Page images
PDF
EPUB

Mr. GOOLD. Yes, sir.

Senator SYMINGTON. Will you come up, please?
Mr. GOOLD. Yes, sir.

Senator SYMINGTON. Will you give your name?
Mr. GOOLD. My name is W. George Goold.

Senator SYMINGTON. And what is your position?

Mr. GOOLD. My position is Assistant Director of Personnel in charge of security and investigations.

Senator SYMINGTON. Have you a copy of this statement with you? Mr. GOOLD. No, sir.

Senator SYMINGTON. Will you see that we have one as soon as we can, as long as it has been given to the press service and not the committee.

Mr. GOOLD. Yes, sir.

You bet I will.

Senator SYMINGTON. Has anybody in the room a copy of this statement that they can help the committee with?

Mr. GOOLD. I shall get you a copy of the statement right now.
Senator SYMINGTON. Thank you.

The Special Agriculture Investigating Subcommittee commenced hearings January 12, 1960, concerning the grain storage operations of the Commodity Credit Corporation.

As was shown at our previous sessions, the amount of tax money being spent by the Commodity Credit Corporation, for storage of Government grain, amounts to hundreds of millions of dollars each year.

In the course of this investigation into the operations and administration of the programs of the U.S. Department of Agriculture, our committee staff has examined the various activities of the several regional commodity offices, which offices are responsible for the operation of this program in their respective areas.

The Secretary of Agriculture yesterday indicated his displeasure at the holding of this hearing. I can well appreciate why the Secretary of Agriculture would not welcome an investigation of the operation of his Department. However, our subcommittee recognizes that it is the duty of Congress to inform the public of any laxity in the administration of existing laws or to explore the need for further legislative action to assure the ethical and efficient administration of our laws.

All of our staff investigations have been made without any aid from the Department of Agriculture or other branches of the executive department. Despite the Secretary, we shall continue our investigation of all aspects of the grain storage program and other matters which fall within the jurisdiction of this subcommittee.

During the course of our investigation, the subcommittee staff learned that the Federal Bureau of Investigation was also investigating the matter. We contacted the Federal Bureau and informed them that the matter had been under subcommittee investigation for some time.

We were told by the FBI that our inquiry should not in any way be influenced by any course of action they might take.

I received a letter on March 5 from an Assistant Attorney General of the United States stating that he had learned that we had subpenaed, or intended to subpena, Mr. Corey, until recently director of the Portland office of the Commodity Stabilization Service.

Such subpena had already been served upon Mr. Corey. This letter from an Assistant Attorney General did not mention a public hearing. I want to emphasize that because it was my understanding that last night Mr. Benson or one of his assistants stated that we had been requested by the Department of Justice not to hold these hearings. That is not correct.

In that connection, I ask unanimous consent of the committee to insert the letter from the Department of Justice at this point.

(The letter referred to follows:)

Hon. STUART SYMINGTON,

DEPARTMENT OF JUSTICE,
Washington, March 4, 1960.

Chairman, Special Agriculture Investigating Subcommittee,
U.S. Senate, Washington, D.C.

DEAR SENATOR SYMINGTON: On January 18, 1960, the General Counsel of the Department of Agriculture forwarded to this Division for consideration as to prosecution certain facts concerning Earl C. Corey of the Portland, Oreg., office of the Commodity Stabilization Service. The Criminal Division, immediately upon examination of the facts submitted, requested the Federal Bureau of Investigation to conduct certain additional investigation required to establish the commission of a criminal offense. This investigation which began at once and which is still continuing has produced evidence sufficient to warrant the presentation of facts to a grand jury and the U.S. attorney has been authorized to institute grand jury proceedings in this matter.

I have learned that you have subpenaed or intend soon to subpena Mr. Corey to testify before your subcommittee. Since I know you are fully aware of the impact of such testimony upon any criminal prosecution in which Mr. Corey may be a defendant, I thought it important to bring to your attention the fact that grand jury proceedings are about to begin in the matter referred by the Department of Agriculture. I know you would not wish to take any steps which might jeopardize Federal criminal proceedings.

Sincerely,

MALCOLM R. WILKEY, Assistant Attorney General.

Senator SYMINGTON. I want to take this opportunity to thank the Comptroller General of the United States and his staff for the fine cooperation and assistance they have given this committee. As the Senators and the people know, they are performing an outstanding public service.

Mr. Counsel, who is your first witness?

Mr. SCHMIDT. Mr. Earl Corey.

Senator SYMINGTON. Mr. Corey, will you step forward, please?
Are you represented by counsel?

Mr. COREY. I am.

Senator SYMINGTON. Would you like him to sit with you?

Mr. COREY. Yes, please.

Senator SYMINGTON. Mr. Corey, will you stand and be sworn.

Do you swear that the testimony you will give in this Senate subcommittee of the Senate Agriculture and Forestry Committee will be the truth, the whole truth, and nothing but the truth, so help you God? Mr. COREY. Yes, sir.

Mr. CORDON. Off the record.

(Discussion off the record.)

Senator SYMINGTON. Back on the record.

Will you identify your counsel, Mr. Corey?

Mr. COREY. Mr. Guy Cordon, former Senator.

Senator SYMINGTON. Mr. Guy Cordon, former Senator from the great State of Oregon.

TESTIMONY OF EARL C. COREY, PORTLAND, OREG., ACCOMPANIED BY GUY CORDON, COUNSEL

Senator SYMINGTON. Senator Cordon, we welcome you here. It is always a privilege to see you. And it is an honor to have you with us again this morning.

Mr. CORDON. Thank you, Mr. Chairman.

Senator SYMINGTON. May I respectfully state that the rules of the committee are that the witness can consult with his lawyer at his convenience.

As I understand it, Mr. Corey, you have a prepared statement, is that correct?

Mr. COREY. Yes.

Senator SYMINGTON. Would you like to read the statement?

Mr. COREY. I would.

Senator SYMINGTON. Have you any copies of the statement?

It is the rule of this committee that any prepared statement should be given the committee 24 hours before the hearing, but we will waive that in this case.

Will you proceed, Mr. Corey.

Mr. COREY. My name is Earl C. Corey. I reside at 3480 Southwest Talbot Road, Portland, Oreg. I have been associated with some phase of the grain and milling industry since July 1930 when I became connected with the Farmers National Grain Corp. as traffic manager, at Ogden, Utah. The grain corporation was liquidated in 1938 and in July or August 1938 I went to Minneapolis as Chief of the Grain Branch in the Federal Crop Insurance Corporation. In the early part of 1939 I transferred to the Reconstruction Finance Corporation in Minneapolis to assist in the takeover of the 1938 wheat that came to the Government under the loan program. In the spring of 1940, I was transferred to the Portland, Oreg., RFC office as special representative.

Later, in 1940 or 1941, the Commodity Credit Corporation was transferred to the Department of Agriculture and, as I recall it, the administrative agency was called the Production and Marketing Administration. I was appointed manager of the Portland office of PMA under the supervision of the Chief of the Grain Branch in Washington, D.C. I remained in that job under various titles and grades until 1946. During that time I worked under three different Secretaries of Agriculture-Mr. Wallace, Mr. Wickard, and Mr. Anderson.

Senator SYMINGTON. Let the Chair interrupt to say that the statement given to the press yesterday by Benson has now been received by the subcommittee and is available to members of the subcommittee. Will you proceed.

Mr. COREY. I remained with the Department until July or August 1946, when I became manager of the North Pacific Millers' Association, which consisted of the principal flour mills in Washington, Oregon, Utah, Idaho, and California. My work was chiefly public relations and statistical. In 1947, I organized Earl Corey, Inc., a statistical and public relations organization, which furnished such services to the individual members of the association. The corporation continued to perform such services until the summer of 1952, al

though during the greater part of 1951 I was in Washington, D.C., as Chief of the Grain Branch in the Office of Price Stabilization under Mr. DiSalle, presently Governor of Ohio. In the late fall of 1951, I returned to Portland, Oreg., to manage Earl Corey, Inc., which, during my absence, was managed by Mr. William Theda.

In the summer of 1952 I joined the Kerr-Gifford Grain Co. In July 1954 I went to work for the Foreign Agriculture Service of the U.S. Department of Agriculture. In January 1955 I was appointed Director for the Commodity Stabilization Service at Portland, Oreg., and remained in that position until January 22, 1960.

In the early part of 1956, I received a telephone call from Mr. Roy Gould, of the Diamond Lumber Co., who told me he had a new building that he would like to rent to the Government or a private operator because he did not understand the storage business. I told him that CCC did not operate any elevators but if I heard of someone interested I would tell him about it. Some time later I discussed the availability of the warehouse with Mr. Richards, manager of North Pacific Grain Growers. He discussed the matter with Mr. L. M. Smith, a longtime operator in the grain business. Mr. Richards told me Mr. Smith was interested so I called Mr. Gould and recited that a Mr. Smith might be interested and, at Mr. Gould's suggestion, he invited Smith and me to have lunch with him, which we did. At the lunch there was no discussion of lease rentals or a Uniform Grain Storage Agreement contract. I left and returned to the office and Mr. Smith and Mr. Gould remained. Some days later Mr. Smith and Mr. Richards and I met for lunch and they suggested the three of us form a business to operate the facility. At that time I made it clear that I would have nothing to do with the management in any manner and that my interest would be solely as an investor.

Mr. Smith discussed the new venture with his attorney, at which time he disclosed who the partners were and the occupation of each. The original partnership papers were drawn up. At this point I made specific inquiry whether I was in violation of any law if I participated as an investor. Mr. Smith assured me that he had discussed the matter with his attorney and was informed the venture was legal. It was Mr. Smith's opinion that the venture would require a capital of $90,000 divided equally. I told both parties that I would have to liquidate my series E-bonds and stocks that I owned. At that point Mr. Smith volunteered to accept my personal note. The note was paid off out of profits of the venture. In late May 1959 we-correction right here. I want this "we" to reflect that it was the Commodity Stabilization Office-received a notice from Washington, D.C. enclosing a copy of the Code of Ethics as formulated by the 85th Congress. This was duplicated in the Portland office under date of June 1, 1959. I felt the language of the seventh item might appear to cover my investment in Three State Warehouse Co. Accordingly, on June 9, 1959, I severed my investment in the company.

Senator SYMINGTON. Does that complete your statement?

Mr. COREY. It does, Mr. Chairman.

Senator SYMINGTON. Mr. Counsel, will you proceed?

Mr. SCHMIDT. Mr. Corey, as Director of the regional office of the Commodity Stabilization Service, your office was responsible in seven

Western States, was it not, for the procurement, fiscal, transportation, and storage activities of the Commodity Stabilization Service? Mr. COREY. It is.

Mr. SCHMIDT. Mr. Corey, your office handles the grain storage matters concerning the Uniform Grain Storage Agreements in those States?

Mr. COREY. It does.

Mr. SCHMIDT. I would like to read to you, Mr. Corey, an excerpt from an organizational chart dated November 23, 1956, recommended by you to the U.S. Department of Agriculture and approved by them relative to the storage management duties of the Portland office.

Provides contract information and receives applications for storage contracts within the area. Orders examination of facilities, commodities stored therein, and investigations of warehousemen. Reviews applications, examination reports and subsequent examination reports, commercial credit reports, and other pertinent data to determine whether warehouses and facilities conform to prescribed standards. Determines initial and makes subsequent reevaluation of performance bond requirements. Directs storage contract and agreement negotiations. Approves, suspends, or terminates storage contracts and agreements. Is that correct? You are familiar with that, are you not, sir? Mr. COREY. If I recommended it, if I signed it.

Mr. SCHMIDT. Now, on your interest in the partnership that you have described, this was under the name of Three State Warehouse Co., isn't that correct?

Mr. COREY. L. M. Smith, doing business as Three State Warehouse Co.

Mr. SCHMIDT. At all times it was L.M. Smith, doing business as Three State Warehouse Co. ?

Mr. COREY. As I recall it.

Mr. SCHMIDT. Mr. Corey, I am going to ask that you be handed a copy of what we will call exhibit 2, exhibit 1 being the organizational chart which we have asked to be included in the record.

(The document referred to will be found in the appendix on p. 396.) Mr. SCHMIDT. This is a general partnership agreement. It recites that L. M. Smith, Waterville, Wash., is doing business in Portland under the designation "Three State Warehouse Co.," whereas W. A. Richards of Portland, Oreg., and Earl C. Corey, are desirous of joining the operation of said company as general partners.

Therefore, you did form a partnership known as Three State Warehouse Co.

Calling your attention to page 3, is that your signature thereon, Earl C. Corey?

Mr. COREY. Yes, that is my signature.

Mr. SCHMIDT. Then this was all three of you actually operating in a partnership known as Three State Warehouse Co.; isn't that true, sir?

Mr. COREY. Yes. I will have to say that. Yes. That is right. As I mentioned, my recollection was it was L. M. Smith doing business as Three State, but this is the-so my testimony will be corrected to

show this.

Mr. SCHMIDT. This partnership agreement is dated August 1, 1956, but you had actually been operating as a partnership from April of 1956, had you not, sir?

Mr. COREY. Would you repeat that, Mr. Counsel?

« PreviousContinue »