Page images

Today is the date accepted by the Grain & Feed Dealers National Association for their appearance. Representing this group is Mr. L. A. Laybourn, of Salina, Kans.

Mr. Laybourn, we welcome you today, and I am going to ask you stand and be sworn in as a witness.

If you will raise your right hand.

Do you solemnly swear that the testimony that you are about to give before this subcommittee of the Committee on Agriculture and Forestry of the Senate of the United States will be the truth, the whole truth, and nothing but the truth, so help you God?


Senator HUMPHREY. I have just been informed that the Subcommittee on Agricultural Appropriations of the Senate is meeting today. Some of my colleagues who had hoped to be here, and who might well have assured some of you that they would be here, are present at that subcommittee markup meeting. This is a very important bit of work around the Senate. Members of the Appropriations Committee have to be at the meeting when the bill comes up for final consideration. I just want to make this note of explanation. TESTIMONY OF L. A. LAYBOURN, SALINA, KANS., ON BEHALF OF


Senator HUMPHREY. Mr. Laybourn, why do you not go right ahead with your testimony? May I suggest that if there is any part that you wish incorporated in the record without the reading thereof, you are at liberty to ask to have it printed as if read.

Mr. LAYBURN. Thank you.

Senator HUMPHREY. May I ask one other question? Would you care to be interrupted during your presentation, or would you prefer to have your whole statement read and then be questioned?

Mr. LAYBOURN. Mr. Chairman, I think if it is agreeable to the chairman, perhaps it would be better if I could continue with my statement and then proceed with the answering of questions?

Senator HUMPHREY. Yes, sir.

Mr. LAYBOURN. However, if it appears that at a certain time that something should be interjected, by all means interrupt me.

Senator HUMPHREY. We shall follow your wishes on this matter.
Go right ahead.
Mr. LAYBOURN. Thank you, Senator.

Mr. Chairman, I have at my right, here, Mr. Alvin Oliver, who is the executive vice president of the Grain & Feed Dealers National Association. I would like to have him sit here, because I have a number of exhibits and documents which may be burdensome for me to try to get them all in the proper sequence.

Senator HUMPHREY. Yes; he is surely entitled to that, and you are, indeed, to have counsel before the committee at any time.

What is the name again?
Mr. LAYBOURN. Oliver.

Senator HUMPHREY. However, if Mr. Oliver is going to testify at any time, he must do so under oath.

Mr. LAYBOURN. That is understood.

Senator HUMPHREY. Go ahead. You may be seated and make yourself comfortable.

Mr. LAYBOURN. My name is L. A. Laybourn. I am a partner in the firm of Simpson, Laybourn, Miller & Stark Grain Co. at Salina, Kans. I've been directly engaged in the grain business since 1923.

By the authority of its executive committee, I represent here today the Grain & Feed Dealers National Association which was founded in 1896 and has 1,200 direct members. I am a member of its country elevator committee. It also has 54 affiliated State and regional grain and feed associations having a total membership of about 15,000. Today I represent the entire membership consisting of large, medium, and small warehouse operators, and the grain-trading firms serving them. Practically the entire membership of the national association and its affiliates falls within the classification of small businessmen.

I would like to interrupt my prepared statement here for a moment and just say, Mr. Chairman, that there are quite a few representatives of these affiliates who are here this morning through their officers, and some of their committee members. With your permission, I would like to introduce them. Is that agreeable, sir?

Senator HUMPHREY. Yes. Would you introduce them by full name and the affiliation by business name?

Mr. LAYBOURN. I shall do that.

First, I would like to introduce Mr. Charles Force, president of the Grain & Feed Dealers National Association, who is associated with Little Bros., at Kalamazoo, Mich.

Second, I would like to introduce some of my colleagues from Kansas: Mr. É. D. Romain, president of the Kansas Grain & Feed Dealers Association, and Mr. Henry Lueck, member of the Kansas Grain Advisory Commission, Lueck Grain Co., Netawka, Kans.

Next, the people from the Rocky Mountain empire

Senator HUMPHREY. May I interrupt just to say that Senator Schoeppel wanted very much to be here, and he finds himself in the same predicament this morning that I did. He had to look after a matter that he has been waiting for 2 years to come up in the Senate, and he had to be there. It never fails, you know.

Mr. LAYBOURN. Yes, sir; we are trying to get some air transportation out in our country.

Senator HUMPHREY, I wanted to make that statement for him. Mr. LAYBOURN. Thank you, sir. Next, I introduce Mr. Des Ellis, vice president, Colorado Grain, Milling & Feed Dealers Association, of Denver, Colo., and Mr. Herschel C. Harrison, Country Elevator Committee, Colorado Grain, Milling & Feed Dealers Association, Arriba, Colo.

From Nebraska, Mr. Howard Elm, secretary of the Nebraska Grain & Feed Dealers Association, Lincoln, Nebr., and Mr. Ray Cogil, president of the Nebraska Grain & Feed Dealers Association, Ogallala, Nebr.

Gene Byer, president, Indiana Grain & Feed Dealers Association, manager, Farmers Grain & Feed Co., Columbia City, Ind.

From Illinois, Ed Herron, secretary, Illinois Grain Dealers Association, Gilman, Ill.; Homer Sturm, president of the Illinois Grain Dealers Association.

From North Dakota, Art Pershke, president of the Farmers Grain Dealers Association of North Dakota, and Lloyd C. Hanson, executive secretary, Farmers Grain Dealers Association of North Dakota, Fargo.

B. C. Swanson, vice president, Western Grain & Feed Association of Iowa, chairman, grain division, New Sharon, Iowa; Robert L. Skinner, executive secretary, Western Grain & Feed Association of Iowa, Des Moines, Iowa.

From California, Thomas Mezger, vice president, California Warehousemen's Association, chairman, rural division, California Warehousemen's Association, California farmer; Everett Salyer, Salyer Land & Farming Co., Corcoran, Calif.; Harold Hansen, Lawrence Warehouse Co., San Francisco, Calif.; Kenneth Brown, Woodland Warehouses, CBC Warehouses, Woodland, Calif.

From Washington, Merrill D. Sather, executive secretary, Pacific Northwest Grain Dealers Association, Spokane.

From Minnesota, Peter Stallcop, secretary, Northwest Country Elevator Association, Minneapolis, Minn., and George Riebe, president of Riebe & Riebe Grain Co., Minneapolis, Minn.

Is there anyone that I have overlooked?

Mr. HELLBAUM. There are two here from Wyoming, Harold Hellbaum, of Chugwater, Wyo., and Russell Zimmer, of Tarrington, Wyo.

Mr. LAYBOURN. I have missed Ohio. From Ohio, George Greenleaf, executive secretary, Ohio Grain & Feed Dealers Association, Worthington, Ohio, and Evans M. Harrell, chairman, Grain Committee, Ohio Grain & Feed Dealers Association, Cincinnati, Ohio.

Also, George Moorehead, president, Ohio Grain & Feed Dealers Association, the Moorehead Elevator Co., Leipsic, Ohio.

Senator HUMPHREY. Mr. Laybourn, if any of the gentlemen you have introduced would like to enter into the record a statement on their own behalf or for their companies or associations, that is permissible, and it will be received by the subcommittee following your testimony this morning. We shall hold the record open to receive statements from those persons you have presented here as part of your general program presentation.

Mr. LAYBOURN. Thank you, sir.

I would like to say first, Mr. Chairman, that the statement I am going to make here today is not for Al Laybourn, as I am commonly called, but I am going to try to reflect as best I can what is in the minds of the people. If it gets a bit rough in places, it is because our members are thinking it and talking that way.

I feel it is my obligation to reflect this to the committee. Viewing the Yates amendment that passed the House last week to which I shall refer in my statement, our people see the Congress now right in the midst of taking a giant step toward the nationalization of the entire grain warehousing industry. We think the farm surplus fiasco has grown so bad in the eyes of the public that it has everybody in Government running for cover, and that our industry has been made a scapegoat.

We hope that the Senate will not go along with the House in ordering the Commodity Credit Corporation to use Government-owned warehouses, because having experienced the results of one arbitrary action already made against our trade from the executive branch, we would foresee a similar zeal on the part of that same organization, the Commodity Credit Corporation, in carrying out such an order from Congress. In so doing, they could break many country elevators, including farm corporatives, and in the Plains States, you can imagine the effect that this will have on the thousands of farm communities where the country elevator is the principal local taxpayer.

There are three general areas I would like to cover in my testimony, in an effort to put into better perspective for the Congress and for the American people this whole matter of surplus grain handling and storage.

First is an understanding of precisely what the Government is buying through its grain storage contracts.

Second is an examination of the arbitrary and unjustified treatment we feel the industry has had, at the hands of Government.

Third is the political predicament of the grain industry.

Under the first I will demonstrate that what the Government buys are services; protection from risk; a delivery obligation undertaken by the warehouseman regardless of the size, kind, or efficiency of his equipment; and an integrity of warehouse receipts which constitutes the American taxpayer's chief safeguard in this whole affair.

Under the second area, I will raise the question as to whether the Government had in fact made up its mind about storage rates quite some time before the matter was discussed in so-called negotiations. Also I will challenge vigorously the validity of cost data used by the Government to justify its actions. Under the third area I expect to show

how firmly captured and bound to the Commodity Credit Corporation the grain warehouseman has become, through none of his own choosing;

the long history of “gun-in-the-back” demands by Government that more storage be built or else the CCC would build its own;

the tremendous uncertainty at any given moment as to the future of grain storage needs under the Government's controversial and so-called temporary commodity programs;

the panicky turnabout within Government against the whole framework of our private enterprise competitive grain marketing system, now that the industry has responded with enough storage space to put the Government in position to dictate rather than

plead. This turnabout is best illustrated by the action taken by the House of Representatives last Wednesday, putting the following directive into the appropriations bill for the Department of Agriculture:

Provided further, That none of the funds herein appropriated shall be used to formulate or administer any program which does not provide for maximum use of Government-owned facilities for storing surplus commodities, consistent with the economical operation of the Corporation.

We ask, where does this process end? What is “maximum use of Government-owned facilities”? Who is going to decide how many facilities the Government will own? Is this action by the lower House based on the assumption that the Government can do business cheaper and better than its citizens? If so, this is an assumption that should be laid clearly before the American people.

At the start of this program years ago, when the Government began the long series of decisions which have led to today's surplus headaches, there was functioning smoothly and economically in the service of the American public a marvelously efficient grain marketing system. It had a tradition of keen competition resulting in extremely low-cost marketing, and it had developed the high level of integrity to which I already referred in connection with warehouse receipts.

The Government's grain programs were built on this foundation of using the existing elements of the trade and on the integrity of warehouse receipts. Thus the Government was not required to build an entire new grain handling and storage system. The loan programs for farmers would have been infinitely more difficult to administer had it not been for this fact.

Gradually the substitution of State direction for the functions of competition in the marketing process has grown along with the size of the grain surplus. This has been in spite of valiant and significant efforts within the Government itself to move back, from time to time, toward freer trade, as for example the payment-in-kind export plan. But now we have a $141/2 billion Government Corporation whose activities dominate the market. Annually, for example, we reach a point late in each crop year where virtually all the wheat is under its control, with barely enough free grain in the pipeline to provide running time for processors. The assumption has never been abandoned in any public policy stated by the Congress or by the executive branch, that eventually we would return to competitive grain marketing.

This posture now is changing as various Government agencies try to defend against criticism from other agencies. The Government's present status as the dominant merchandiser and marketer of the Nation's grains now tends to harden and solidify, making its position become absolutely permanent. Consumers and producers lose the benefits of competition in the marketplace and taxpayers have a very difficult time indeed finding out exactly what Government market influence really costs.

I would like to make a little insert here, if it is appropriate. You know, it is not just the cost of freight incurred in moving the stuff around annually; it is not just the cost of interest absorbed on nonrecourse loans taken over, nor interest on the money invested in annual inventory; it is not just the cost of storage on the various storable commodities which is paid. There is the overhead burden of the Department of Agriculture, the time and expense of congressional hearings and investigating committees, subsidies employed in getting rid of the stuff abroad, storage of strategic materials received in return under barter deals, prices influenced by supports reflected in prices paid by consumers—all these items are part of the cost, and there are things we do not know anything about.

Now, exactly what does the United States of America buy with its taxpayers' money when it enters into grain storage contracts with warehousemen?

Well, for one thing, in addition to custodial care and space, it buys insurance. Insurance against loss to vast quantities of highly volatile perishable grains. Compare the Uniform Grain Storage Agreement of 1940—2 pages—with the one of today. I believe it's 13 pages. The current agreement of 1956 has 13 pages of very fine print. But perhaps this is not a very fair comparison, as the print is even finer on the two-page document.

« PreviousContinue »