Mr. Anderson furnished a list of the firms which sold and repurchased butter and cheese under DA 112. This list, which is being attached to this memorandum as appendix B, indicates that a total of 5,195,112 pounds of butter was sold to CCC and then repurchased from CCC in April 1954. The amount paid to those companies which sold and then bought butter amounted to $281,042.08. This represented a differential between the support price for butter in March 1954 and the lower domestic sales price in effect in April 1954. Appendix B also indicates that 85,514,556 pounds of cheese were sold to CCC in March 1954 and repurchased from CCC in April 1954 pursuant to DA 112. The amount paid to the companies pursuant to DA 112 was $2,096,401.64. This represented the differential between the support price for cheese in March 1954 and the lower domestic sales price for cheese in effect in April 1954. Mr. George E. Cooper, Deputy Solicitor for CCC, advised that this matter was referred to the Department of Justice about September 1955. Mr. Cooper advised that as recently as 3 weeks ago he inquired of the Department of Justice as to the status of this matter and was advised at that time that no opinion had been rendered by the Department of Justice. American Community Stores, Topco Associates, Inc., 431 South Dearborn St., Chicago, Ill. American Stores Co., 424 North 19th St., Philadelphia, Pa. Armour & Co., Chicago, Ill.. C. J. Berst & Co., 312 Brady St., Portage, Wis. Bildner Bros., 163 Shaw Ave., Irvington, N.J. Blue Moon Foods, Inc., Thorp, Wis. Blue Mounds Cheese Mart, Mount Horeb, Wis. Bongards Co-op Creamery Association, Bongards, Minn.. The Borden Cheese Co., New York, NY.. Bruder Dairy Products Co., Cleveland, Ohio. Calumet Cheese Co., Inc., Hilbert, Wis. Casco Cheese Co., Casco, Wis. Central Cheese Co., Inc., Marshfield, Wis. H. C. Christians Co., Chicago, Ill. Clearfield Cheese Co., Inc., 116 East Oak St., Clinton, Mo.. 293, 180 Dairymen's League Cooperative Association, Inc., 100 Park Ave., New York, L. Daitch & Co., Inc., 3339 Park Ave., Bronx, N. Y De Kalb Creameries, Inc., 99 Hudson St., New York, N.Y. 35.495 C. M. Denisseu, 305 East Walnut St., Green Bay, Wis. 36.860 Denver Milk Producers, Inc., 945 11th St., Denver, Colo. 70.213 Dilbert Bros., Inc., Cooper Ave. and Dry Harbor Rd., Brooklyn, N.Y 19, 538 44,899 621.16 1.013. 65 1.930. S 341.91 785.73 S. M. Flickinger Co., Inc., 180 Niagara Food Terminal, Buffalo, N.Y. Fremont Packaging Co., Inc., Weyanwega, Wis.. The Frink Creamery Co., Unit 67, Wazee Market, Denver, Colo. Giant Food Shopping Center, Inc., 845 Bladensburg Rd., NE., Washington, Golden Rod Creamery Co., Inc., 20 North Wacker Dr., Chicago, Ill. APPENDIX B-Continued Total disbursements under announcement DA 112-Continued Contract Firm name and address Lake-to-Lake Dairy Co-op, 917A South 8th St., Manitowoc, Wis. Land O'Lakes Creameries, Plymouth, Wis.. Lily Lake Cheese Co., New York, N.Y. Loblaw, Inc., Buffalo, N. Y. McCadam Cheese Co., Inc., Ogdensburg, NY Milk House Cheese Corp., 1114 Wood St., Dallas, Tex. Modern Dairy Co-op, Sheboygan, Wis. National Biscuit Co., New York, N.Y. Northern Wisconsin Produce Co., Manitowoc, Wis. Outagamie Products Cooperative, Black Creek, Wis. P. & C. Family Foods, Inc., Syracuse, N.Y. Phenix Food Co., Chicago, Ill.. Pleasant View Cheese Factory, Appleton, Wis. Plymouth Cheese Corp., Green Bay, Wis. W. S. Pope & Sons, Philadelphia, Pa... Rib Lake Cheese Co., Medford, Wis.. Frank Ryser Co., Mayville, Wis. Schmitt Bros. & Waither Co., Platterville, Wis L. D. Schreiber & Co., Inc., 246 North Main Blvd., Green Bay, Wis. Sheboygan Falls Creamery Co., 837 Buffalo St., Sheboygan Falls, Wis. M. Wildstein & Sons, Delaware Ave, and Vine St., Philadelphia, Pa. Wilson & Co., Inc., 41st and South Ashland Ave., Chicago, Ill. Woody's Cheese Co., 200 North Broadway, Green Bay, Wis. Total, Cincinnati office.. PORTLAND COMMODITY OFFICE CHEESE Golden State Co., Ltd., 425 Battery St., San Francisco, Calif.. Tillamook County Creamery Association, Tillamook, Oreg. 4,527,603 79, 233. 13 Brooklawn Creamery Co., 262 South 1st West, Salt Lake City, Utah. Nelson Ricks Creamery Co., 314 North 3d South St., Salt Lake City, Utah. Kraft Foods Co., 2660 Newhall St., San Francisco, Calif. Challenge Cream & Butter Association, 2650 18th St., San Francisco, Calif.. Consolidated Dairy Products Co., 635 Elliott Ave. West, Seattle, Wash. APPENDIX B-Continued Total disbursements under announcement DA-112-Continued CINCINNATI COMMODITY OFFICE Cudahy Packing Co., Omaha, Nebr. Fort Worth Poultry & Egg Co., Inc., 715 East 9th St. (Post Office Box 1537), L. D. Schreiber & Co., Inc., 246 North Main Blvd., Green Bay, Wis S. & W. Waldbaum, Inc., 134 Reade St., New York, N.Y. Zenith-Godley Co., Inc., 176 Duane St., New York, N.Y. 39,400 282,840 68, 212 38,409 260, 720 141,065 3, 581. 13 1,920.45 13,087.69 7, 250. 11 Total, Cincinnati office... PORTLAND COMMODITY OFFICE BUTTER 3, 196, 422 161,580.39 Wilsey Bennett, 323 South Anderson St., Los Angeles, Calif.. Mr. LENNARTSON. That was Commodity Credit Corporation. Mr. WHITTEN. I know, but the Federal Government bought the cheese and butter, at support levels, as I recall it, and turned around and sold it back at a greatly reduced price to the same people who had it to start with and in the same warehouse, and these people made fortunes. Later this transaction proved to be illegal, and the Department of Justice filed suit to recover. Now here, if I understand it, at the instance of the processors or producers, you bought actual citrus juice, 340,000 cases. How much did that amount to in cash? Mr. SMITH. $1,800,000. Mr. WHITTEN. Did you accept delivery on any part of it? Mr. SMITH. Part of it, yes. About 19,000 gallons. Mr. WHITTEN. And the rest you took title to? Mr. SMITH. Yes, on the quantity delivered but not on the balance. Mr. WHITTEN. Title changed to you? Mr. SMITH. That is right on the quantity delivered. Mr. WHITTEN. Then after this citrus juice greatly increased in value, when the price had gone from $1.25 for 6-ounce cans, which the Government had in it, up to $2.30, you turned it back to the folks who formerly had it and let them make the extra $1.05, and the Government was out the cost of handling from the start. Is that about right, or wherein is it wrong? Mr. LENNARTSON. The Government had not taken title to the citrus juice except for the small number of cases that were delivered. CONTRACT PROVISIONS Mr. WHITTEN. Now, in your own words, what does the contract provide? Mr. SMITH. The contract provides for the quantity that is to be delivered, the price agreed, container, and specifies the delivery dates, and then there are certain standard provisions which become a part of that contract which among them are the escape clause, which gives the contractor some redress, depending upon the conditions that prevail at the time of scheduled delivery. Mr. WHITTEN. Who do you mean by "contractor"? Mr. SMITH. In this instance, I was referring to the seller. Mr. WHITTEN. It gives him what relief? Mr. SMITH. Relief in terms of delivering or not delivering, depending on what the conditions are as specified in this particular section of the contract. Mr. WHITTEN. What are those conditions? Mr. SMITH. Abnormal weather conditions affecting the availability of supplies, I think strikes are included, and one or two other conditions which don't come to mind, which are included in that general category of conditions beyond the control of the supplier-contractor. CONTRACT CANCELLATIONS Mr. WHITTEN. Here the supply was already on hand. Who contacted you with reference to setting this contract aside and who made the determination to set the contract aside? Was that your determination or at a higher level? Mr. SMITH. The contacts were made at a higher level. Mr. SMITH. After contact was made, a discussion was held in which I participated, and we undertook as a result of that discussion to explore whether it was feasible to release the parties who had entered into these contracts from delivering the orange juice. Mr. WHITTEN. At the time you considered that, were you aware of the change in value on the retail market? Mr. SMITH. This consideration, Mr. Chairman, I think took place either a day or two, something like that, right after the freeze, and the market for this product wasn't active, as I recall. I think the processors withdrew what price lists they had. Mr. WHITTEN. Were you aware it was bound to skyrocket? Mr. SMITH. I think it is fair to say, Mr. Chairman, that the supposition was that the price would increase, whether-how much it would go up, I can say no, honestly, we had no basis of determining; because at that stage we didn't know to what extent the supplies, as a result of the freeze would be reduced. Now, in that connection, it now appears that from a crop of 120 million boxes of oranges, they will have something like 80 million boxes available instead. At that stage there wasn't anyone that really knew how much below the 120 million boxes the crop would be reduced. Mr. WHITTEN. Do you have a legal opinion on that? From your general counsel? If so, could we have it? Mr. SMITH. They were consulted and there was a memorandum. drawn up on this, which they approved, Mr. Chairman. I don't think they have rendered a formal opinion on it. PREVIOUS CASES OF CONTRACT CANCELLATION Mr. WHITTEN. Has the Department ever done anything like this before, throughout your years in the Department? Mr. SMITH. There have been other instances, Mr. Chairman, where commodities that have been contracted for were released because of change in market conditions. Mr. WHITTEN. Could you cite those examples, provide them for the record in detail? Mr. SMITH. Yes, sir, we will provide them for the record. (The information requested follows:) FRESH APPLE PROGRAM, 1947-48 SEASON The market for fresh apples during the 1947-48 season was adversely affected by several factors. In general, conditions were disturbed due to the necessary adjustments of the postwar period following relaxation of many types of governmental controls over the Nation's food supply. The Northwest apple crop matured 2 to 3 weeks earlier than normal and heavy demand at the beginning of the season kept f.o.b. prices at a good level. Eastern apples were later than usual in maturing and, when they arrived on the market in volume, prices generally declined. The dull fresh market was also adversely affected by reduced demand from the processing sector of the industry who utilized 30 percent fewer apples in this outlet in 1947-48 than the previous season. The U.S. price for apples for fresh consumption averaged $2.19 per bushel in September of 1947 and declined steadily thereafter averaging $1.45 per bushel in January 1948 The purchase of fresh apples was approved in mid-February 1948 and contracts were awarded for a total of 1.240 cars to be delivered during the period March 9 to April 30, 1948. The commercial market continued to decline during this period. The U.S. average price for April reached a seasonal low of $1.17 |