We submit these differences ranging from 24 to 36 percent truly reflect the effect that the proposed revisions in the contract and the proposed revisions in the rates would have on the warehouseman's income. The committee no doubt fully realizes but we want the record to show that this reduction, which averages about 33 percent, is a reduction in gross income and that there won't be any corresponding decrease in costs, rather costs will almost certainly increase. So, inevitably, this 33 percent reduction in gross income will be translated in ruinous reductions in net income - reductions that will bankrupt the most essential segment of the warehousing industry- and cripple the warehousing enterprises it doesn't bankrupt and leave the warehousing industry a shambles. APPENDIX D 1. Changes in Handling Charges There is no change in terminal handling charges. But very severe cuts in truck received charges (in and out) are proposed for wheat, rye, soybeans, and grain sorghums. They are shown as a percent of change in Table 1, below: Truck Handling Rates Under Proposed U.G.S.A. Schedule, with Comparisons in Percent Receiving :Percent: Loadout Total :Percent : 1956 Proposed:Change : 1956 :Proposed: 1956 :Proposed: Change : 2.75 2.75 None .75 .75 3.50 3.50 None While advertised as a 19-percent cut in rates, actually the impact of the proposed rates varies greatly by areas. Table 2 below illustrates this: 1/ States comprising the five areas under the 1956 U.G.S.A. are as follows: Area I Ariz., Calif., Idaho, Nev., Ore., Utah, and Wash. Area II - Minn., Mont., N.D., S.D., and Superior, Wis. Colo., Ill., Iowa, Kans., No., Neb., Wyo., and Wis. except Superior. Area III APPENDIX E TEXT OF PRESS RELEASE 636-52 UNITED STATES DEPARTMENT OF AGRICULTURE Washington, March 24, 1952 There follows a letter from Secretary of Agriculture Charles F. Brannan to March 24, 1952 Hon. John J. Williams Dear Senator Williams: This is in reply to your letter of March 11 enclosing a copy of the Congressional Record containing your lengthy attack of the day before on the grain storage program conducted by this Department. I am completely at a loss to understand the point you were trying to make by the many letters and comments with which you loaded that day's Record. I furthermore regret and resent this waste of time involved in this exchange of correspondence you are forcing on the Department and hope it may soon be brought to an end. In the first place, you are obviously still criticizing the Department for having contracted with the private grain trade for use of the facilities at Camp Crowder, Missouri, instead of operating those former military facilities directly. Such a criticism from you, of all people, is incomprehensible, in view of the fact that you were one of the chief architects of the legislation which requires us to follow that policy. Secondly, you obviously are still attempting to create a public impression that the two private companies with which we contracted at Camp Crowder are making excessive profits; yet you ignore most of their cost figures and distort others in the fact of the fact that you have been told repeatedly that one or both of the compenies will likely show a loss instead of any profit. The following facts completely demolish your argument on both points: The General Accounting Office has issued a supplemental report showing, that the ultimate loss of the V. M. Harris Grain Company will be more than $300,000, and that the other operator at Camp Crowder, Midwest Storage and Realty Company, will realize only a little more than $40,000 for its entire operation, including salaries to officers and dividends. I am utterly amazed that you have continued to say that these companies are making "unconscionable" and "fantastic" profits in the face of repeated cautions that they might even lost money when all the claims were settled. But let me continue with the uncontrovertible facts as given in Supplement No. 1, dated January 25, 1952, of General Accounting Office Report No. I-17038. This report shows that as of November 30, 1951 the operating income of V. M. Harris Grain Company had exceeded operating disbursements by $102,178.33, and claims against the company in the amount of $595,000.11 had not been satisfied. The company had claims of its own in the amount of $174,452.69 against others. If all claims are settled at face amount, the company's loss on the Camp Crowder operation will be $318,369.09. The principal claim against the company, reported by G.A.0. as $530,960.72, is that of Commodity Credit Corporation for quantity and quality deficiencies in grain loaded out. We know of no reason why the Harris Grain Company and its surety should not be held for the full amount of this claim and it is evident that the ultimate loss of this operator will be in excess of $300,000. This same General Accounting Office report shows that the Midwest Storage and Realty Company operation as of November 30, 1951, showed operating income exceeded operating disbursements by $105,744.20, while unpaid bills and claims were in the amount of $64,125.73. The principal unpaid claim is that of the Corps of Engineers in the amount of $59,935.25, which is involved in a dispute over the extent to which Midwest put the buildings back into condition after the Army called for their return. If all claims are paid in full, only $41,618.47 will remain for payment of salaries of officers of the corporation and of dividends to stockholders. As a businessman yourself, engaged in a similar occupation, I think you will agree that this is not an unreasonable return for two years' operation of this nature. It involved the alteration and repair of former troop barracks to make them suitable for grain storage; the unloading and trucking of some 1,200 cars of corn; the storage, conditioning, and fumigation of more than 2 million bushels of corn for a period of some 500 days, and the considerable supervision required by all this. If we make allowance for salaries actually earned by officers of the company, then the profit on the operation will be somewhere between zero and ten percent of the amount received from the Commodity Credit Corporation for storage charges. It is absurd to think of this return as "unconscionable" or "fantastic", especially in view of the risks of the operation which have been made obvious by the experience of the V. M. Harris Company under even slightly more favorable conditions in the same area. I am of course pleased that the Commodity Credit Corporation has had a completely satisfactory performance on its Uniform Grain Storage Agreement signed with the Midwest Realty and Storage Company. Let us turn now to the history of the legislation under which we contracted with these two companies for grain storage, and especially to your part in that legislation. As recently as February 5 of this year, on page 828 of the Congressional Record, you reaffirmed your basic position on these cases, including every error in it: "I repeat there is absolutely nothing in the law today, nor was there anything in the law at the time he (the Secretary of Agriculture) leased those government plants which would have prohibited the Department of Agriculture from leasing them directly from the particular government agency which owned them." you Coming from some people, this would be an excusable error, but coming from - a chief sponsor of our legislative mandate on this point it is inexcusable. As you know, the legislative history of this started back in 1948 when the 80th Congress, with your aid, took away from the Commodity Credit Corporation our authority to acquire or directly utilize any new grain storage facilities. I will not argue that specific action at this time, but it was in the course of removing that authority that the language concerning preferential use of private trade was inserted in our legislation. Here is the history of that language: S. 1322, the bill providing a Federal Charter for CCC, was reported by the Senate Committee on Agriculture and Forestry on March 24, 1948. On April 20, 1948 you introduced an amendment which would have added the underscored language and deleted the bracketed words: Section 12. Utilization of Associations and Trade Facilities. The Senate agreed to the amendment, after you personally explained the provision as spelling out "in greater detail and with more emphasis that the Corporation shall, wherever feasible, utilize the facilities of private enterprise." (Congressional Record, April 22, 1948, at page 4872.) On April 22, 1948, the House Banking and Currency Committee reported out the companion bill, H.R. 6263. The House committee amended section 4(h) so as to prohibit the Corporation's acquiring or leasing any plant or facility or acquiring or leasing real property or any interest therein other than office space. The House committee also amended section 5 of the bill by adding a paragraph making mandatory the utilization of the usual and customary channels, facilities and arrangements of trade and commerce in the warehousing, transporting, processing or handling of agricultural commodities. The House passed the bill as reported out. The Conference Committee adopted the House version of the bill, but added to the provision dealing with the use of trade facilities the language: "to the maximum extent practicable consistent with the fulfillment of the Corporation's purposes and the effective and efficient conduct of its business." Thus, the substance of amendments proposed by you to section 12 and passed by the Senate quoted above, were contained in section 5 of the Charter as finally passed. That was the status of our legislation until 1949, when the 81st Congress amended it to restore authority of CCC to acquire storage facilities. However, there was no substantive change made in the language relating to preferential use of private trade. I have no idea how often you have misled the members of the United States Senate and the public by your statements that the 1949 amendments by the 81st Congress changed the situation concerning preferential use of the private trade. An example comes from the February 5 record, page 827, where you stated: "Notwithstanding the fact that the amendment has been repealed Secretary Brannan is still paying huge sums to private interests who in turn are leasing him |