request was based upon estimates prepared during November and the early part of December of 1941. The Congress authorized the expenditure by the bank during the fiscal year ending June 30, 1943, of only $200,000. Increased activity of the bank as a result of demands on its facilities since Pearl Harbor and the Pan-American Conference at Rio de Janeiro in January 1942 necessitates an additional allocation for administrative purposes in the interest of adequate execution of the present program.

Since January 1942, the bank has authorized 38 new loans aggregating $347,498,812.07. In order to meet the many new problems which the war has created in this hemisphere and in order to justify the support which we are seeking from the countries of Latin America, recently approved projects must be carried out expeditiously and with extreme care. In addition to the new projects, many of those authorized during the past few years such as the Brazilian Steel Plant and the Inter-American Highway south to the Panama Canal have assumed increased importance.

The Brazilian Steel Plant, upon completion, will be able to turn out steel rail, ship plate, and many other vital types of manufactured steel to relieve in part Brazil's demand upon the mills and shipping facilities of the United States. With respect to the Brazilian Steel Plant, the bank has opened letters of credit and made individual commitments to the extent of $25,000,000, such letters of credit and commitments to require the bank to effect between 4,000 and 5,000 disbursements during the next year.

Financing by the bank to develop the Itabira mines in Brazil and to rehabilitate transportation systems for the delivery of many strategic materials will require the supervision of and disbursements in connection with orders placed in this country numbering many thousands.

It will be recognized that purchases for export cannot be effected as in peacetime trade and that manufacturers and suppliers are now justified in requesting letters of credit or immediate payment against documents. Such a situation, however, increases the administrative problems of the bank. In this respect it may be well to point out again that the authorization of a commitment by the bank is not

followed by a single transfer of funds, but that, in order to assure the utilization of the funds in accordance with the terms of the loan, disbursements are made from time to time only as required to make appropriate payments or reimbursement for proper expenditures.

In addition to the new loans above-referred to, there are 116 credits previously authorized, very few of which have been disbursed in full. Accordingly, there are now on the books of the bank 153 active loans and commitments totaling $621,835,823.11 which require constant attention, including numerous conferences and negotiations and the preparation of contracts and other legal documents, and there is one contingent commitment in the amount of $86,000,000 in favor of the Republic of Brazil for such projects as may be agreed upon between Brazil and the bank provided that at such time funds are available within the limitations placed by law upon the lending authority of the bank. In view of the fact that no two loans are of the same nature the work cannot be standardized to any appreciable extent.

The present volume of business of the bank is indicated by the net earnings during the fiscal year ending June 30, 1942, which amounted to $7,671,579.60. Earnings for the first 2 months of the present fiscal year were $1,179,069.27.

The estimates attached indicate the increases which will be required because of the greater volume of business as compared with former years.

Disbursements for administrative expenses for the fiscal year ending June 30, 1943, symbol, account No. 93-269-total by months

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! Does not include obligations incurred but unpaid of $5,993.18 for July and $5,558.29 for August.

Statement of salaries for fiscal years 1941, 1942, and 1943 (2 months), actual and

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The following tables set forth the aggregate of transactions actually handled during the fiscal year 1942 and estimates for the fiscal years 1943 and 1944. The estimates for 1943 and 1944 are necessarily tentative and are subject to revision.

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