Mr. SCHMIDT. Mr. Pollock, I think the record should show that was included in a financial statement filed by Pollock Elevators under a Uniform Grain Storage Agreement with the Evanston, Ill., Commodity Credit office, and that is how it came to our attention. Mr. POLLOCK. Was it shown as an asset, Mr. Schmidt? Mr. SCHMIDT. It was shown on the financial statement of Pollock Elevators, as shown to you yesterday. Mr. POLLOCK. Owned by my son, Gerald R. Pollock. Mr. SCHMIDT. Right. Mr. POLLOCK. He is the sole owner of those two elevators. Mr. SCHMIDT. Correct. Senator SYMINGTON. Do you know why it was not listed before, and then later was listed? Mr. POLLOCK. I do not know that, sir; no, I do not. He has had that Senator SYMINGTON. Would you find that out for the record? Mr. SCHMIDT. Mr. Pollock, you are the principal creditor, then. The U.S. Department of Agriculture Regulations, chapter 55, section 2, subsection 20-12, which covers conduct of employees and outside interests, states, in part: Any employee having financial or other interests in any corporation, company, firm or association directly affected by his work will give written notice of such to his immediate superior through the head of his agency. Have you done that, sir? Mr. POLLOCK. No, I do not believe I have given written notice, sir. Mr. SCHMIDT. No further questions. Senator SYMINGTON. Senator Ellender, have you any further questions? Senator ELLENDER. No. Senator SYMINGTON. Senator Young? Senator YOUNG of North Dakota. Yes. Had you conveyed the title to this property to your son? Mr. POLLOCK. Yes, sir. Senator YOUNG of North Dakota. Of record? Mr. POLLOCK. Yes, sir. Senator YOUNG of North Dakota. What time was it recorded? Mr. POLLOCK. Well, it was in early 1957. I cannot give you the dates on it, Senator Young. Senator YOUNG of North Dakota. Previous to your coming here? Mr. POLLOCK. Previous to my coming here, yes, sir. Senator YOUNG of North Dakota. That is all. Mr. POLLOCK. And I had a reputable law firm handle the thing and see to it that it was done properly. Senator SYMINGTON. Do you know what the net worth of the company is? Mr. POLLOCK. Of the Pollock Elevators Co. ? Mr. POLLOCK. No, sir, I do not. Senator SYMINGTON. Well, I think the record shows it is $38,000, in 1956. Mr. SCHMIDT. Yes. Senator SYMINGTON. And how much is the value of the loan, 60 Mr. POLLOCK. $65,000, I believe, was the figure that you had there. Senator SYMINGTON. $65,000. Mr. Pollock, before we recess these hearings, I make an observation for your consideration. The cost of administering the price support program in the Department of Agriculture has gone up further in the last few years than any increase in any management costs I have seen, in Government or private business. The total costs for administering the price support program have gone up from $34 million a year in 1952 to $364 million a year in 1959. That is an increase of almost over 1,000 percent. One of the problems we have run into from the standpoint of good business practice is the relative dilution of authority and responsibility incident to these committee systems. You mentioned this committee you were on. There were 25 people in this particular meeting. They are just the people from the Department of Agriculture. There are pages of additional people. What is hard for us to do is to locate who has the responsibility and the authority over there. It has been my experience there are only three things a man has to know to do a good job: Who does he report to, who reports to him, and what he is supposed to do. Now, you have outlined what might be called your job analysis here, and it is well outlined. But the testimony shows there are a good many parts of it not too clear. I bring this up in an effort to be constructive, because these costs are shockingly high. I know you will agree nobody doing Government work should make 167 percent profit on cost. The Congress is constantly criticized because of the amount of money the farm program costs. At the same time, we run into this character of management. And so I would hope that you would take back to the Secretary our thoughts in this matter, in an effort to streamline authority and responsibility in the Department, so we can get the facts; and so you will operate on a basis less costly to the taxpayer. We would also like to know your policies-I do not think we should wait 90 days with respect to this new corn crop coming up. Moisture or no moisture, it is going to be here. I live in that part of the country. Also what do you plan to do from the standpoint of first filling Government-owned storage capacity before making additional commercial contracts? I think you said that Government-owned storage capacity is only 70 percent full. Is that correct? Mr. POLLOCK. That is about right. Senator SYMINGTON. What we are interested in is lightening the burden to the farmer, which Secretary Benson told Senator Ellender's committee a year ago this month was what he wanted to do, too. So I think we are both after the same end. We appreciate your being a forthright witness. It has been a pleasure to see you. Mr. POLLOCK. Thank you, sir. (Subcommittee note: On January 25, 1960, Mr. Pollock submitted the following supplemental material to the subcommittee:) U.S. DEPARTMENT OF AGRICULTURE, Hon. STUART SYMINGTON, Chairman, Special Agriculture Investigating Subcommittee, Committee on Agriculture and Forestry, U.S. Senate. DEAR SENATOR SYMINGTON: When I appeared before the Special Agriculture Investigating Subcommittee on January 13 and 14, 1960, and was questioned with regard to any possible interest I might have in the grain elevators at Walford and Norway, Iowa, operated by my son, Gerald R. Pollock, I had to testify from memory without opportunity to refresh my recollection with regard to the details of the matter because I was not informed in advance of the nature of the inquiry. In a letter to Mr. Richard Schmidt, counsel of the subcommittee, dated January 14, 1960, I furnished certain information requested by the subcommittee in the closed hearing on January 13. Since giving the testimony, I have obtained from my bank safety deposit box the two notes which were given to me by Gerald R. Pollock in connection with sale to him of the Norway and Walford elevators. Photocopies of these notes are furnished herewith for the purpose of supplementing and correcting any details of my oral testimony which may be at variance with the terms of the notes. While I have not had an opportunity to review the transcript of the oral testimony, I recall having indicated that I held notes totaling approximately $65,000 which were given in February of 1957 in payment for my two-thirds interest in the elevators at Norway and Walford, Iowa, which I sold to Gerald R. Pollock prior to entering Government service, Gerald having previously acquired an interest in the elevators in 1953. Upon examination of the documents, I find that the note given on February 23, 1957, for the purchase price of the two-thirds interest in the elevators amounted to $57,007.12, that such note had a due date of January 1, 1987, and that it provided for payment of $2,000 annually beginning January 1, 1958. No payments on the principal amount have been made. You will recall my testimony that my son has offered to make principal payments on the notes since 1957 but I declined the payments because of the high interest rate required to be paid by him on current borrowing at banks. The other note is dated August 1, 1953, was in the original amount of $19,277.62, and provided for interest at the rate of 3 percent per annum. This note, according to my present recollection, was given by Gerald R. Pollock for the purchase from me in 1953 of a one-fourth interest in the elevators at Norway and Walford, Iowa, which were operated from that date until July 1, 1955, in the partnership name of Pollock and Christy, the partnership interests being Raymond J. Pollock, one-half; Gerald R. Pollock, one-fourth; and J. M. Christy, one-fourth. On July 1, 1955, my son and I purchased Mr. Christy's interest, and the partnership continued as Pollock Elevators (two-thirds owned by me and one-third by my son) from that date until the partnership was completely terminated upon sale of my remaining two-thirds interest to my son. By mutual agreement, this sale was made effective as of January 1, 1957, in order to simplify tax returns. The reverse side of the note of August 1, 1953, shows seven payments on principal from July 24, 1954, through January 20, 1957, with a principal balance remaining due on the latter date of $8,500.60. The total of the balance of principal due on the 1953 note and the principal amount of the 1957 note is $65,507.72, which represents the balance due on the purchase price of 100 percent ownership of the elevators. Interest payments were received and are credited on both notes for 1957 and 1958. Early in January 1960 I received a check for the 1959 interest on both notes which has not yet been deposited or credited on the notes. In view of the implication in the hearings before the subcommittee that I may have violated Department regulations relating to conduct of employees and may have failed to comply with Department regulations in not making a written report on these notes to my superior in the Department when I entered Government service in 1957, the Office of Personnel of the Department of Agriculture has examined the facts in the light of the Department regulations. The Office of Personnel has concluded that the Department regulations did not then require such a written report to be made and that my holding of these notes does not constitute a violation of Department regulations. Enclosed is a copy of the memorandum of January 22, 1960, on this subject from the Assistant Director of Personnel to the Assistant Secretary of Agriculture and of my affidavit which was attached. Since being employed by the Department, I have not transacted any business of the Government with the Pollock Elevators or my son. Nor do I have any interest in the ownership, operation, or profits of this elevator business. Commodity Credit Corporation contracts with such elevators are made and administered by the Evanston (formerly Chicago), Ill., Commodity Office, which is not under my supervision or direction. Paragraph 2012 of title 8 of the Department regulations, from which counsel for the subcommittee read the second sentence requiring written notice in certain instances, applies only to employees engaged in regulatory and investigational work. The Grain Division of the Commodity Stabilization Service, of which I am Director, does not engage in regulatory or investigational work. The full text of paragraph 2012 is as follows: "2012. INTERESTED PERSONS NOT TO BE ASSIGNED TO REGULATORY OR INVESTIGATIONAL WORK.-No employee of the Department shall be assigned to investigate or to conduct any regulatory work directly affecting any corporation, company, firm, association, or organization in which he has a financial or other interest. Any employee having a financial or other interest in any corporation, company, firm, or association directly affected by his work shall give written notice of such interest through his immediate superior to the head of his agency." Secretary's memorandum No. 1436, dated December 31, 1959, requires that employees in certain categories, which include my position, submit written reports by February 1, 1960, on their pecuniary interests in business enterprises and private employment. I am including in my report submitted under this memorandum the information with respect to the notes of Gerald R. Pollock and the transactions to which they relate. In view of the questions asked in the open hearing with respect to this matter, I believe that the record of such hearing should also show, as I testified in the executive session, that, before accepting the position in the Department of Agriculture in March 1957, I gave an oral report on this matter to my prospective superiors in the Department, including Mr. Clarence Palmby, who was then Director of the Grain Division and is now Associate Administrator of the Commodity Stabilization Service. Mr. Palmby and others to whom I reported this matter were satisfied with my explanation and did not request any written report. I wish to thank the chairman and other members of the subcommittee and the staff for their courtesy on the occasion of my appearance before the subcommittee. It is respectfully requested that a copy of this letter and the enclosures be made a part of the record of the open hearings to supplement my oral testimony. Sincerely yours, To: Marvin L. McLain, Assistant Secretary. RAYMOND J. POLLOCK, JANUARY 22, 1960. From: W. George Goold, Assistant Director for Security and Investigations. Subject: Raymond J. Pollock, Attached is a copy of an affidavit taken from Mr. Raymond J. Pollock, Director, Grain Division, Commodity Stabilization Service, with respect to his former ownership of grain elevators and his disposal of his interest therein prior to entering on duty in the Department. This affidavit was taken because of his disclosure before the Symington committee of the fact that he still holds notes given by his son representing payment by the son for all of his (Pollock's) interest. Copies of the notes are attached to the statement. In view of Mr. Pollock's disclaimer of any participation, ownership or interest in the operation of these elevators, and in the absence of evidence to the contrary, we are of the opinion that his holding these notes does not constitute a violation of Department regulations. Officials were on notice orally of Mr. Pollock's holding of these notes at the time of his appointment. We can find nothing in the regulations prior to issuance of Secretary's memorandum 1436 that would have required him to report it in writing to the Department. CITY OF WASHINGTON, W. GEORGE GOOLD. Before us, Edward M. Loweree and John E. Francis, investigators of the United States Department of Agriculture duly authorized to administer oaths, personally appeared Raymond J. Pollock, of 3506 Glenmore Drive, North Chevy Chase, County of Montgomery, State of Maryland, who deposes and says: Having been duly advised of my constitutional rights that I do not have to give testimony incriminating myself and having been warned that any statement made by me may be used against me, I voluntarily, of my own free will, without promise of immunity or any reward whatsoever, and without any threat or coercion having been made against me make the following statement. I am Director, Grain Division, Commodity Stabilization Service, U.S. Department of Agriculture, with headquarters at Washington, D.C. I received this appointment effective March 25, 1957. Prior to my appointment to my present position, I had two-thirds ownership in a partnership with my son, Gerald R. Pollock, who held the remaining one-third in two grain elevators, one located in Walford, Iowa, and the other one located at Norway, Iowa. I had purchased the first one in 1943 by myself and continued sole ownership until 1949 when I took into partnership Mr. J. M. Christy. He was with me from January 1, 1949, to July 1955. Christy and I jointly purchased the Norway elevator in 1953. He had a quarter interest in both. On August 1, 1953, my son Gerald R. Pollock, who had recently graduated from college, purchased one-fourth interest in both elevators from me. At that time, I took his note in the amount of $19,277.62 in full payment of his one-fourth interest. This meant that I then had one-half interest, my son one-fourth interest and Mr. Christy one-fourth interest in these elevators. Christy withdrew in 1955. At that time, I acquired his interest and sold to my son enough to make up a one-third interest in the two elevators for him. I retained the other two-thirds. The latter part of January 1957 I was approached by Mr. Clarence Palmby of this Department to ascertain whether I would be interested in accepting a position of Associate Director of Grain Division here in Washington. I told Mr. Palmby that I had made a commitment to the Directors of the Western Grain and Feed Association to become its Executive Secretary effective July 1, 1957. This was a salaried position. I had previously served as President of the Association without compensation. I state this to show that I had intended to divest myself of responsibilities in the elevators prior to being offered my present position. Mr. Palmby suggested that I obtain a release from the Board of Directors. I did so and took this job. At that time I understood that I must divest myself completely of all ownership and interest in the elevators and was very careful to do so. I even consulted my attorney, Mr. William Dallas of Donelly, Lynch, Lynch, and Dallas of Cedar Rapids, Iowa, to make sure that I had done so. At that time I executed a deed to my son on the land and buildings at Norway and a Bill of Sale only at Walford as the elevator there was on leased ground. At that time I took back from my son a note dated February 23, 1957 in the amount of $57,007.12 representing payment in full for my two-thirds interest in both elevators. This was his personal note payable $2,000 annually beginning January 1, 1958, with interest at 32 percent. The transaction was made effective January 1, 1957 to make the tax situation less complicated, and my son paid me a salary for the interval between January 1, 1957 and the time I entered on duty at the Department. This money was reported as income in my return for 1957. Except for this I have received no other income from the business, and have received interest only on these two notes since entering on duty. My son had reduced the principal of the first note, mentioned above, to about $8,500 prior to my entering on duty here. He has offered to make principal payments on the second note, but I knew he was borrowing money from banks for working capital on which he had to pay at least 6 percent interest and since I did not need the principal payments, I informed him that it would not be necessary for him to make them as scheduled. My son continues to operate these elevators under the name of Pollock Elevators. I have had no voice in the management and have not, in fact, even looked at the books of the business since I entered on duty here. |