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The difference is more striking if exports to the occupied zones are eliminated, as these do not involve selling and are more nearly
constant: Wheat exports, other than to bizone, French zone, and Japan [Bushels] July August 1948------------------------------------------------------------------------- 10,301,000 18, 738,000 1949------------------------------------------------------------------------- 5, 602,000 7,905,000
As stated in the beginning, delay in settling the subsidy question is partially responsible for this decrease. At the same time we have lost, and are losing regularly, other selling opportunities because there are no offers of United States wheat to foreign buyers on a competitive market price basis. Commercial firms in Europe handle the internal distribution of most grain, even in countries where purchases are by governments. In many countries these firms receive daily offers of Canadian, Argentine, Russian, Polish, and other wheats, but none from the United States. Similarly, exporting concerns can make firm offers of Canadian and other wheats to their selling agents abroad, but they are not permitted to offer United States wheat. In times of scarcity, when exporting wheat is a mere matter of accepting orders and making shipments, the present method may work well enough. It appears that it is not working well now, except to the occupied areas and to countries wholly dependent on ECA financing. As with radios, washing machines, and even automobiles, the days of order taking are over. We need salesmen abroad; but salesmen cannot operate if they cannot quote prices, or promise delivery of the qualities wanted at the time they are needed. We believe, too, that commercial exporting firms and their foreign branches can help inject life into the much-discussed plan for bartering farm products against strategic and other materials. Authority for such bartering was granted in the Commodity Credit Corporation charter about 6 months ago, but little progress has been made until now. In the meantime, our European and other foreign branches have been exceedingly busy with such trades. This is an old story abroad, and has become routine since the middle 1930's: 10% tons of north African barley for 5 tons of Dutch sugar; Danish malt for Brazilian coffee; Cuban sugar for Norwegian freights; and so on for a whole list of transactions. It should be pointed out, too, that hardly any of these trades are bilateral; nearly all involve three or more countries. Very often there remains one loose leg which cannot be firmed up immediately. The private trader has to take a chance and be long in that commodity, speculating that he can sell later at a profit, and such profits are never available in dollars. All of these intricacies lead to doubt about the ability of a Government agency to compete with these barterwise foreign traders. Assistant to the Secretary of Agriculture E. D. White, who is in charge of the Cotton and Fiber Branch of ECA, has recognized this and has invited the cooperation of cotton exporters in the project. We are attempting to formulate a group of proposals, and hope we may be able to contribute something to assist in the program.
We should dislike to leave the committee with the impression that this legislation to give effect to the international wheat agreement concerns only wheat and wheat-flour people. It is of general interest, because hope has been expressed that the wheat agreement will lead to many others—agreements for cotton, coarse grains, possibly tobacco and other farm products. If so, this implementing legislation will be a pattern; therefore, nearly every Member of Congress is directly concerned in behalf of his constituents. For these reasons, we respectfully ask the committee to give careful thought to the method of providing subsidies; to the prohibitions and restrictions upon exporting; to the penalties and extremely harsh forfeitures; and, above all, to the effect upon free trading between citizens of free nations. I should like to close by repeating the last few paragraphs of our statement of May 24, 1949, filed with the Senate Committee on Foreign Relations. Those paragraphs expressed our feelings at that time, and they are equally true of our sincere sentiments now: During the difficult world supply position following cessation of hostilities, importing nations were grateful for the method of procurement instituted at that time by Commodity Credit Corporation. It was generally recognized that this system was inevitable in the interests of movement maximization and distribution equity. Since, however, the supply position is moving toward surplus, would-be buyers feel the continuance of this method to be irksome. In the interests of United States agriculture, freer access to wheat on a daily market basis would attract buyers who now come to the United States only as a last resort, when they find they cannot buy elsewhere, or when they must have ECA financing. This has been particularly evident in the case of corn lately. Already we are beginning to lose some of the good will that is so valuable. Private importers often have no alternative than to work on grains from sources other than American. We believe all of us recognize the importance of reversing this position. We need foreign distributors pushing our farm products enthusiastically. Private exporters and government must team up in a job of real salesmanship. The wheat agreement obligations assumed by importing nations can be helpful. But our prices must not be frozen in a rigid subsidy formula. We must have subsidy arrangements operating through private exporters in a flexible and competitive manner. The results will far outweigh the technical obstacles discussed
earlier. It is our intention to join forces with farm groups and the Government to work
out an effective procedure. In this way it is hoped that we may maximize exports, take forward steps in freeing world trade, and so help to promote harmony among nations.
Senator Johnston. Any questions? Is there anything you wish
to add? Mr. SANFORD. No, I have said enough, Senator. Senator Johnson. We will adjourn at this time until 10 o'clock tomorrow morning. (Whereupon, at 4:35 p.m., the hearing was adjourned to reconvene on Thursday, September 22, 1949, at 10 a. m.)
INTERNATIONAL WHEAT AGREEMENT FUNDS
- THURSDAY, SEPTEMBER 22, 1949
UNITED STATEs SENATE,
The subcommittee met, pursuant to adjournment, at 10 a. m., in the committee room, United States Capitol, Senator Olin D. Johnston, presiding.
Present: Senators Johnston, Holland, and Young.
Also present: A. J. Borton, Office of Manager, Commodity Credit Corporation.
Senator JoHNSTON. We will begin the hearing.
Mr. Smith, you are first on our list this morning. Give the reporter your name and representation.
STATEMENT OF RUSSELL SMITH, LEGISLATIVE SECRETARY, NATIONAL FARMERS UNION, WASHINGTON, D. C.
Mr. SMITH. My name is Russell Smith, and I am legislative secretary of the National Farmers Union, located here in Washington. Senator JoHNSTON. How many members do you have? Mr. SMITH, Approximately 460,000. Senator JoHNSTON. Proceed. Mr. SMITH. While there are subsidiary questions involved in the legislation before the committee, it seems to us in the National Farmers Union that the principal question is one of speed in giving effect to the international wheat agreement already ratified soilo by the Senate. We should like, therefore, first to urge the committee to act as speedily as possible on this legislation and to express the hope that the House quickly will follow suit. The wheat agreement is of critical importance, not alone because of the promise it offers in helping to solve the difficult situation of that commodity, but also because it is in a sense a test case of an international commodity agreement. Moreover, failure of the Eightieth Congress to act on the agreement already has meant a year's delay and renegotiation of the instrument. Successful operation of the agreement is, of course, the earnest desire of every friend of American agriculture, and we earnestly hope that the attainment of that end will not be handicapped by any delay in the commencement of operation under it. Secondarily, the National Farmers Union endorses S. 2383 which we understand to be the measure also having the approval of the
Department of Agriculture. Its only difference from S. 2287 is in the provision of the latter for the Economic Cooperation Administration to pay the difference between prices at which wheat is sold under the agreement and prices at which wheat is transferred by ECA from this country to European countries participating in the European recovery program. We have consistently opposed restrictions upon the freedom of action of ECA. A recent example was our opposition to the McClellan amendment to the ECA appropriation bill, which would have required European countries to accept specified amounts of agricultural commodities. In taking this position, we joined with all of the other American farm organizations. In any event, such losses as may be sustained in the operation of the wheat agreement and the operation of a domestic price-support program ultimately will be sustained by the Treasury of the United States, and we can see no valid reason for relating the operation of the European recovery program to the mechanics of the international wheat agreement. Similarly, we do not regard it as of great consequence whether, if losses are sustained, they are made up by direct appropriation by Congress or whether they come from Commodity Credit Corporation funds. Such losses can be well regarded as part of the price for maintaining domestic support levels, since whatever wheat is exported under the wheat agreement will be taken out of surpluses and to that extent will lose its price depressant effect. Further, the regular accounting process of Commodity Credit Corporation would appear to be adequate to keep Congress and the public informed as to the funds expended in the operation of the wheat agreement. Thank you. Senator JoHNSTON. What do you think about setting up a separate fund so it will show what ECA is spending and what it is costing, and put it up in a separate fund instead of charging it in general against the CCC or against ECA funds? Mr. SMITH. You mean for this specific purpose? Senator Johnston. Yes. Let the ECA—let the world know they are spending this much more. That is what they are doing. Mr. SMITH. We would rather not do it that way, Senator. There are a number of things involved other than the one I have mentioned here. For one thing, the European recovery program is going to end, I think, in 1952. Senator Johnston. I hope so. h." SMITH. We all hope so. We hope it will be possible to end it then. or Johnston. I hope we can terminate it sooner than that, myself. Mr. SMITH. But the wheat agreement runs beyond that date, and we hope will be extended beyond the expiration date provided in the instrument now. Senator Johnston. The reason I make that statement, rather than to make special legislation and putting it on some other agency to pay for subsidies to ECA countries, I though it might be allowed to terminate with ECA. Mr. SMITH. We do not regard this as being in any sense an emergency machinery of the kind that ECA is. We regard it as essentially a part of a long-time surplus-disposal program for the United States in the world community. We are inclined to think it would not be wise to commingle the two kinds of things. Of course, this money has some relationship to both kinds of money, but we think it has more relationship to the domestic-support program actually than it has to ECA. Senator Johnston. And that is your reason? Mr. SMITH. Yes, sir. Senator Johnston. There is some logic to that. Mr. SMITH. That is the primary reason. Senator Johnston. Do you have anything else? Mr. SMITH. No, sir, that is all. Senator Johnston. We thank you for coming. Mr. SMITH. Thank you, Senator. Senator Johnston. We will have next the vice president of the Millers' National Federation, Mr. Herman Fakler.
STATEMENT OF HERMAN FAKLER, WICE PRESIDENT, MILLERS' NATIONAL FEDERATION, WASHINGTON, D. C.
Mr. FAKLER. Mr. Chairman, my name is Herman Fakler. I am vice president of the Millers' National Federation, which is the national association of the wheat flour milling industry of the United States. My address is National Press Building, Washington, D. C. I appear before you this morning in behalf of the Committee on Agriculture of our association, and by direction of the executive committee of the board of directors of the association, to express the views of our industry with respect to S. 2383, introduced by the chairman of your committee, Senator Thomas, entitled “A bill to give effect to the international wheat agreement.” As you are aware, the Government of the United States, together with the governments of 40 other nations, has negotiated and signed the international wheat agreement of 1949. The Senate of the United States has ratified the agreement, and it has also been ratified by a sufficient number of other nations so that by its own terms it became fully effective on August 1, 1949. However, as has been pointed out by witnesses who have preceded me, it is necessary for the Congress to enact legislation to give effect to the agreement so far as the United States is concerned, and to enable our Government to completely carry out the obligations it has undertaken. Although the agreement has been in effect since August 1, the United States has been able to export only very limited quantities of wheat and wheat flour to the countries which have ratified the agreement because of the absence of necessary legislative authority. In order to correct this situation and to enable us to export the quantities of wheat and wheat flour provided for in the agreement, it is our recommendation that the Congress enact the necessary legislation promptly. It is also our recommendation to the Congress and to the President that the United States Department of Agriculture be given full and complete authority to administer the several provisions of the proposed legislation. The Secretary of Agriculture has provided the leadership necessary to bring the agreement into being. The agreement deals