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Parenthetically, I might add, Mr. Chairman, that the action of the Senate committee in striking this from the bill was approved by the Senate and the bill, I understand, is now in conference.

Senator SYMINGTON. Could I ask a question there?
Mr. BROOKS. Yes, sir.

Senator SYMINGTON. As I understand, you believe that you should have a uniform agreement for all people who store grain?

Mr. BROOKS. I believe that the terms and conditions under which Government grain is stored should be uniform throughout the country; yes, sir. Senator SYMINGTON. Including the price?

Mr. BROOKS. The rates, I believeĪ hesitate to use the word variable, because it has so many meanings. But up until this

, have been area rates and commodity rates, depending on whether it be corn or wheat or oats or rye.

Senator SYMINGTON. Well, what I am getting at

Mr. BROOKS. I would recommend the continuance of a procedure such as that as to rates.

Senator SYMINGTON. What I am getting at is, Do you think the rate should be established ? You use the word here, “uniform.” Do you think a rate should be established regardless of cost?

Mr. BROOKS. Well, cost to whom, sir?
Senator SYMINGTON. Cost to the person who is storing the grain.

Mr. BROOKS. Well, I have a theory in this field which I adopt as a result of a number of exposures. The background of the grain warehousing industry is one that has found this industry subject to varying degrees of local State control. You have warehousing laws, some of which require that maximum rates be set by statute. Others require that maximum rates be set by commissions. These are State laws. Other State laws require that you post your tariffs, and, having posted them, you cannot exceed them.

Now, it is within this framework—these rates are set at the local level in view of the reasonableness of the local rates. I believe in this system. I believe in the system of having States be laboratories, as it were, for determining what kind of regulations you should use for businesses affected with a public interest, and that is the kind of business grain warehousing is. It is within that framework that I think rates should be set.

I think that most people, back at local levels, looking upon the reasonableness of their situations in Kansas or Minnesota or North Dakota or Missouri can determine what maximum rates should be charged, taking in mind a lot of things, including the cost of operating.

Senator SYMINGTON. Are you saying that local people, say a county in my State, should tell the Federal Government what the rates should be for that particular district ?

Mr. BROOKS. No, sir; I am not.

Senator SYMINGTON. Then should the State be able to tell the Federal Government what the rates should be?

Mr. BROOKS. I say that the Federal Government can justifiably rely on local practices, including the maximum rates permitted to be charged by States, as the framework within which they should determine the Federal Government should determine what rates CCC should pay, assuming there is a default on a loan and title passes to the Government on grain in storage.

Senator SYMINGTON. My question was, Do you think there should be a uniform rate regardless of cost to all the people who store grain on the part of the Federal Government?

Mr. BROOKS. If it is broken down by areas to reflect the State-imposed, State-set, State-regulated rates.

Senator SYMINGTON. Of course, we cannot operate something subject to the approval of the States. That is not the way Federal money can be appropriated or expended.

Now, suppose you have, in a State, a grain storage facility which, because it has been fully depreciated, or because when it was approved, the purchase price of it was very low, and therefore the cost of grain storage in that particular storage place was very low, we have had costs as low as 3 cents a pound, according to the General Accounting Office-3 cents a bushel, I am told. I am a pound man at heart, and I suppose we can only talk about that in milk. But we have had it under 3 cents a bushel.

Now, let us take a unit that has been built in the same locality at the request of the Department of Agriculture, fairly recently, so that the costs of the recent facility were a great deal higher than the costs of the other facility which might be in the same town. When you use the words, “uniform agreements," do you mean that the price in both cases should be the same? I am not criticizing, I am just trying to follow your trend of thought. Do you believe that the Federal Government, through the Department of Agriculture, should pay each of those grain storage people the same amount of money per bushel for the storing of that grain?

Mr. BROOKS. Provided it reflects those rates which the local State legislature or the local warehouse commission or custom seems to regard as reasonable.

Senator SYMINGTON. Well, then, what you are saying is that the Federal Government, through the Department of Agriculture, should follow the recommendations or the practices of the States; is that correct?

Mr. Brooks. Sir, I am saying this. I am going back to the charter of the Commodity Credit Corporation, which provides that in its operations it shall follow the usual and customary facilities and arrangements of trade or commerce. I am suggesting that the usual and customary facilities of trade and commerce in the warehousing business involves the use of State-set, State-approved, federally approved, or posted and therefore common law tariffs which must be observed.

Senator SYMINGTON. Well, now, my next question is, you bring out

Mr. BROOKS. I might go back, if I may, Mr. Chairman, to your hypothetical situation, and point out that the risk assumed by both of these elevator operators is the same, irrespective of the kind of operation they have.

Senator SYMINGTON. I am sorry that I cannot agree with you on that. Speaking as a businessman, if you are making a profit of two or three hundred percent, your risk is not as great as if you are making a profit of 2 percent or losing money.

Mr. BROOKS. Mr. Theis will handle this term "profit” as you are using it.

Senator SYMINGTON. I would say that profit is what you distribute to the stockholders and spend yourself after the costs.

Mr. BROOKS. He will take that up.

Senator SYMINGTON. Let me ask another question. You also suggest the premise what we follow in effect is the philosophy of the customers or the recommendations of the locality and the States as a method for area establishment of rates. Do you question the renegotiation? I am only trying to find out what is in your mind. Do you question any renegotiation clause in the contract? Mr. BROOKS. Very definitely. Senator SYMINGTON. All right, sir. Will you proceed?

Mr. BROOKS. What are our views on this proposal of mandatory use of Government facilities to store surplus commodities?

1. The congressional committees having jurisdiction over legislation affecting the Commodity Credit Corporation; that is, House Committee on Banking and Currency and the Senate Committee on Agriculture and Forestry, have not considered this amendment which in fact amends the Commodity Credit Corporation's charter. On those occasions in the past when these committees have considered legislation in this area, they have determined that requirements similar to those of the appropriation bill should not be imposed on Commodity Credit Corporation.

Those committees in the Congress, after mature consideration of similar proposals, have provided in Commodity Credit Corporation's charter:

That nothing contained in this subsection shall limit the duty of the Corporation, to the maximum extent practicable consistent with the fulfillment of the Corporation's purposes and the effective and efficient conduct of its business, to utilize the usual and customary channels, facilities, and arrangements of trade and commerce in the warehousing of commodities.

This amendment obviously violates, without amending, the plain language of Commodity Credit Corporation's charter,

2. Commencing in June 1949, the policy of the executive branch has been to regard its grain storage facilities for use only in emergencies. On June 7, the then Secretary of Agriculture, Mr. Brannan, in a press release stated in part:

This CCC storage is intended to supplement existing facilities only to the extent necessary to help meet urgent current needs. The bins or other storage facilities on these sites, when not needed by the Corporation, will be subject to lease by farmers or groups of farmers. We regard the CCC bin purchase approach to the grain storage problem as a temporary measure, made necessary by the lack of time in which to meet situations which are immediately ahead.

This is the press release, sir, if you would care to see it. I do not want to put it into the record.

Mr. SCHMIDT. You do not want to put it into the record ?
Mr. BROOKS. No; it has some value as an antique, I think.

Under a number of programs approved by Congress, commercial grain storage facilities have increased to 4.2 billion bushels of capacity as compared to 1,250 million bushels of capacity in 1950. This expansion in part was in reliance on the plain language of Commodity Credit Corporation's charter, quoted above, and in part on the executive branch's continuing professed intentions that in the warehousing of surplus grains the usual and customary channels, facilities, and arrangements of trade and commerce would be given priority.

This amendment summarily overrules an 11-year executive practice actually or impliedly approved by Congress as from time to time Congress has considered and adopted amendments to Commodity Credit Corporation's charter.

3. No hearings have been held by either the House Committee on Appropriations or the Senate Committee on Appropriations to obtain the views of interested parties affected by the amendment.

Since the language of the amendment is not limited to such grain storage facilities as are owned by the Government, but extends to all Government-owned facilities in which surplus commodities might be stored, the scope of the amendment is so great as to require Commodity Credit Corporation to completely nationalize the warehousing of any commodities which are in surplus.

Therefore, if the amendment remains in the appropriations bill, the private business of warehousing commodities will have been condemned by the U.S. Government without having offered warehousemen an opportunity to be heard and without affording them any legal recourse for the loss of their property and business.

4. No evidence is available that storage costs to Commodity Credit Corporation in Government facilities are below the cost to the Government of warehousing surplus commodities in the usual and customary channels, facilities and arrangements of trade and commerce.

I might add parenthetically there that the grant of authority to the Commodity Credit Corporation to acquire interests in real estate to meet emergency situations is not at all like the philosophy in back of the legislation on which the TVA and REA and similar Government operations are based, one of which was to determine a yardstick at which private utility rates could be set.

Grain stored in Government facilities is at best only preserved while in those facilities. Deterioration and quantity losses are at the expense of the Government. Only at additional expense to the Government beyond the cost of storage can the value of this grain be maintained.

In my opinion, storing and warehousing are not synonymous.

Government-owned grain stored in public warehouses is guaranteed against loss in quantity or deterioration in quality, whether this grain remains in store for a day, several days or several years.

When Government grain is stored in warehouses those warehouses create or maintain value in this Government grain, all to the benefit of the farmers, consumers, and the Government.

5. Private warehouses pay local taxes, real and personal, local and State franchise taxes, and State and Federal income taxes.

If the amendment becomes law, these warehousemen cannot compete with the Federal Government, all to the financial detriment of local and State governments and to the financial detriment of the United States.

6. If any Member or any Members of Congress wish to nationa' ze the assembly and distribution of agricultural commodities, we suggest that he or they introduce bills to this end ; that appropriate legislative committees hold hearings on their proposals, and that after



full hearing, those committees have the Congress on the basis of evidence introduced at these hearings, determine whether now, or at any time in the foreseeable future, the food and fiber industries of the United States shall be nationalized.

I am glad to attempt to answer any questions the committee may have on the Government's grain storage program.

Senator SYMINGTON. Thank you very much for your interesting statement, Mr. Brooks.

Mr. Counsel, have you any questions?
Mr. SCHMIDT. I have no questions.

Senator SYMINGTON. We appreciate your coming before the committee to present your thoughts here today. Mr. BROOKS. Thank you,

Mr. Chairman. With me, as I said earlier, is Mr. Frank A. Theis, who will present the views of another of our members, the Terminal Elevator Grain Merchants Association. With Mr. Theis this morning are a number of directors of that association whom if the chairman would permit, I would like to introduce to you, sir, and others representing terminal market points.

Senator SYMINGTON. You may proceed.

Mr. BROOKS. Mr. Donald Fraser, who happens to be chairman of the National Grain Trade Council's board, and the director in Minneapolis of Mr. Theis' group.

We have, also, Mr. Charles Summers, director from Hutchinson, Kans.; Mr. Sam Rice, Jr., director from Toledo; Mr. Ernest E. French, director from Wichita, Kans.; Mr. R. C. Woodworth, director from Albany, N.Y.; Mr. Orville Fisher, director representing Duluth, Minn.; Mr. Gerry DuRant, a director representing Buffalo, N.Y.

In addition to these, from Fort Wayne, Ind., Mr. Sam Hunt; from St. Joseph, Mo., Mr. Arthur Frank; from Minneapolis, Minn., Mr. H. H. Tearse, Jr.; Mr. Robert Serumgard, and Mr. F. P. Heffelfinger.

From Salina, Kans., Mr. Ed Morgenstern.

From St. Louis, Mo., Mr. Arnold Schneider, James Hogan, and Mr. Donald Bid good.

From Indianapolis, Ind., Mr. Ralph Brown, and from Kansas City, Mo., in addition to Mr. Theis, Mr. Jerry Cossette.

Mr. SCHMIDT. Mr. Brooks, will you make sure the reporter gets the list?

Mr. BROOKS. I shall do that.
Senator SYMINGTON. Thank you very much, Mr. Brooks.
Who is your next witness, Mr. Counsel ?
Mr. SCHMIDT. Mr. Theis.

Senator SYMINGTON. Mr. Theis, do you swear that the information given the subcommittee this morning is the truth, the whole truth, and nothing but the truth, so help you God?

Mr. THEIS. I do.


Senator SYMINGTON. Do you have a prepared statement ?
Mr. THEIS. I do, sir.
Senator SYMINGTON. Would you like to read it!

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