Detroit that for every dollar of food stamp subsidy, we got 95 cents increased food purchases. On a general basis the food sales, in these areas increased by 8 percent once the program got underway. We found that 80 percent of the increased purchases were going for what we hoped for, meats, dairy products, poultry products, fruits and vegetables. We found that the nutrition of the families who were participating increased materially. Whereas before they came into the program about 26 percent of them were meeting the minimum requirements of the National Research Council nutritional standards, once the program was underway, around 50 percent of them were purchasing food that would provide this minimum dietary level. I might say for the Nation as a whole, this only runs about 60 percent.

PROGRAM OPERATIONS

Now a word about how the program operates, just to clear the air a little. The program operates through the State agenciesState welfare departments-through agreement, just as we operate our other distribution programs through State agencies. They are responsible for determining the families' need, to be eligible to participate, they are responsible for actually selling the coupons. We the Department of Agriculture-take the responsibility for supervising the grocer's work and any work with the banks. The standards of eligibility are developed by the State, but they must be approved by the Department of Agriculture. These standards generally provide that the families fall into the income groups about the same as the other public assistance families.

Incidentally, the public assistance participants are eligible, because they had already been determined to be needy. Other lowincome groups at about that same level are also eligible. Once the eligibility is determined, the State and ourselves on the basis of studies, work out tables which determine by family size and income about what that family would normally spend for food out of its welfare check, plus some earnings or whatever cash income that family has. We have 1955 food purchase studies that were developed by the Department, which give a guide as to what any given family with certain income would normally spend for food. Then these families must pay that amount for their coupons. They put their own cash on the barrelhead, to buy these coupons. Over the first year and a half, this has averaged out across the country, all areas and all participants, to be about-they paid about 63 cents for every dollar's worth of coupons. The 37 cents or 37 percent was the Federal subsidy coming out of our section 32 funds.

The families then take these coupons to the grocer any grocer that asked to sign up-and they spend these coupons for any food for human consumption, other than alcoholic beverages, tobacco, or any item that is clearly imported.

COST AND EFFECT OF AN EXPANDED PROGRAM

Mr. WHITTEN. Mr. Davis, on that I notice here you have eight pilot areas. It comes from section 32 funds, and it costs $13 million for eight pilot areas. In how many areas of the United States are you supplying free commodities? Do you have that?

Mr. LENNARTSON. Well, this is a field which Mr. Davis has been primarily responsible for. If it is agreeable, we would like to have him cover the points you raised there.

Mr. WHITTEN. Yes. I want to know all about it, frankly.

Mr. DAVIS. All right, sir. In the first place, to date and through this fiscal year we have conceived of the program as a pilot operation, experimental. In our first planning we estimated a possible cost of around $50 million, for fiscal year 1962. This was an outside figure. We really did not have a very good basis for estimating what that pilot operation might cost. However, we did open eight pilot project areas during that first year of the experiment, and we did wind up spending I believe instead of $50 million, something like $13 million. The experience with those first eight areas was quite favorable. The program seemed to operate as we hoped it might and accomplished the objectives which we had in mind.

Mr. WHITTEN. Now that is very nice, but tell us for the record the objectives you had, the purposes you had in mind.

PURPOSE OF THE FOOD STAMP PROGRAM

Mr. DAVIS. The basic premise on which the project was started was that with the tremendous productive capacity we had in agriculture in this country, the fact that our production was outstripping our marketing, the fact that we were using tremendous quantities of food overseas, both from a humanitarian standpoint and as an arm of our foreign policy, and also as a means of reducing our inventories, that the least we could do was to make sure that all of our people here at home had enough to eat even though in some cases they did not have enough income to buy.

The first step, as you will recall, was to increase the direct distribution of commodities. Then, because this program had some inherent difficulties of physically distributing food, in large quantities around the country, the food stamp experiment was begun to accomplish the same basic objective through perhaps a better means. basic objective of the plan would be to increase domestic consumption of food, and to do this through coupons that could be used just as money, through normal retail channels.

The

We had two ideas in mind, that given a choice, all of the studies have shown that with increased income for food people will spend that increase largely for meats, dairy products, poultry products, fruits and vegetables, the perishables, the commodities that would contribute most to better nutrition, and all commodities which tend to yield a greater return to the farmer.

EFFECT ON FOOD CONSUMPTION

This, then, was the basic objective and it had the effect of increasing food consumption without the Government getting into the food distribution field and without the Government competing with normal commercial food handlers.

The eight original projects were found to be successful in that the Government subsidy went almost, resulted almost, dollar for dollar, in increased food purchases by the families who participated. We did studies before and after the program went into effect and found in

Detroit that for every dollar of food stamp subsidy, we got 95 cents increased food purchases. On a general basis the food sales, in these areas increased by 8 percent once the program got underway. We found that 80 percent of the increased purchases were going for what we hoped for, meats, dairy products, poultry products, fruits and vegetables. We found that the nutrition of the families who were participating increased materially. Whereas before they came into the program about 26 percent of them were meeting the minimum requirements of the National Research Council nutritional standards, once the program was underway, around 50 percent of them were purchasing food that would provide this minimum dietary level. I might say for the Nation as a whole, this only runs about 60 percent.

PROGRAM OPERATIONS

Now a word about how the program operates, just to clear the air a little. The program operates through the State agenciesState welfare departments-through agreement, just as we operate our other distribution programs through State agencies. They are responsible for determining the families' need, to be eligible to participate, they are responsible for actually selling the coupons.

We the Department of Agriculture-take the responsibility for supervising the grocer's work and any work with the banks. The standards of eligibility are developed by the State, but they must be approved by the Department of Agriculture. These standards generally provide that the families fall into the income groups about the same as the other public assistance families.

Incidentally, the public assistance participants are eligible, because they had already been determined to be needy. Other lowincome groups at about that same level are also eligible. Once the eligibility is determined, the State and ourselves on the basis of studies, work out tables which determine by family size and income about what that family would normally spend for food out of its welfare check, plus some earnings or whatever cash income that family has. We have 1955 food purchase studies that were developed by the Department, which give a guide as to what any given family with certain income would normally spend for food. Then these families must pay that amount for their coupons. They put their own cash on the barrelhead, to buy these coupons. Over the first year and a half, this has averaged out across the country, all areas and all participants, to be about-they paid about 63 cents for every dollar's worth of coupons. The 37 cents or 37 percent was the Federal subsidy coming out of our section 32 funds.

The families then take these coupons to the grocer-any grocer that asked to sign up-and they spend these coupons for any food for human consumption, other than alcoholic beverages, tobacco, or any item that is clearly imported.

COST AND EFFECT OF AN EXPANDED PROGRAM

Mr. WHITTEN. Mr. Davis, on that I notice here you have eight pilot areas. It comes from section 32 funds, and it costs $13 million for eight pilot areas. In how many areas of the United States are you supplying free commodities? Do you have that?

Mr. DAVIS. Some 1,500 counties and about 300 cities or towns. Mr. WHITTEN. Now that is about half of the counties and I presume that would be about half of the cities. As you say, the folks on those programs, are already qualified for this food stamp program in the communities where you have this program?

Mr. DAVIS. I wouldn't say automatically, Mr. Chairman. We have been recertifying all households in these communities we have gone into with the food stamp plan, where they had already been participating in the direct distribution program but essentially the same group by definition would be eligible.

Mr. WHITTEN. Well, I understood you to say earlier that those who are qualified for commodities are qualified for this.

Mr. DAVIS. No; those on public assistance, aid for dependent children, aid for the aged, and so on.

Mr. WHITTEN. The point I am making is if you carry this program forward to where you issue coupons to those that are at a certain level of income and below, and it costs $13 million in 8 areas, how much would it cost for 1,500 counties and 300 cities. The pilot program means this is the beginning and this is where we are learning how and seeing if it works. If it works, you plan to expand it. Now if you were to expand the 8 into 1,500 counties, you have gotten up into the billions of dollars haven't you? Where are you going to draw a line?

Mr. DAVIS. No, sir. You really can't just multiply $13 million by the difference between 8 and 1,500. But our best calculations, based on the participation in the food stamp plan, as against the numbers of people in those same communities that were participiating in the direct distribution, and assuming that we might extend it to all of the communities that are now making direct distribution, we estimated it would cost-the program-subsidy cost, would be around $360 million.

Mr. WHITTEN. Annually?

Mr. DAVIS. Annually; yes, sir.

Mr. LENNARTSON. This would cover approximately 4 million recipients. These are our best estimates now.

Mr. WHITTEN. Don't you believe if you provide that for 4 million, you will have another 4 million that will want on it and in the first campaign thereafter, they are liable to get on it?

Mr. DAVIS. No, sir. Our past experience has been that we probably won't get interest expressed-or to put it another way-enough need in a given community for us to have many more or any more communities wanting the food stamp program than now have direct distribution.

Mr. WHITTEN. Don't misunderstand me. No one can be against some such provision being made, in a country such as ours with the production that it has, for a reasonable standard of living or certainly a reasonable diet for all. It is when you get into the mechanics of how you are going to do it that you begin to wonder if maybe you aren't destroying initiative, and destroying effort, and building up a group over and above the group who really are disabled, aged, and incapable of looking after themselves.

I have seen it in my own area, and I am sure this was true elsewhere too. Back in the old WPA days, the average fellow was em

barrassed to death when he got on the WPA. But after 2 or 3 years he referred to having a job with the Government.

There is no joke about that. That was the change in public attitude, as far as Government relief programs were concerned. Now it seriously concerns me that we may get into a national program to where it may spread and spread and spread at the destruction of initiative and effort by those who are capable of doing things for themselves.

Mr. DAVIS. Could I say, Mr. Chairman, that I think this program as it is set up is taking a very careful look, is certainly taking this into account and I say again for emphasis, in this program these people, as nearly as we can devise the program, are putting their own money into it. They are buying these coupons, and in buying them they are paying about what they would normally with their income be able to pay and were already spending for food.

So this is not saving the families any money. It is not supplementing their total budget. It is strictly a food program and gives them more money to spend for food.

Mr. WHITTEN. Well, I am not saying that there is a single recipient that can't well use the food. I am just saying in the process I don't know what we are doing to the American people overall. I don't know when we will know. I know the arguments made for it, but I wanted the record to show it.

SOURCE OF SECRETARY'S CASH AND FOOD PLEDGE TO UNITED NATIONS FOOD PLAN

I have before me the Record of February 21, a speech by one of my colleagues, in which he quotes from the Washington Star of September 5, 1962, and I quote:

Freeman pledges $50 million to United Nations food plan. United Nations, New York, American Secretary Freeman pledged $50 million today in American food and cash toward a $100 million United Nations world food program. Freeman made the offer at a conference at which other nations also offered pledges of assistance to the program, being developed by United Nations Food and Agricultural Organizations. Food would be used to help feed the world's hungry.

The Secretary told the conference that U.S. participation in this program would supplement and not replace help to the hungry through the country's food-forpeace program. The U.S. pledge included $40 million worth of food, $10 million in cash, ocean transportation service on U.S. vessels. Mr. Freeman said the types and amounts of U.S. food to be donated to the program would be determined later.

This was in the February 21 Congressional Record.

Now is section 32 subject to the individual decision of the Secretary of Agriculture? Can he go to United Nations and say I will send you a check for $10 million? Are these surplus foods which Commodity Credit Corporation has in hand, and are they available for the Secretary to just give them away on that kind of basis, and if so what is the authority for it?

Mr. LENNARTSON. I would assume this is the authority of section 416 of Public Law 480, Mr. Chairman.

Mr. WHITTEN. We might have that section inserted here.

(The material requested follows:)