sentative of the Chinese Ordnance Department has requested the Department of Agriculture to furnish them the specifications and blueprints of such a machine at the earliest possible date.

If

During the first 5 months of 1942, we have imported linters at the rate of more than 2,000 long tons per month, principally from South American countries. an assured supply of cut cotton were available in this country, this cargo space could be released.

The present purifying capacity for cotton linters is approximately equal to the linters (1,000,000 bales) derived from a 12,000,000 bale cotton crop, but the potential estimated demand for smokeless powder far exceeds this quantity. If suitable machines were available for cutting lint cotton to the approximate length of linters, plans could then be made for increasing the capacity for purifying cotton cellulose so as to provide an adequate supply of the best quality of smokeless powder.

Plan of work. As a first step, the Bureau of Agricultural Chemistry and Engineering of the Department of Agriculture, in cooperation with the Hercules Powder Company and the Naval Powder Factory, determined that certain grades of short staple lint cotton could be cut, purified, and used satisfactorily on a commercial scale in the production of smokeless powder. Large-scale cutting experiments were conducted with the most promising types of commercial machines and, while their performance was satisfactory on a quality basis, their production capacity was far less than desirable and their efficiency from a mechanical standpoint was low. Consequently, a large number of cutters of these types would be required to supply the material for a purification plant.

The problem was considered by Bureau engineers and a machine especially adapted to the cutting of lint cotton was designed. A small-scale experimental single-phase cutter was built. Test runs clearly indicated the suitability of the design of this cutter. With this first experimental cutter, it was necessary to pass the cotton through the cutter twice. It is believed that it will be possible to modify the design of the cutter by placing a second set of rotors underneath the first set, thereby eliminating a second feeding with resulting increased capacity. To test these modifications in the cutter and feeder, a second machine must be developed, designed, and built. This machine should be of such a size that the correctness of design can be determined and its true efficiency of operation compared with commercial-size machines. Cutters of this new type will have decided advantages over available commercial cutters, as considerably less steel and installation space will be required per ton of cutting capacity.

The plans for the duplex disk-type cutter will be drawn by personnel now employed in the Department of Agriculture. The cutter will be built in the shops of one of the companies manufacturing ginning machinery in the cotton area of the Southeastern States, preferably one close to a purification plant. Engineers of the Bureau of Agricultural Chemistry and Engineering will supervise construction. Arrangements have been made with the Cotton Branch of the Agricultural Marketing Administration to secure 250 bales of cotton for use in conducting the necessary trial run to obtain needed data on the capacity and quality of the output of the cutter. These cutting tests will be made at a purification plant where the cut cotton can be fed directly into the purification process. This procedure will yield valuable experience in determining the optimum operating conditions of this type of feeder and cutter. Running the tests in one of the purification plants will make it necessary to rebale the cut cotton. It is anticipated that a memorandum of understanding will be entered into with the purification plant selected, whereby the cut lint will be taken at the market price for chemical cellulose.

It is believed that this project will be completed during the fiscal year 1943, provided funds are made available during the first quarter of the present fiscai

year.

Financial requirements.-The estimate of $30,000 is based upon the temporary employment of field mechanics and laborers, travel expenses of Department personnel engaged in the machine-development investigations, expense of transporting the cotton, cutter parts, etc., to the project location, expenses incurred for use of machine shop, etc., at site of development, purchase of necessary supplies and materials for building the cutter, and the purchase of the necessary motors for driving the cutter and feeder.

WEDNESDAY, SEPTEMBER 30, 1942.

COMMODITY CREDIT CORPORATION

STATEMENT OF J. B. HUTSON, PRESIDENT, AND R. W. MAYCOCK, OFFICE OF BUDGET AND FINANCE

SALARIES AND ADMINISTRATIVE EXPENSES, 1943

The CHAIRMAN. Mr. Hutson, we have before us an estimate in House Document No. 857, for the Commodity Credit Corporation, for salaries and administrative expenses in the sum of $625,000, to be payable from funds of the corporation.

GENERAL STATEMENT ON EMERGENCY PROGRAM

Will you give us a statement about that?

Mr. HUTSON. Mr. Chairman, the increased funds required for the administrative expenses of the Commodity Credit Corporation during the fiscal year 1943 results from the assignment thereto of additional responsibility for carrying on activities designed to aid the war effort. Under the terms of the agreement made at the Pan American Conference at Rio de Janeiro, in January 1942, this country pledged to support the economy of such Latin American countries as might be jeopardized by the loss of normal export outlets for their products as a consequence of the war and, on April 28, 1942, the President approved the use by the Corporation of funds for the purpose of carrying out projects involving the acquisition, handling, and disposition of agricultural commodities produced in foreign conutries friendly to the United States. An extensive foreign purchase program has been undertaken by the Corporation pursuant to Directive No. 2, issued under date of May 19, 1942, by the Executive Director of the Board of Economic Warfare, which, as revised on June 20, 1942, stated in part:

(2) Except as to purchases by United States Commercial Co., on and after May 20, 1942, Commodity Credit Corporation, an agency of the United States Department of Agriculture, shall be the sole and exclusive agency for the negotiation and conclusion or amendment, subject to the prior approval of, or as may hereafter be directed by, the Board of Economic Warfare, of all imported materials contracts for agricultural commodities.

This program has required the establishment of a Foreign Purchase Division, a regional office in New York City, and the sending of representatives to various foreign countries.

The Commodity Credit Corporation is also undertaking a program directly related to the war effort, whereby spruce logs suitable for airplane lumber will be obtained from the Tongass National Forest in Alaska and sold to mills capable of producing the largest quantities of airplane lumber therefrom. A major portion of the work in connection with this program will be performed by employees of the Forest Service whose services are being made available to the Corporation on a reimbursable basis.

In addition, the wartime emergency has greatly increased the scope of the programs of the Commodity Credit Corporation which encourage the production of strategic domestic agricultural commodiries. The critical shortage of fats and oils, for instance, has necessitated an extensive program for expanding the domestic production

of vegetable oils. Additional projects designed to aid the war effort are under way.

As to these projects, the most recent one is for hemp. The War Production Board has indicated that we need at least 300,000 acres of fiber hemp because of the loss of imports which formerly came. from the Far East.

The burden of this is on the Commodity Credit Corporation. We have to make certain guaranties with respect to the price, and set up an organization to handle it--all the way from the farmer until it is ready to be sold to the man who is ready to make it into rope. It is practically a new industry.

In the handling of the large crop of wheat, we have had to purchase enough wooden bins to take care of 100,000,000 bushels of this wheat. Then, in connection with the soybean crop we are purchasing about 20,000,000 bushels in addition.

We have had to purchase some peanut pickers to take care of the peanut crop. It was impossible to get orders placed through the private trade in time to get these pickers.

In connection with sugar, because of the shipping situation we have undertaken a project in connection with the expansion of sorgo.

We are planting about 10,000 acres of this crop to be used in the making of molasses.

We have had to make some expansion in flax fiber, which is necessary again because of reduced imports.

We have had to undertake a project of getting some seed available this year and are probably going to have to plant a considerable acreage in 1943 of castor-beans. We are purchasing some castorbeans from Brazil. We are going to move some of the beans from Brazil, but we do not know whether we will be able to move all of them. We might be prevented from importing some that we expect to move at this time, and as a safety measure we may need a sizable increase in domestic production.

In all, there are from 20 to 25 projects in this undertaking. I might say that I went over these projects a day or two ago and I wondered if we had asked for enough to do the job. I cannot be at all sure that we will not have to come back again and ask for more money. However, I think we can get through if no additional projects are added. I think, as far as we can see today, that will be sufficient, but things are changing so fast that we do not know what may happen. We may have to do some things in 1 week that we did not know about now. We can just estimate upon the basis of what we know about, and that is what we have done.

The CHAIRMAN. Mr. Hutson, this deficit is brought about primarily by Executive orders issued since your first estimate was made, which placed upon you the responsibility of added activities.

Mr. HUTSON. Yes, sir.

The CHAIRMAN. All of that increase was directly connected with the war effort, resulting from the war program.

Mr. HUTSON. That is right.

WHEAT AND SOYBEAN PROJECTS

The CHAIRMAN. You mentioned two projects you are handlingone in connection with wheat and one in connection with soybeans.

It is my understanding that we have too much wheat and not enough soybeans; or do you have a surplus of both?

Mr. HUTSON. We need the oil from the soybeans for making up our stockpile. We are building up some reserves of oil.

In the last war fats and oils were one of the things Germany was short of first.

I think that was important in determining the outcome, and at the present time we are building up reserves.

The CHAIRMAN. You have shortages in everything you have mentioned-in hemp, soybeans, and sugar and you have an excess now of wheat, and perhaps an excess of peanuts. What about peanuts?

Mr. HUTSON. The thing that is taking our time is the shortage of the equipment for the handling of these crops.

Take peanuts, for instance. We want peanuts because we want to build up reserve stocks of oil. That is a part of the program. We are short on pickers and warehouse facilities.

We are short, in the case of soybeans, of storage facilities, and we also want the oil.

In the case of wheat, there is a shortage of storage for the handling of this crop. This all comes about through the desire to build up reserves. We are rather short on facilities for handling much of the

reserves.

The CHAIRMAN. How do you handle these things; how do you handle the extra bins for wheat? Do you take title to them, or do you make it possible for the owner to take them over, and, if so, what equity do you retain, and what salvage will there be after the war is over?

Mr. HUTSON. In the case of the bins, we place orders for the purchase of the bins. We move them into the areas in which they are needed, and in these areas they are used for two purposes: One, when the elevators are filled, and the farmers deliver the wheat and then find that we cannot get space for it, we put it in a bin. That would be the 1941 crop of wheat that has been stored on the farm, and we store it in order that farmers may have a place for the 1942 crop.

In the second place, we sell bins to the farmers to be used in storing the 1942 wheat. We are trying to sell all these bins to the farmers; and it is possible that at the end of the season we will have title to one-third, and two-thirds of them will be passed to the farmers. The CHAIRMAN. And you recoup the cost of the amount you pay the farmer for his crop?

Mr. HUTSON. Yes.

The CHAIRMAN. As to the third that is left on your hands, what disposition will you make of them after the emergency is over?

Mr. HUTSON. We will dismantle them and they will be sold for scrap. They could pay for themselves in about 3 years.

The CHAIRMAN. Who takes title to the machinery; that is the peanut pickers?

Mr. HUTSON. The farmers buy them. They cost from $500 to $800 per picker, and one person or group of people will go in together, and we will take a down payment of about $200 on those pickers. The farmers run them on a custom basis.

The CHAIRMAN. What success do you have in securing the purchase price? You recoup yourselves out of the crop you take over? Mr. HUTSON. That is correct.

The CHAIRMAN. As a rule, those operations are conducted without loss to the Government; are they not?

Mr. HUTSON. The only loss we would have would be on some pickers left on our hands.

ACTIVITIES IN CONNECTION WITH THE CULTIVATION OF HEMP

The CHAIRMAN. In some instances you have to establish a new industry, such, for instance, as in the cultivation of hemp.

Mr. HUTSON. That is right.

The CHAIRMAN. You have to start from the ground up and go on until you get the finished product to the consumer. How do you handle such a project?

Mr. HUTSON. In the case of hemp, first we would set up a hemp division in the Commodity Credit Corporation that would have about ten to a dozen people in it. We would go out and encourage the organization, or assist in the organization of a private corporation for the handling of it. That means the development of an industry which would employ from 6,000 to 8,000 people.

The CHAIRMAN. What about the land?

Mr. HUTSON. That is done through these organizations. We will go out in the next few days to certain areas adapted to the growing of hemp, with a price and contracts for the farmers and ask them if they will agree to plant 4,000 acres of hemp in the area.

A site is selected and a plant constructed for the first processing of that hemp. We have to appoint managers.

We will go through that type of thing until we get about 70 of these projects. It takes about 70 plants to handle this all the way through. Then you have to go through with a training program, in each area. That is also done through a private corporation, but you have to have governmental assistance on the training. You go through a training program for each of the operators of these plants.

Then you have the farmers contracted to grow the hemp which is to be processed in that area, and you need to have someone trained to operate the plant.

The CHAIRMAN. The finished product goes to private ownership? Mr. HUTSON. That is right.

The CHAIRMAN. Is such a project self-supporting, or does the price you get include a subsidy which must come out of your funds?

Mr. HUTSON. That has not been necessary, so far as I can see at the present time, and unless some price ceilings are put in-and there are no price ceilings in that area at the moment they could be built without large losses. On the other hand, you could have a ceiling put on at such a point that you could not absorb all your costs. We are pretty well set on the first part of this. You have to know first where you are going to plant the hemp. You cannot start erecting mills or plants until you know where you are going to grow it.

for

The CHAIRMAN. The farmer must abandon the crop he has been making and start in on something he is fundamentally unfamiliar with. Mr. HUTSON. He will grow it in small areas. It will be grown, the most part, in the area that has been growing oats, because there are fewer horses than formerly, and there is some slack that can be picked up in that area, and there is also some slack that can be picked up in the bluegrass area in Kentucky. The farmer would plant hemp

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