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Mr. SANFORD. You might, but you might not. We do not know. That will depend on the relationship between the support price and the international wheat agreement price. I would think if the Congress feels it is necessary to give a blanket import control on wheat that should be studied by the Senate Committee on Agriculture and considered on its own merits. I do not think it has anything to do with the international wheat agreement, and I think the authority exists already. I do not know why it would be needed again. Senator YouNG. Mr. Chairman, I think afterward we might call the Commodity Credit Corporation back to explain that. Mr. SANFord. Well, it is not a vital point as far as we are concerned. I am simply pointing out that we should not throw everything but the kitchen sink into the regulation just to save the trouble of thinking what you really need in it. As I say, I do not think it is of importance because you already have it in connection with the price-support program. At all other times it will be in the interest of United States wheat producers to stimulate wheat exports by removing impediments to a free export trade. Except under scarcity conditions and high world prices, therefore, we believe the only statutory control necessary to implement the wheat agreement is the statutory authority to pay a subsidy and a | statutory requirement to report sales. We recommend, therefore, that section 3 (a) be amended to read: The President is hereby further authorized to prohibit or restrict the exportation of wheat or wheat flour whenever and to the extent that it is determined and declared by the Secretary of Agriculture that such prohibition or restriction is necessary to maintain supplies of wheat in the United States sufficient to meet all domestic requirements, to meet obligations to supply occupied areas, and to carry out the United States quota obligations of the International Wheat Agreement. The President is further authorized to issue such rules or regulations as may be necessary in his judgment in the implementation of the International Wheat Agreement. Senator Johnson. That is in case of a scarcity of wheat in the |United States? Mr. SANFord. That is the only circumstance I can think of under which our hope would not rather be to maximize exports rather than to put on any controls or limitations on them. When wheat is surplus and in abundance, I think it is in the interest of the United States farmer to remove all of the restrictions we can. Senator YouNG. I would agree with you. I think the grain trade might find new markets that, say, the Commodity Credit Corporation could not. Mr. SANFORD. Well, I have a section on that later, Senator Young. Senator YouNG. May I ask you this question? You are in the grain business. Supposing the Army contracted with you to buy 5,000,000 bushels of rye. Do you suppose you could find it? Mr. SANFORD. I can find it in Canada. Senator YouNG. In the United States? Mr. SANFORD. Well, Senator, you have raised a tough question on that one. You will say, of course, “Why do they not raise their price to the point that would bring out the rye?” because you and I know that rye is at a very low price as compared to wheat. The relationship is cockeyed.
Unfortunately there is no power that I am aware of to restrict the imports of rye into the United States as there is in the case of wheat, so the Secretary of Agriculture has been caught in this unhappy position that if he puts the price of rye up high enough to buy rye in the United States, Canada moves in on it, the umbrella collapses and down comes the Canadian rye. That is illustrated by the fact that during the last year we exported 4,500,000 bushels of rye, and the imports were 6,900,000. My figures may be a little off. Senator YouNG. I would not see any objection to buying Canadian ği in the United States if we buy it in Canada with United States dollars. Mr. SANFORD. Well, if you persuade the Secretary of Agriculture to take rye off of the surplus list, then probably ECA would be very happy to buy it. I think there is no authority for offshore procurement of rye. Senator Johnston. You did not mean to say that the ECA does. not want to buy anything that is surplus? Mr. SANFORD. ECA is not allowed to under the Economic Cooperation Act under section 112 (d). Senator YouNG. They are not allowed to buy unless there is surplus. Mr. SANFord. No; if there is surplus, they are not allowed to buy offshore from countries other than the United States. Senator YouNG. They can get around that. They did it the other day, around $175,000,000 worth. r. SANFORD. This rye thing is rather interesting, Senator, and I know you are interested in it. Perhaps the answer would have been to clean up that little dab of Canadian rye. After all, there are 10 or 15 million bushels, and for the Germans to have rye is really a great bargain for them. Up to a certain percentage they would rather have rye than wheat. Let them have it and perhaps head off some of the Polish rye that comes flooding in there anyway. Senator Johnston. Do you think if the Government starts messing with rye and just let the countries buy what they wanted to buy, do you not think they would buy the rye right now? Senator YouNg. That is what I was getting at a while ago. I think sometimes limiting just the Commodity Credit Corporation in the export field limits the exports. I believe these grain trade boys sometimes may be able to find a market that the Commodity Credit Corporation cannot. Mr. SANFORD. The Commodity Credit has trouble finding a market for rye at the going price because they have a standing order from the Army to buy rye all winter, and they have bought a halfmillion bushels in the last week or so, but your complaint on this rye situation is not whether Commodity Credit bought it or not; it is the price. You do not like to see rye at 50 or 60 percent of parity. Well, parity is way low on rye, too. In the eyes of the Germans, rye, if we have to buy it, the price is as much as wheat, or close to it. We do not let them have it, so what happens? We sell some corn to Germany and Poland sells some rye to England, and they make a swap, which is beneficial to both of them. The British get corn that they want, and the Germans get rye that they want, but we are unhappy because we have got a dab of rye here. Of course, it is really a tempest in a teapot in a way, except to the individual farmer who happens to grow rye. Senator YoUNG. Well, that is enough, is it not? Mr. SANFORD. Well, he switches. He already has switched. You have not got any rye problem for next year because they are not raising anything to amount to anything. Senator YouNG. Well, the farmers are required to reduce their wheat acreage. The support price of flax has gone down to 60 percent, and you cannot afford to raise it at that price. Farmers must reduce corn acreage. They could well shift to rye if purchases were made and the price would be reasonable. Mr. SANFORD. Maybe we had better switch this hearing to the price-support program. Senator YoUNG. It all came about because of the export market business. - Mr. SANFORD. Section 3 (b): As this section now stands it would grant unlimited investigatory authority to the executive branch which authority might be exercised either with or without reference to transactions under the international wheat agreement. Again it is difficult to see why “importers” should be subject to this authority. In the past, when wheat or wheat flour exports have moved under Government subsidy, exporters have agreed that if subsidies were paid, the Secretary of Agriculture would have access, during the usual hours of business, to books and records for the purpose of verifying reports and documents submitted to the Government in connection with such subsidized transactions. As an alternative to providing this authority by regulation, we have no objection to the present language if amended in line 3, page 4, to insert after the words “are relevant” the words “to transactions eligible for recording under the International Wheat Agreement.” I might read that sentence: For the purposes of ascertaining the correctness of any report made or record kept or of obtaining information required to be furnished in any report, but not so furnished, the President is hereby authorized to examine such books, papers,
records, accounts, correspondence, contracts, documents and memorandum as he has reason to believe are relevant—
and to that I wanted to add—
are relevant to transactions eligible for recording under the International Wheat Agreement—
and it continues—
Section 3 (c) would make it a misdemeanor, punishable by a $1,000 fine, if reports were not made or records not kept. The inclusion in S. 2383 of this provision does not appear unwarranted.
Section 3 (d), however, contains a forfeiture provision equal to three times the value of wheat or wheat flour “knowingly” exported in excess of the quantity permitted to be exported under Presidential regulation. In our opinion this provision is too harsh and probably is more severe than intended.
A cargo of wheat is worth about $700,000. We admit that our international obligations under the wheat agreement should be met. We doubt, however, if to meet them it is necessary to have available a sanction that may mean a penalty of over $2,000,000 if a single violation of a regulation is found. Grain exporting is not big business. Few exporters have that much liquid capital. The presence of such a sanction would, we believe, discourage the private exporting of American wheat. It seems that the reporting requirements and necessity to get approval of transactions in order to qualify for subsidy payments provide all the protection and penalties that are needed.
This conclusion is strengthened by the language of section 3 (e) where it is provided that—
the remedies, fines, and forfeitures provided in this Act shall be in addition to, and not exclusive of, any remedies, fines, and forfeitures under existing law.
|Under that language, violations of the law would be punishable as a crime against the Government and subject to whatever penalties those crimes warranted. General criminal statutes would be available to punish irregular, illegal, or improper activity. We respectfully urge, therefore, that section 3(d) be stricken.
III. PROMOTION OF EXPORT SALES
In the report of the hearings before the subcommittee of the Senate Committee on Foreign Relations last May, there is a discussion on pages 40, 41, and 42 between the chairman, Senator Elbert D. Thomas of Utah, and Secretary of Agriculture Brannan, as to whether or not this treaty “puts the United States in a position as a governmenttrading country.”
Secretary Brannan assured the committee that it did not, saying at one point that if wheat— can move through private channels and through the private trade groups, then
every encouragement is given by our Government to see that it is moved in that fashion.
This is qualified later by his explanation:
I do want to make this point, that because of the volumes of wheat which it has been necessary to move in world trade, the Government of the United States has been taking a major role in moving the wheat out of the country and getting it to the importing countries. . On the strength of Mr. Brannan's testimony, the following appears in the report of Senator Thomas to the Senate, Executive Report No. 7, Eighty-first Congress, first session:
17. OPPORTUNITY FOR PRIVATE TRADE
Although the parties to the agreement are governments, article III provides that the guaranteed quantities may be supplied through private trade channels. This provision is new and is interpreted by the interested departments as an encouragement to private enterprise. The committee was told by Government witnesses at its hearings that the agreement will be administered in the United States in such a way that it will not result in competition between the private trade and the Government.
As stated in Secretary Brannan's testimony, the Government, through the Commodity Credit Corporation, has been taking the major role in exporting wheat. Private exports of wheat, as grain, are permitted only to the Western Hemisphere, and they amount to less than 5 percent of the total.
Due to problems of transportation, storage, and handling of such a large volume, private exporting of grain was ordered discontinued last November, before it had really begun. While we did not agree then with the imperative need for Government handling, we do not deny that there were and will be difficulties whenever the movement is so great. Meeting these difficulties is our business, and has been our commonplace exercise as a routine matter. When done inefficiently, we have paid for our mistakes. If they were too frequent, we did not last long as exporters. Nevertheless, even after the First World War, when the grain-export movement was larger than now and handling facilities were less, the job got itself done without commotion or public expense. It was accomplished by the traditional American mechanism of each firm managing its own business as skillfully as possible. Although unconvinced, therefore, of the need for government handling as ordered last, November, we did not protest it. We have cooperated as capably as possible in executing the huge shipping program. We promise to continue doing so in the future, in the belief that when a procedure is adopted we have an obligation to help make it work. Secretary Brannan has been consistent with his testimony before the Thomas subcommittee in drafting the following portion of S. 2383, section 2, page 2, line 18: Nothing contained herein shall limit the duty of the Commodity Credit Corporation to the maximum extent consistent with the fulfillment of the Corporation's purposes and the effective and efficient conduct of its business to utilize the usual
and customary channels, facilities, and arrangements of trade and commerce in making available or causing to be made available wheat and wheat flour here
under. This contains the usual language “to the maximum extent, and so forth,” permitting administrative discretion in applying this clause. In this respect it follows the pattern of similar clauses in the export control law, the Economic Cooperation Administration Act, and in the Commodity Credit Corporation Charter itself. While we feel that such latitude weakens the provisions so that frequently it is meaningless, we do not deny the need for authority to cope with emergencies. A recent example is ECA Administrator Hoffman's decision to finance part of the Canadian wheat, contracted with Britain. Secretary Brannan has given further evidence of the sincerity of his testimony, in directing the return of coarse-grain exporting to private firms when sales of corn, oats, barley, and grain sorghums began to lag during recent spring months. As to wheat exports, there is evidence that the time is at hand, or is approaching, when the present policy of Government selling for export should be reviewed. The problem is translating itself from one of handling the volume, into one of getting a volume to handle. This is illustrated by the following figures:
33, 821,000 45,356,000 25, 220,000 30,066,000