human hunger. Both types of programs seek the enhancement of agricultural income. Both serve important immediate objectives in the improved market conditions they bring about.

The A. A. A. purchase programs are carried on by the Federal Surplus Commodities Corporation. By filling relief needs with farm surpluses, they have endeavored to effect a simple and direct approach to two vexing national problems. The approach is necessarily limited in scope and offers no final solution to either the surplus or the relief problem, but it has the advantage of attacking both problems with one simple answer.

The diversion programs have played a similar dual role by developing new outlets for excess commodities while at the same time improving grades and standards for the quantities shipped to the customary outlets.

OPERATIONS OF THE FEDERAL SURPLUS COMMODITIES

CORPORATION

The Federal Surplus Commodities Corporation was chartered as a nonprofit membership corporation under the laws of Delaware, October 4, 1933, as the Federal Surplus Relief Corporation. On November 18, 1935, the name was changed to its present form and the Corporation was placed under the direction of the Department of Agriculture.

From November 18, 1935, to May 6, 1938, the Corporation spent approximately $57,950,000 on purchase programs in connection with surplus agricultural products. Through these purchase programs it diverted about 56,400 carloads of such products from the normal channels of trade, and distributed 2,135,000,000 pounds of foodstuffs to persons who otherwise would not have been able to obtain them.

Before it was placed under the direction of the Department of Agriculture, the Corporation had been concerned with meeting relief needs, and only more or less incidentally with the farm end of the dual problem. Its first grants of funds were made under the law creating the Federal Emergency Relief Administration, May 12, 1933. It also distributed farm products acquired by the Secretary of Agriculture through the Agricultural Adjustment Administration and donated to the Corporation for its use. The Jones-Connally Cattle Act, approved April 7, 1934, authorized the appropriation of funds to enable the making of advances to the Federal Surplus Relief Corporation for the purchase of dairy and beef products for distribution and relief purposes.

Section 32 of Public, No. 320, 74th Congress, which also contained the amendments of 1935 to the Agricultural Adjustment Act, appropriated funds for each fiscal year equal to 30 percent of the customs receipts to the Secretary of Agriculture. Included among the purposes for which such funds might be used was the encouragement of domestic consumption of agricultural commodities or products by diverting them from the normal channels of trade. The Federal Surplus Commodities Corporation became one of the means by which surplus agricultural products could be purchased and donated to States for distribution to needy persons on relief.

Later amendments permitted the purchase of commodities, for the purposes enumerated in section 32, without requiring competitive

bids on goods bought by Government. These amendments also simplified the procedure of approving purchase programs, and authorized the allocation of funds to the Corporation so that it might make purchases direct instead of confining its activities to the relief distribution of commodities purchased through the Agricultural Adjustment Administration.

When the Corporation was placed under the direction of the Department of Agriculture in November 1935, a change in policy resulted. The objective of Corporation activities became to develop programs that would help agricultural groups faced with long-time or temporary surpluses, as well as to assist people on relief. The operation now had two important objectives. For agriculture, the purpose was to protect or increase farm income by removing burdensome surpluses of agricultural products from the regular market channels. For people on relief, the purpose was to give these commodities to persons who would otherwise go without, and thus encourage maximum utilization of the crop.

Since November 1935, about 79 percent of all expenditures were authorized under section 32 provisions. About 9 percent were authorized under the Jones-Connally Act (Public, No. 142, 74th Cong.); 7 percent were made from Federal Surplus Commodities Corporation funds; 5 percent from State funds. As used here, Corporation funds are residual balances from the financing of the activities of the Federal Surplus Relief Corporation by the Federal Emergency Relief Administration. State funds are the proceeeds of the sale of commodities acquired during the drought programs of 1934 which were not suitable for relief distribution (principally wool and hides), and the funds currently derived from sales of containers which are in excess of requirements for maintaining intrastate distribution.

Table 7 shows the sources of funds and the distribution of their expenditure from November 18, 1935, to May 6, 1938.

TABLE 7.-Distribution of expenditure for current programs by sources of funds, from Nov. 18, 1935, to May 6, 1938

Tables 8, 9, and 10 show the commodities purchased, by expenditures and by quantities, for each of the three fiscal periods into which the history of the Corporation has been divided.

In the 72 months ended June 30, 1936, among the 22 commodities purchased the principal one was wheat, of which 3,000,000 bushels were purchased at a cost to the Corporation, including

transportation, of approximately $3,730,000. Raw cotton was second with purchases of about 50,000 bales at a total cost of $2,800,000. The third item in importance was fresh apples, of which 2,648,000 bushels were purchased at a cost of approximately $2,058,000. Prunes were fourth with purchases of 28,600,000 pounds at a cost of about $1,339,000. Butter was fifth with purchases totaling 2,951,000 pounds at a cost of $853,000. Other important commodities were cotton ticking, evaporated milk, cotton mats, cotton fabric, dried beans and peas, and onions.

TABLE 8.-Federal Surplus Commodities Corporation expenditures, by commodities, Nov. 18, 1935, through June 30, 1936

TABLE 9.-Federal Surplus Commodities Corporation expenditures, by commodities, July 1, 1936, through June 30, 1937

TABLE 9.-Federal Surplus Commodities Corporation expenditures, by commodities, July 1, 1936, through June 30, 1937—Continued

TABLE 10.-Federal Surplus Commodities Corporation expenditures, by commodities, July 1, 1937, to May 6, 1938

In the fiscal year ended June 30, 1937, purchases of 39 different commodities were made. Prunes were at the top of the list with an expenditure of $2,270,000 for 42,939,000 pounds. Eggs were second with an expenditures of $2,137,000 for 288,000 cases. Dry skim milk was third with purchases of 25,190,000 pounds at a commodity expenditure of $1,843,000. Other important commodities included grapefruit and grapefruit juice, evaporated milk, butter, frozen fish, white potatoes, dried peaches, fresh pears, and a miscellaneous list of other fruits and vegetables.

Between July 1, 1937, and May 6, 1938, 31 different commodities were purchased. Apples were the most important item. Expenditures, excluding costs of transportation, totaled $4,573,000 for fresh and dried apples, equivalent to a total of 8,013,000 bushels in the fresh form. Potatoes were second with purchases of about 4,300,000 bushels. Butter was third with commodity expenditures of $2,598,000 for 9,202,000 pounds. About 1,700,000 boxes of oranges were purchased at a cost of $2,300,000. Prunes were fifth with a total expenditure of $2,206,000 for 45,106,000 pounds. Rice purchases were sixth in importance, accounting for 72,630,000 pounds at a cost of $2,006,000. Eggs were seventh, with purchases of 270,164 cases at a cost of $1,725,000. Other important commodities were dried beans, canned peas, cottonseed oil, milk in both fluid and dry skim forms, fresh pears, dried apricots, and grapes. Purchases of each of these commodities involved commodity expenditure of more than $200,000, ranging upward to $1,600,000.

The purchases have not been a large part of the total supplies marketed. In most instances they have been from 1 to 5 percent of the total quantities available. They have been made when supplies were at or near record levels and grower returns were, or threatened to be, relatively low.

The Federal Surplus Commodities Corporation does not distribute the products it purchases directly to persons on relief, but makes them available to State welfare agencies which carry out the distribution under the supervision of the Corporation. The principal basis for the distribution of these commodities is the number of persons eligible for relief in the State concerned. Perishability of the commodities, transportation costs, and the desire to encourage new consumption of various products are other factors taken into account in the determination of the distribution.

From November 18, 1935, through June 30, 1936, a total of 591,000,000 pounds of foodstuffs was distributed, with a commercial value of approximately $41,000,000. In the fiscal year ended June 30, 1937, the total was approximately 555,000,000 pounds with a retail value of about $38,000,000. From July 1, 1937, to May 6, 1938, the volume of foodstuffs distributed increased to about 989,000,000 pounds, with a commercial value of about $67,300,000.

Purchase methods and price policy. Since November 1935, a number of purchasing methods have been employed by the Corporation. For some commodities, especially processed commodities, the practice of calling for formal bids has been used. Under this arrangement offers are advertised, bids are submitted by those interested, the bids are then opened publicly, and awards are made to the lowest