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raise it. Apparently something is in the way of a decent rye price, and greater production of rye. It would alleviate some of the wheat acreage. It is something I cannot understand.
Senator HOLLAND. Is there no difference in the storage possibilities?
Senator Young. No, it is exactly the same thing. I have taken up too much time on rye here, but I think it does have a relationship to wheat because it is a bread food and it is costing the Commodity Credit Corporation money to support it. Rye acreage can be substituted for wheat acreage.
Senator JOHNSTON. Proceed, Doctor.
Dr. FITZGERALD. Mr. Chairman, there is one other matter I should like to raise. I regret to say I was a little late getting to your hearing this afternoon, so I do not know whether it came up or not, and that was the desirability of making such action as the Congress may take retroactive to August 1.
The wheat agreement went into effect on August 1, and it is now September 21. During that interim period, so far as the ECA participating countries are concerned who have used ECA funds for the purchase of either wheat or wheat flour, with ECA dollars, they have had to both pay at the market rate and also to deposit counterpart fund at the higher wheat cost.
Now, we are obviously and naturally desirous of the committee and the Congress considering favorably the administration bill which was introduced by Mr. Thomas, but whether or not that bill or some other variation of it is passed by the Congress, it is in our opinion highly desirable that it be made retroactive so that the countries who did ratify the wheat agreement may get such benefits as do accrue to them, starting August 1 rather than at some later date. I believe, I may say that there is a suggestion coming up on the language on that, Mr. Trigg.
Mr. TRIGG. There is. So far as the Department of Agriculture is concerned, they are in agreement with that position, that whatever bill is passed by the Congress, that it be made retroactive to August 1.
Senator Young. Have you prepared language to that effect?
Mr. Trigg. It has been in the process of being cleared by the Bureau of the Budget, and I was advised by telephone just before coming here that it meets the President's program and it can be submitted, and it is being prepared or will be prepared and submitted, Senator Young.
Dr. FITZGERALD. That is all the comment I had, Senator Johnston. I am at your service for questions.
Senator JOHNSTON. Any questions?
Senator HOLLAND. In other words, if I understand the need for that amendment, that part of the 7,000,000 bushels that has been authorized and bought since August 1, should be put in the same position as if they had been bought after the passage of this proposed bill which carries out the provisions of the international wheat agreement.
Dr. FITZGERALD. Yes, sir.
Senator JOHNSTON. We will hear next from Mr. Parel of the American Farm Bureau Federation.
STATEMENT OF DON PAREL, ASSOCIATE DIRECTOR OF THE
WASHINGTON OFFICE, AMERICAN FARM BUREAU FEDERATION, WASHINGTON, D. C.
Mr. PAREL. My name is Don Parel. I am associate director of the Washington office of the American Farm Bureau Federation.
By way of summary of my statement, Senator, it says in effect that the American Farm Bureau Federation asks that obligations accruing under the wheat agreement be handled as a separate appropriation, that the expenditures not be charged to the Commodity Credit Corporation or run through its books to show a loss to the Corporation, or that it be charged to ECA. We would like to have the wheat agreement stand on its own, and any losses be charged to the operation of the wheat agreement and met by a separate appropriation.
That, Senator, is in substance the position of the Farm Bureau.
Senator Young. I think that is a good sound approach, but if you had to depend on appropriations, that would hold up exports for this year, would it not?
Mr. PAREL. I was thinking of that, Senator. It might be handled in this manner; that it be charged to the Commodity Credit Corporation for this year, that the following years there be a separate appropriation and that the first year be carried on its books so that the Corporation is made whole rather than showing a loss for 1 year that it might be carried by the corporation. I do not know
Senator Young. That is better than charging it to the Commodity Credit Corporation.
Senator HOLLAND. Well, I certainly think well of the suggestion that it be carried as a separate fund and not charged to the Commodity Credit Corporation, but I want it to be very clear in this record before we get through with the record and close it, that the Appropriations Committee in the hearings had this specific thing before it, and it did permit ECA to have advantage of the international wheat price, and thereby provided for reduction of the ECA appropriation bill by that amount, whatever it was, It looks like here it would be about $60,000,000.
Senator Young. That is right.
Senator HOLLAND. And I think attention somewhere should be clearly called to that, because that would not have been a real reduction of the ECA budget, but instead just a shifting of that part of the budget to another department of the Government, and I am not clear in the matter as to just what has happened.
Senator Young's statement was the clearest thing on the whole picture, and certainly he understands that that was done, but I think in order to have the thing crystal-clear for the benefit of the Senate when this report comes in, we should have in the record here a specific showing as to how much reduction of the ECA budget was represented by this particular feature, and just how it was handled.
(There was discussion off the record.)
Senator Young. On the record again, Dr. FitzGerald, could you answer that? There was this exchange of letters between Mr. Hoffman and Secretary Brannan. Do you recall whether Secretary Brannan had agreed to absorb the losses?
Senator HOLLAND. My point is this. The Appropriations Committee, as I understood it, and I was conferring with them from time to time while they had the ECA appropriation before it, was to make a very real effort to cut the amount of the ECA budget and the ECA appropriations.
Unless they meant it so, I think they would feel that they had not created any very real cut as to this $60,000,000 if they simply reduced the amount of the ECA appropriation bill by that amount, but had passed on to another Government corporation the obligation of meeting that same amount of the expense of acquisition of wheat for ECA countries.
Senator Young. That is correct, Dr. FitzGerald, that Secretary Brannan did agree to absorb it?
Dr. FITZGERALD. Yes.
Senator HOLLAND. You see, I think we must have a clear showing in the record, if there is about $60,000,000 involved here, whether or not it has actually been a saving in the ECA budget or whether or not it has just been passed on to another Government department where it would not appear in the appropriations.
Senator YOUNG. According to the testimony of Mr. Hoffman before the Appropriations Committee, they did reduce their budget by either 60 or 80 million dollars. Am I correct in that, Dr. FitzGerald?
Dr. FitzGERALD. Yes, sir; you are, Senator.
In that connection, Senator Holland, Senator Thomas of Utah, in discussing the international wheat agreement itself before the Senate, said:
As you know, the maximum in the agreement is 180 on the basis of that figure, and wheat prices as of March 1, 1949, are now estimated at the cost for subsidy purposes, will be about $64,000,000 for the 1949 market year. If we recall that the wheat trade operates under price-support program, the subsidy here in question becomes relatively small. As a matter of fact, it is expected that a large part of the subsidy will be returned to the United States Treasury due to savings by ECA in its purchases of wheat. ECA estimates that if it could buy wheat at $1.80 a bushel under the agreement, it could save $60,000,000 of its estimated cost for the coming year and its appropriation for the coming year has been cut to that extent.
Senator HOLLAND. Was its appropriation cut?
Dr. FITZGERALD. Yes, sir; it was. It was cut more than that, as a matter of fact, Senator.
Senator HOLLAND. I mean as to this particular item. Was that cut off?
Dr. FitzGERALD. Yes, it was cut off in this way. It was reduced specifically by the House Appropriations Subcommittee. Then the House full committee and the House made it a flat 10-percent cut in the ECA appropriation.
When we came before the Senate Appropriations Committee, Mr. Hoffman placed before the Senator a request for $4,015,000,000, which represented a reduction from the request he had made to the House. That reduction included the three items that I mentioned earlier in my testimony, one of the three being the $60,000,000 expense saving on wheat.
(The information filed by Dr. FitzGerald is as follows:)
LEGISLATIVE HISTORY OF ECA APPROPRIATION FOR THE FISCAL YEAR 1950
DEMONSTRATING REDUCTION OF $60,000,000 TO REFLECT SAVINGS Possible UNDER INTERNATIONAL WHEAT AGREEMENT
1. The legislative history of the foreign-aid appropriation bill, 1950 (H. R. 4830), demonstrates that the ECA appropriation for the fiscal year 1950 was specifically cut by $60,000,000 to reflect savings in connection with financing of wheat purchases by ERP countries which would be possible under the international wheat agreement. The $60,000,000 cut, which was initially recommended by the Subcommittee on Foreign Aid of the House Committee on Appropriations at the outset of congressional consideration of the ECA appropriation, was intended to reflect the saving ECA would obtain by being able to acquire wheat at the agreement price of $1.80 per bushel. It was estimated that the international wheat agreement would require the payment of a subsidy of $84,000,000, of which $60,000,000 would represent the payment in connection with ECA-financed shipments of wheat. In return for the cut of $60,000,000 in the ECA appropriation for fiscal 1950, it was clearly understood that the $60,000,000 subsidy on ECAfinanced wheat would be borne by an agency other than ECA, namely, the Department of Agriculture.
2. The initial report on the foreign aid appropriation bill, 1950, made by the House Appropriation Committee subcommittee, which was later recalled by the full committee because of the committee's decision to make additional cuts in the ECA appropriation, should be referred to in order to fully understand the history of the $60,000,000 cut relating to the international wheat agreement. The House committee report flatly stated that in suggesting a reduction of the ECA appropriation to $4,015,000,000, it made, among other reductions, a reduction in an amount "of $60,000,000 based on the expected ratification of the international wheat agreement now being considered by the Senate.” The committee also pointed out that "in the event that prices do not decline to the extent suggested, and the international wheat agreement is not ratified as anticipated, and compensating savings cannot be found by the Administrator, the ECA is expected to reappear before the committee for such funds as may be needed to carry out the program presently contemplated.” The public nature of the recalled report is emphasized by the fact that it was extensively quoted in the newspapers in reporting the actions of the House Subcommittee on Foreign Assistance of the House Committee on Appropriations. See the dispatch by Felix Belair in the New York Times for Wednesday, May 25, 1949.
The pertinent portions of the recalled House subcommittee report are incorporated by reference at two places in the hearings before the Senate Appropriations Committee on the ECA appropriation. At page 653 in a letter to the chairman of the Senate Appropriations Committee, Representative John Taber, a member of the Subcommittee on Foreign Assistance of the House Appropriations Committee refers to the recalled report when he states,
These savings on wheat were only in part considered by the House committee but illustrated how one single item can affect this bill
Mr. Hoffman's letter to the chairman of the Senate Appropriations Committee, commenting on Representative Taber's letter, refers to the House subcommittee's report when he states, “The following table, prepared in the same form, reflects the actual cuts which can be made from the original ECA and GARIOA appropriation requests by virtue of the signing of the international wheat agreement. As you know, the House Appropriations Subcommittee allowed for this savings in its recommendation and it is, therefore, reflected in the appropriation for fiscal year 1949-50 of $4,015,000,000 approved by this subcommittee” (p. 881 of Senate Appropriation Committee hearings on foreign aid appropriation bill, 1950).
3. There is equally clear evidence in the hearings before the Senate Appropriations Committee that the figures submitted by ECA to the Senate committee, which were based on a spending rate of $4,015,000,000 for 12 months (the same rate adopted by the House subcommittee), already encompassed the cut of $60,000,000 reflecting anticipated savings under the international wheat agreement. Thus, in his opening statement before the Senate Appropriations Committee, Mr. Hoffman stated, “* In addition the House Appropriations Subcommittee, viewing favorably the prospects of Senate ratification of the inter
national wheat agreement in the near future, decided to allow for the lower export prices of wheat provided for in that agreement, which we calculated would make possible a further reduction of $60,000,000 in the ECA appropriation (p. 6 of Senate Appropriations Committee hearings on foreign-aid appropriation bill, 1950). Again, at page 681 of the Senate hearings, in response to a question posed by Senator Young, Mr. Hoffman stated: “* Actually, today, as you know, Senator, the wheat that we are selling in our program is being paid for at the rate of around $2.50. After August 1 the European nations will get much of it for about $1.80. The Department of Agriculture is supplying about $60,000,000 to cover the difference between the support price of wheat we have to buy and the guaranteed price under the wheat agreement.
4. In the Senate debates of June 13, 1949, on the ratification of the international wheat agreement, Senator Thomas of Utah, the Administration's proponent of the agreement, stated that ECA had received a cut of $60,000,000 in its appropriation for fiscal 1950 because it was to obtain wheat at the agreement price of $1.80 per bushel. In the portion of the debate quoted below it was clearly indicated that there would be a subsidy of $84,000,000 in connection with the wheat price of $1.80 per bushel, which subsidy would be borne by an agency other than ECA. “Mr. THOMAS of Utah.
As Senators know, the maximum in the agreement is $1.80, and on the basis of that figure and wheat prices as of March 1, 1949, it is now estimated that the cost for subsidy purposes will be about $84,000,000 for the 1949–50 market year.
If we recall that the wheat trade operates under a price-support program, the subsidy here in question becomes relatively small. As a matter of fact, it is expected that a large part of that subsidy will be returned to the United States Treasury due to savings by ECA in its purchases of wheat. ECA estimates that if it can buy wheat at $1.80 a bushel under the agreement, it can save $60,000,000 of its estimated cost for the coming year, and its appropriations for the current year have been cut to that extent. Thus, it would appear that the subsidy figures will be offset by savings of a substantial character *
"Mr. THYE. Did I understand the Senator correctly to say that the ECA requirements would be taken out of the 168,000,000 bushels provided for in the treaty?
"Mr. Thomas of Utah. They will make their savings because, so far as the ECA wheat goes to the countries which are parties to the agreement, buyers of our export wheat in accordance with the agreement, the ECA has promised to give them so much wheat, which we ourselves pay for, and they are able to buy it at the Government figure, $1.80, instead of at the market price of wheat as it is today, $2.25.” (Congressional Record, June 13, 1949, p. 7729.)
Mr. PAREL. That concludes my testimony, Senator.
(The document above referred to follows:) STATEMENT FILED BY Don PAREL, ASSOCIATE DIRECTOR, WASHINGTON OFFICE,
AMERICAN FARM BUREAU FEDERATION The American Farm Bureau Federation supported ratification of the international wheat agreement. We believe that the agreement provides a firm foundation for a continuing world trade in wheat, and that it provides the United States with a stabilized market for a large quantity of wheat that otherwise might become surplus. Consequently, we favor the enactment of legislation to make it possible for the United States to carry out its commitments under the agreement.
The two bills (S. 2287 by Senators Young and Russell, and S. 2383 by Senator Thomas) which have been introduced to implement the wheat agreement differ in one important respect on which we would like to make a recommendation. This difference has to do with the question of how losses, in the event they should occur, are to be accounted for, particularly during the period of ECA's operaton.
Section 2 of S. 2287 provides that transfers of wheat and wheat flour from the Commodity Credit Corporation to the Economic Cooperation Administration shall be made "at prices applicable by law to other transfers of wheat and wheat flour between such agencies” where the commodities transferred are to be granted