Mr. THEIS. I would like to have the privilege of reading, if you please, sir, as maybe some questions that come to your mind or counsel's mind as we go along may be answered later in the statement. However, I shall be glad to return and answer any question at any time, or even if you want to catch the point at that time.

Senator SYMINGTON. Very well, sir.

Mr. THEIS. My name is Frank A. Theis. I am president of the Simonds-Shields-Theis Grain Co. in Kansas City, Mo. Our company is in its 76th year in the grain business, and personally, I am in my 48th year of handling grain. I appear as president of the Terminal Elevator Grain Merchants Association, an important segment of the National Grain Trade Council.

This association was organized in 1918. Its object, as set forth in the constitution, is as follows:

For the purpose of cooperating with our Government and Food Administration for the economic buying, handling, and distributing of our country's grain by making available our terminal elevator facilities for that purpose.

Any merchandiser of grain, whether person, firm or corporation, owning or operating a terminal grain elevator, is eligible for membership. The 19 directors of this association represent the following markets or areas:

Albany, N.Y.

Amarillo

Buffalo

Chicago

Cincinnati-Cleveland

Duluth-Superior

Enid, Okla.

Fort Worth-Dallas

Hutchinson, Kans.

Kansas City

Milwaukee
Minneapolis
Wichita

Omaha

Pacific coast

St. Joseph, Mo.

St. Louis
Salina, Kans.
Toledo

I shall not read them, because they are in the statement. I am very happy that a number of my colleagues are here today. It gives me a little encouragement in what I am going to try to tell you, Mr. Chairman, of our industry.

Senator SYMINGTON. You would not object to their interest in what they get in price for the storage of grain?

Mr. THEIS. They are very interested, and you will hear that as I go along in speaking, sir.

Senator SYMINGTON. We are very glad to have them with us this morning.

Mr. THEIS. Our membership is composed of terminal operators, both proprietary and cooperative, throughout the Grain Belt of the United States and at the main terminal and subterminal markets, and represents a total capacity for grain storage of nearly 1 billion bushels. The elevators in this category receive and ship grain primarily by rail and water.

Our Terminal Elevator Grain Merchants Association is very proud of our record, first with the U.S. Grain Corporation during the First Wold War, second with the Farm Board and Grain Stabilization Corporation during 1929 to 1932, and we have cooperated to the fullest extent with various agencies of the Federal Government, including the Commodity Credit Corporation.

In addition to my personal experience as operator of a private grain firm, I have held various positions or affiliations with Government through which I have gained considerable experience. I was with the original Agricultural Adjustment Administration in 1933 and 1934, holding the title of Chief, Grain Processing and Marketing Section, under Secretary of Agriculture Henry A. Wallace, and put into effect in 1933 the first subsidized movement of wheat and flour under the marketing section of the agricultural act. In 1934 I headed a special mission that Secretary Wallace appointed to go to Argentina to discuss participation in the International Wheat Agreement. I was a member of the War Food Administration Advisory Committee in 1942; a member of Secretary Benson's Wheat Advisory Committee, appointed in 1953; a member for 8 years of the Grain Research and Marketing Advisory Committee of the USDA; and a member since 1954 of the Grain Storage Advisory Committee formed to aid the Administrator of Commodity Stabilization Service in dealing with grain inventories and storage problems. Also, since 1938, I have been a member of the grain industry committee which has until this year negotiated storage rates with the Department of Agriculture. I used the words "until this year" because, as you know, Mr. Chairman, the rates this year were not negotiated but proclaimed.

Mr. SCHMIDT. May I interrupt just a moment? Will you, for the record, and as member of the Grain Storage Advisory Committee, just give a brief description of the duties of that committee?

Mr. THEIS. I shall be very happy to, sir.

In 1954, Secretary Benson called a storage meeting in Omaha. He asked the entire company to understand the mounting surpluses and the necessity for more storage. The meeting was held by the then Administrator. I happened to be there representing our terminal people, and expressed the views of what our people would do to try to build more capacity to try to take care of this mounting surplus. The same thing was done for country areas, and so forth.

At that time, the then Administrator conceived the idea of appointing a committee, I think of 18, representing various segments of the industry and various areas who, since 1954, have diligently and honestly, in my opinion, endeavored to counsel with the Administrator where the need for storage may be, the movements of grain that might alleviate certain situations, and that sort of thing.

We have had many, many meetings. We have advised, in some cases, that more farm storage was necessary. We have advised in some cases that more bins by Government and quonsets should be built by them.

Senator SYMINGTON. More what?

Mr. THEIS. More bins and quonsets and farm storage. I mean of Government's own storage. I think you know there is something close to a billion bushels that the Government now has, besides the storage that they have marked off on the James and the Hudson Rivers and on the Pacific coast.

We have advised, we think, from an intelligent operational standpoint, helping the Government and assisting the Government to take care of their grain, as well as the oncoming crops that the farmer desires to have available to him, for loan purposes.

Senator SYMINGTON. Did you advise on the rates?

Mr. THEIS. No, sir; at no time. You mean the rates of storage? Senator SYMINGTON. Yes.

Mr. THEIS. No, sir.

Senator SYMINGTON. What do you mean when you say "The rates were not negotiated but proclaimed"?

Mr. THEIS. It is an entirely different subject, Mr. Chairman.
Senator SYMINGTON. Are these two committees?

Mr. THEIS. These are entirely different committees. One is a negotiating committee.

Senator SYMINGTON. I see. The Grain Industry Committee-I see. But you have been on a committee which has negotiated a price? Mr. THEIS. Every one that CCC has had since 1938, sir.

Senator SYMINGTON. In negotiation?

Mr. THEIS. Yes, sir.

Senator SYMINGTON. What did you mean by the phrase "were not negotiated but proclaimed"?

Mr. THEIS. We have, in this Committee, and there have been various people on the Committee-I happen to be one if there is any great compliment to it-happen to have been on the Committee since its inception, but we have tried to work out, and we think we have worked out, with meetings not only in the areas, but in the Committees, in trying to arrive at equitable and fair rates of storage, and, of course, in accordance with the contract's responsibilities.

These meetings have been held, as you have seen in the record, at various times, and there have been changes in personnel over the years. As I say, I have been on all of the negotiations. This time, however, we learned, after 5 months of negotiations, that what we had suggested, not only as a committee, but what had been recommended with complete unanimity of the people at the Kansas City meeting for 2 days, where there were 1,000 grainmen in attendance giving their views of these rates as they had suggested back in March, were not at all considered.

All of that information which we had developed in 5 months was completely disregarded and we were told what the rates were going to be, on April 29.

Senator SYMINGTON. Well, in the past, you negotiated the rates. Is the implication there and I am only asking for information—that there was a mutual agreement as to what the rate should be?

Mr. THEIS. There has always been a mutual agreement up to this year; yes, sir.

Senator SYMINGTON. Well, how can the Government, with the taxpayers' money, enter into a mutual agreement with a supplier as to what the rate will be?

Is not the Government the decisive factor in establishing rate?

Mr. THEIS. I may say they are always the decisive factor, of course. Senator SYMINGTON. I do not understand it. I am just thinking back to my business experience. I am trying to understand the difference between negotiating and proclaiming. I think you want this

clear for the record?

Mr. THEIS. I do.

Senator SYMINGTON. Is the implication that the rate could only be set in the past with the approval of the grain storage people, and that now the Department has become independent?

Mr. THEIS. I say this, sir, and I shall try to clear it up in just a few words.

Senator SYMINGTON. All right.

Mr. THEIS. Until this year, by the advice and the statistics and the information that we, as an industry, country elevators, terminals, et cetera, were able to furnish to the various committees of the Government that we have dealt with, we have convinced them that the rates we were charging or had suggested to them-we did not always get what we asked for, please understand that have been historically below what Mr. Brooks has described as State rates, or Federal rates. They have constantly been under those prescribed under those laws. But we have persuaded, for the use of the Government, that really the things we suggested had some merit and they were considered. But this year, what we suggested was not in the least considered at all. As a matter of fact, it became very evident to us that they had in mind, back in December, about what kind of a cut they were going to make in the rates.

Senator SYMINGTON. I only present to you for what it is worth, my experience. I saw a good many products sold to the Government in the past and the rate was always proclaimed to me. Sometimes I thought the price was very unfair.

Also I got a price that I thought was a pretty good price; it was often renegotiated. So I still do not understand the difference between negotiating a price and proclaiming a price from the standpoint of the Government's position with private industry in any field. If you would like, just for the record-I do not want to labor it—if you would like to explain it a little more in the record, this point, I think it would be constructive.

Mr. THEIS. Senator Symington, I realize you have had a lot of business experience. But I venture the opinion that your business experience has been negotiating on commodities or something that you are selling or something that you are manufacturing, whereas we are servicing institutions. We were negotiating service to the Government. There is a great difference, in my opinion.

Senator SYMINGTON. Well, may I respectfully say that there is very little that I have sold the Government where, if anything went sour, I did not have to service in major fashion.

Mr. THEIS. I may say we are in the same position. Our responsibility is very, very definite.

Senator SYMINGTON. There are certain items you can sell without service and I have sold those. There are certain items you can sell through service, and I have also sold those. Will you proceed? Senator COOPER. I have a question to ask, Mr. Chairman. Senator SYMINGTON. Certainly.

Senator COOPER. While I have had no experience in supplying the Government in anything, except my own services I hope, is it not a fact that prices for services are not proclaimed by the Government, usually; that the prices of services, such as your group and other groups furnish, are arrived at either by bids or by negotiations? Is not that the usual practice?

Mr. THEIS. That has been the usual situation, Senator Cooper. That is, we have negotiation, the Government has one idea, the industry has another, and finally we come to some agreement. That is the reason you have negotiation, to get to an agreement.

But this particular year, we had ideas and they had ideas, and they simply put out the rate with no consideration at all.

As a matter of fact, our meetings broke up, as you probably know. Senator COOPER. I was not quite sure if my friend, the chairman here, was not arguing that there should be a proclamation of prices paid by the Government for services or supplies.

Senator SYMINGTON. No; my point is that I just wanted clarification on the difference between the two phrases. I think you said there had been a 5-month discussion of rates.

Mr. THEIS. I missed the question.

Senator SYMINGTON. Was there any discussion of what the rates should be this year?

Mr. THEIS. Yes, indeed, there was. But let me explain this to you. We first were negotiating the body of the contract, the substance of the contract, and the responsibilities and the things that were necessary. This year, we were presented with an entirely new uniform storage agreement. Previous years, there had been amendments. This was a completely new one in December. I am talking about the body of the contract, itself.

Our committee took the position, and I think rightly so, until we knew what our liability was going to be, we would not talk about rates until we got that information. As a matter of fact, that did not come out until the March hearings in Kansas City, and the final April hearings that we had here in Washington.

Senator SYMINGTON. Mr. Theis, I want to emphasize to you, as my constituent and an outstanding citizen of my State, I do not have any particular approval of the present operations of the Department of Agriculture. I do not think that comes to you as any surprise.

The Department of Agriculture is constantly stating, groaning to the people, about the cost of the farm program. It has ever since I have been on this committee. As a result of this constant groaning about the high cost of the farm program, the prices to the farmers, at least in my State, have been steadily reduced.

When I first came to the Senate, the chairman of the Subcommittee of the Department of Agriculture, of the Appropriations Committee of the Senate on Agriculture, made a speech in which he said that the total percentage of the farmers in this country was now down to 13 percent. They were only getting around 6 percent of the national income. Today that 13 percent has been reduced to just over 12 percent, but that 12 percent is now only getting just over 3 percent of the national income, according to the latest figures.

In other countries of the world, 90 percent of the people in most countries are in the production of food and there is no surplusrather, there is the reverse. Their problem is hunger and famine in most of those countries. In our country, our problem is surplus.

Now, regardless of the reasons why, the income of the farmers of the United States, as against the rest of the population in the other segments of the economy, has been dropping steadily. Based on the figures in the Department, it dropped very heavily last year in my State. In Iowa, it dropped 28 percent; in Nebraska, 29; or vice versa. In South Dakota, it has dropped 35 percent in 1 year. In North Dakota, farm income has dropped 36 percent in 1 year, as against the previous year.