Mr. SCHMIDT. I say this partnership agreement is dated August 1, 1956, but you actually had been operating this partnership since April of 1956; isn't that true?

Mr. COREY. That is right.

(The document referred to will be found in the appendix on p. 397.) Mr. SCHMIDT. And what was the occupation of Mr. L. M. Smith at the time you three entered this partnership?

Mr. COREY. He was manager of the Waterville Union Grain Co. at Waterville, Wash.

Mr. SCHMIDT. What was the occupation of the other partner, Mr. W. A. Richards?

Mr. COREY. He was manager of the North Pacific Grain Growers in Portland, Oreg.

Mr. SCHMIDT. Did both the Waterville Union Grain Co.'s and the North Pacific Grain Growers' warehouses have Uniform Grain Storage Agreements with the government?

Mr. COREY. Yes; they did.

Mr. SCHMIDT. And your interest in this partnership as well as Mr. Richards' interest was concealed; is that correct, sir?

Mr. COREY. It was.

Senator SYMINGTON. I didn't hear your answer.

Mr. COREY. It was.

Mr. SCHMIDT. And you formed this partnership for the purpose of going into the grain storage business, is that correct?

Mr. COREY. Yes, sir.

Mr. SCHMIDT. Ånd did this partnership, of Three State Warehouse Co., make application to the Portland office of the Commodity Stabilization Service for a contract to store Government grain? Mr. COREY. It did.

Mr. SCHMIDT. And did you know how this application was made, under what name?

Mr. COREY. I do not.

Mr. SCHMIDT. I will ask that the witness be handed what we have marked "Exhibit 3."

(The documents referred to will be found in the appendix at p. 399.) Mr. Corey, this is a uniform grain storage agreement dated April 26, 1956, USDA contract No. 92-4-CCC-288, accompanied by a letter dated May 10, 1956, addressed to the Three State Warehouse Co., Portland, Oreg. The application recites that the applicant is L. M. Smith doing business as Three State Warehouse Co. The letter of May 10, 1956, recites:

Your facility at Milwaukie, Oreg., State No. 373, Building No. 2, has been approved under uniform grain storage agreement No. 92-4-CCC-288 as of May 9, 1956.

We are enclosing an executed copy of this agreement and of schedule of rates for your files.

We are also enclosing a copy of "Handbook for Warehousemen Operating Under Uniform Grain Storage Agreement" for your information.

Very truly yours,

EARL C. COREY, Director. By HENRY W. COURTNEY.

In other words, Mr. Corey, you in effect approved your own business in behalf of the Government, did you not?

Mr. COREY. At this time I would like to explain to the committee that this storage management division who approves and inspects warehouses

Senator SYMINGTON. That this what?

Mr. COREY. This Storage Management Division that approves and inspect warehouses is a separate division in the office and this application came in in routine fashion and I never saw any part of it.

Senator SYMINGTON. Excuse me. You are not saying that you didn't know that there was going to be an approval of a contract by your office, are you, to the company that you had formed?

Mr. COREY. I would have to say that, yes. But the details I did not handle.

Mr. SCHMIDT. Mr. Corey, there was a new Uniform Grain Storage Agreement on behalf of the Government and all grain storers in July of 1956, was there not? Didn't the Government draft a new Uniform Grain Storage Agreement that became effective in July of 1956, for all warehouses throughout the country?

Mr. COREY. I think that was the date when the new agreement— it is renegotiated occasionally and as I recollect, that is right.

Mr. SCHMIDT. And at that time new agreements were entered into by these various companies contracting to store grain for the Govern

ment.

Mr. COREY. Yes.

Mr. SCHMIDT. I hand you what has been marked "Exhibit 4" which is an application for approval of warehouse, and it is directed to Earl C. Corey, director of the Portland office, 1218 South Washington Street, Portland, the Commodity Stabilization Service Office, from Three State Warehouse Co., and it is signed L. M. Smith, doing business as Three State Warehouse Co. That also you were aware had been filed, were you not?

(The document referred to may be found in the files of the subcommittee.)

Mr. COREY. It would come in the ordinary course of business and I might add, Mr. Chairman, that all mail to these offices is directed to the Director and it is rare that he sees very much of it.

Mr. SCHMIDT. Mr. Corey, you do not care to lead this committee to believe that you weren't aware that this company was applying for a Uniform Grain Storage Agreement with the Government, were you?

Mr. COREY. No. I am not saying that.

Mr. SCHMIDT. And you did not want your name to appear as a partner in Three State Warehouse on this application, isn't that true, sir?

Mr. COREY. I was only an investor.

Mr. SCHMIDT. We have already taken up the partnership agreement. But you did not want your name to appear as a partner in this application to the Government, isn't that right?

Mr. COREY. Right.

Mr. SCHMIDT. But you were aware that the company was making application for a contract to store Government grain?

Mr. COREY. I was aware they would.

Mr. SCHMIDT. And it was your responsibility as the Director of the Portland office to see to it that this was processed and examined and approved, isn't that true?

Mr. COREY. It would be handled in routine fashion as all other applications.

Mr. SCHMIDT. Now how much money did Three State Warehouse Co. receive from the storage of Government grain?

Mr. COREY. I have never had anything to do with the books. I do not know.

Mr. SCHMIDT. Mr. Corey, the committee has been furnished with information from the company showing that for the period from April 1956 to January 22, 1960, Three State Warehouse Co., received $1,013,616.87 from the U.S. Government for the storage of Government grain. Do you have any reason to dispute that figure? Mr. COREY. You undoubtedly got the figures from the books of the company, so I have nothing-no alternative but to accept them. Mr. SCHMIDT. Do you know what the storage capacity of Three State Warehouse was?

Mr. COREY. I am guessing at something in the neighborhood of 2 million bushels.

Mr. SCHMIDT. I believe the approved capacity on this shows 2,250,000, and it currently has 2,195,000 bushels of Government grain in storage.

How much money did you receive from Three State Warehouse Co., as your share of the profits?

Mr. COREY. Mr. Chairman, may I ask my counsel a question?
Senator SYMINGTON. Sure.

Mr. COREY. That matter was discussed in the hearing the other day and your figures indicated that it was in the neighborhood of $83,000 before taxes, and if that is what the records show, that is what I will accept.

Mr. SCHMIDT. The record shows, Mr. Corey, that the Three State. Warehouse Co., from August 1, 1956, through the fiscal year ending April 30, 1959, made a net profit of $249,750.20. All of this amount except $4,800 came from the Government for grain storage and handling payments. And the figures show on the books of the company as confirmed by you the other day, that your profit out of the company was $83,250.06 for the period of time from April of 1956 through June of 1959.

THREE STATE WAREHOUSE Co., PORTLAND, OREG.

Revenues received from CCC under the Uniform Grain Storage Agreement, April 1956 to January 1960 (firm's fiscal year ends Apr. 30)

NOTE.-Company organized and began operations in April 1956. Last revenue received in January 1960, per company records. Above reflects all of company's income except for small amounts received from other sources such as sale of assets ($750) and storage and handling of private grain ($4,134.45.)

Source: Company records maintained in company attorney's offices.

Summary of revenue and expenses, Aug. 1, 1956, to Apr. 30, 1959

You say $30,

Mr. SCHMIDT. Now, Mr. Corey, when this was organized, what was your investment, the amount of your investment here? 000 advanced by Mr. Smith, as I recall your statement. Mr. COREY. That is right.

Mr. SCHMIDT. And this $30,000 of Mr. Smith advanced in your behalf was paid back to him out of the profits of the company; is that correct?

Mr. COREY. It was paid out of the $83,000.

Senator SYMINGTON. Will the counsel yield?

Did you ever put any money, making any financial investment in this partnership?

Mr. COREY. No. Only my security that Mr. Smith knew I had and accepted my note.

Senator SYMINGTON. Did you put the securities up as collateral when you made your note?

Mr. COREY. Physically, no. But he was aware that I had them.
Senator SYMINGTON. Thank you.

Mr. SCHMIDT. Did you pay interest on this note, Mr. Corey?
Mr. COREY. No.

Mr. SCHMIDT. Mr. Corey, your profit participation is represented by various canceled checks which this committee has in its possession, photostatic copies of them, and we will ask that you be furnished with copies of these checks.

Mr. COREY. Mr. Chairman, may I ask the counsel how much that total figure was, that $83,000? What it was?

Mr. SCHMIDT. $83,250.06.

Mr. COREY. I identified these checks the other day, Mr. Chairman, and

Mr. SCHMIDT. These are the same ones. We would like to have you look at them and make sure they are all the same ones.

Mr. COREY. These are all the same.

Mr. SCHMIDT. All right. Mr. Corey, I will read these off to you. The first one is April 17, 1959, check No. 14, in the amount of $150.82. Mr. COREY. May I get the dates, please?

Mr. SCHMIDT. Yes. April 17, 1959.

Mr. COREY. How much?

Mr. SCHMIDT. $150.82. The next one is the same date, made out to Robert C. Corey in the sum of $5,000. Who is Robert C. Corey? Mr. COREY. My son.

Mr. SCHMIDT. The books of the company show that this $5,000 was charged to your drawing account; is that right?

Mr. COREY. If that is what the books show, that is what it is.

Mr. SCHMIDT. All right. The next check is dated April 17, 1959, drawn to the New York Life Insurance Co., and it is in the amount of $2,372.19. That was also drawn and made payable to New York Life at your request, is that right, sir?

(Mr. Corey nods.)

Mr. SCHMIDT. The next one is a check dated April 10, 1959, made payable to Earl C. Corey in the amount of $3,409.69.

Mr. COREY. May I see that one? That is right, and it is endorsed to the Oregon State Tax Commission.

Mr. SCHMIDT. Yes, sir. The next one is a check dated April 10, 1959, in the amount of $20.567.30 made payable to Earl C. Corey and endorsed on the back, "Pay to the Director of Internal Revenue, Earl C. Corey."

Was that drawn at your request and paid to the Internal Revenue Service?

Mr. COREY. That is right.

Mr. SCHMIDT. The next one is a check dated June 29, 1959.

Mr. COREY. June 29?

Mr. SCHMIDT. Yes, sir. In the amount of $30,000 made payable to Earl C. Corey, endorsed Earl C. Corey. That was drawn at your request and that was at the time you terminated your interest in this company, is that right, sir?

Mr. COREY. That is correct. The reason I suppose that the date is June 29 is for the reason that it took from June 9 to June 29 to get the records through the books and to get-I would like to add here, Mr. Chairman, that my termination of my interest in the company was as of the end of the fiscal year, April 30, 1959, and so these amounts that the counsel previously mentioned as having been received by the Three State Warehouse Co., I had no interest in them from March 31, 1959.

Mr. SCHMIDT. April 30, 1959, don't you mean? The fiscal year ended April 30, 1959 ?

Mr. COREY. The reason I say March 31, Mr. Chairman, is that the payments come on quarterly basis and any payments that were received after March 31 were not involved in the statement.

Mr. SCHMIDT. The records of the company do not show that, Mr. Corey.

Another check dated here June 12, 1959, in the amount of $18,250.07, made payable to Earl C. Corey. Is that correct, sir?

Mr. COREY. Right.

(The documents referred to follow :)