We most respectfully ask the Congress to guard carefully its own prerogatives. Provisions of the charter should hold the Corporation directly accountable to Congress for its responsibilities and per formance. In part II of our statement we are making certain specific recommendations with respect to drafting the charter. As we have told you before, we are making that a part of the record. We are not reading it. However, we urge these points and hope that you will give them consideration when it comes to studying this matter. Some of these features are as follows: (1) We are respectfully submitting to the committee a suggested redraft of a substitute bill. It attempts to do what we said above, specifically set forth the duties, powers, and responsibilities of the Corporation. (2) We are suggesting that the life of the Corporation be limited to a term of 2 years. There are various matters pending which are discussed more fully in part II. I might say here that we have in mind that there is a long-range agricultural policy which is being studied now by both branches of Congress. There may possibly be changes that within the next 2 years would change some of the attitudes as to Commodity Credit Corporation. Senator AIKEN. For your information, that bill will be introduced this afternoon. Mr. SANFORD. That is very interesting. Senator AIKEN. You may have a copy of it tomorrow. Mr. SANFORD. I would like very much to have it. If, at the end of a 2-year period, it appears that Commodity Credit Corporation is then satisfactorily discharging its obligations, and it is then still a necessary and useful instrument in connection with whatever farm program is in existence at that time, it will be a simple matter to extend its life. I think some of these previous extension bills have been a matter of one sentence or something of that nature. (3) We are suggesting elimination of certain vague and indefinite terms, such as in section 2 of S. 1322—and I want to be sure you are clear that these sections references are to the bill you have, to S. 1322 itself, not to our draft of it. The phrase "for the purpose of promoting the general welfare." Some of these matters have been called to the committee's attention by the General Accounting Office. Senator AIKEN. Have you or anyone in your organization had any discussion with the General Accounting Office in regard to this bill? Mr. SANFORD. Do you mean the bill we are submitting. Senator AIKEN. Yes. Mr. SANFORD. Or S. 1322? Senator AIKEN. Either one? Mr. SANFORD. I think that after the report was out, Mr. Brooks, our Washington attorney, has talked with some individuals over there. (4) We are proposing that under section 4, subsection (h) of S. 1322, the corporation not be given authority to acquire and own real property or to rent or lease property such as farm lands, warehouses, elevators, railroads, terminal facilities, barges, boats, wharves, and so forth. Our reason for the above is obvious. All of these facilities are available in this country to handle the flow of grain and other commodities in commerce. We consider it a threat to farmers as well as to business, to give any governmental agency the power to acquire commercial facilities. Senator AIKEN. What about the stories we hear about grain having to be piled on the ground in the West because of lack of storage, and elevators clogged? to Mr. SANFORD. That has happened two or three times in the past, my knowledge. I do not think it ever required the Government to buy or build competing elevators at that time. Hon. GEORGE D. AIKEN, NATIONAL GRAIN TRADE COUNCIL, United States Senate, Washington, 25, D. C. MY DEAR SENATOR AIKEN: In reviewing the testimony of Mr. Sanford and Mr. Slaughter before the Senate Committee on Agriculture Monday, I have come across questions, asked by you with reference to the General Accounting Office, the answers to which seem to require clarification. At page 225 of the transcript, appears the following discussion between you and Mr. Sanford: "Senator AIKEN. Have you or anyone in your organization had any discussion with the General Accounting Office in regard to this bill? "Mr. SANFORD. Do you mean the bill we are submitting? "Senator AIKEN. Yes. "Mr. SANFORD. Or S. 1322? "Senator AIKEN. Either one? "Mr. SANFORD. I think that after the report was out, Mr. Brooks, our Washington agent, has talked with some individuals over there." That you may know the nature of my talk with the General Accounting Office, I wish to advise you that my contact with them was directed and confined to an attempt to determine the progress being made toward resolving the differences, that had arisen in the course of the hearings on January 20 and 21, between the Department of Agriculture and the General Accounting Office. At no time did I discuss with them the substantive provisions of S. 1322; of any changes recommended by the General Accounting Office on January 20 or in their report to you of February 26; or of the substitute bill submitted by the grain trade Monday. My contacts with the General Accounting Office were limited, as above indicated, to determining the progress, by that Office, of its study of the pending legislation. At pages 255 and 256 of the transcript, appears the following discussion between you and Mr. Slaughter: "Senator AIKEN. Just a minute, Mr. Slaughter. You keep referring to the supplemental statement filed with the committee by the General Accounting Office. May I ask how you happen to know so much about this supplemental statement? I am not aware that it has been made public or released by the committee. "Mr. SLAUGHTER. I do not know, Senator. I have seen it a long time. "Senator AIKEN. You keep referring to it. "Mr. SLAUGHTER. Yes. "Senator AIKEN. Therefore it must have been released by the General Accounting Office to the trade because as far as I know the committee has not released it * * On March 3, in the early afternoon, I obtained from Mr. Kendall, clerk of the committee, a copy of the General Accounting Office's report dated February 26. Later that afternoon I communicated with you at your office by telephone. I inquired as to whether you had had an opportunity to study the report and you advised me that you had not. You may recall the conversation, for thereafter I inquired as to when your subcommittee planned to do anything further with reference to S. 1322. At that time you advised me that in view of Senator Capper's decision to reopen hearings before the full committee, you regarded your subcommittee as, at least temporarily, discharged from further consideration of the bill. Yours sincerely, WILLIAM F. BROOKS. Senator AIKEN. Do they own a substantial number of elevators at this time? Mr. SANFORD. They do not own any and we do not think they should. Senator AIKEN. You do not think they should be permitted to own any? Mr. SANFORD. If they are not going to do it, why give them the power to do it. Senator AIKEN. What about the sale of storage and cribs to farmers for storing their own? Mr. SANFORD. I do not think that is real property. Senator AIKEN. You think that was permissible then? Mr. SANFORD. I would have to go into a 2-hour discussion of the corn and wheat bin subject. There were 2 years when something certainly had to be done. Senator AIKEN. Are you satisfied that these facilities are available at all points where they might be needed now? Mr. SANFORD. I think there certinly will be additional grain elevators built in the United States from time to time. I think that the Government should not build them. I think the cooperatives and private firms should do that. That is a commercial job. Senator AIKEN. Do you believe that the facilities in general are adequate, then? Mr. SANFORD. Unless we accumulate huge carry-overs again. Senator AIKEN. We hope to avoid that under our new long-range program, Mr. Sanford. Mr. SANFORD. You are working on that? Senator AIKEN. I do not know whether we can or not, but we are working in that direction. Senator THYE. If we were confronted with a situation comparable to what it was at the time that these individual granaries and the storage bins had to be constructed and erected and maintained, you might find that there would be a safety measure in such a provision within the incorporation of the Commodity Credit Corporation, for the reason that we just do not know what emergencies might be ours to cope with. You take, for instance, this past year, the production of wheat, and with your carry-over, and under normal times where you had a peak demand for it, you might find yourself confronted with some surpluses that should be retained on the farm rather than in the terminals and that there might not be either the financial means on the part of the producer to have acquired all of that storage space for his own, and that you might, in some conceivable manner, establish some type of storage facility in the area where the production is, rather than to have to go to the big terminals to involve the expense of bringing it back if the next year's crop did not give you sufficient quantity of wheat to supply your domestic needs in that respective community or in that respective section of the country, so that the provision that would permit that type of storage facilities on the part of the Commodity Credit Corporation might be desirable and it might protect, you might say, the proper group, against paying freight and expenses, and commercial firm expenses, in sending the grain on to the terminal and then having to pay that additional expense in bringing it back from the terminal to feed lots or areas where it would be needed. There is the only reason why I can see the safety measure in such a provision. Mr. SANFORD. I do not believe that the prohibition against owning or acquiring real property would have stopped the corn and wheat program, because I do not think it is real property. They took the bins out and arranged with a country elevator nearby to put up the bins adjacent to the elevator. It was done on some sort of agreed contract basis. Now, I would say, and I am quite sure this is correct, although it is hard to guarantee what would have been the case if something else had to happen, but I would think that the private trade might have put up a great many of those bins, if they had been given the same kind of contractual guarantee as the expense of the program actually turned out to be to the Commodity Credit Corporation. We were not approached along those lines. I think where farm storage was provided in the country, they guaranteed the farmer 7 cents a bushel for a year's storage. Senator THYE. If you will permit the interruption, not wishing to take us away from this subject, for instance here, in order to assist one country in taking care of frozen meats because of the emergency that existed in that country and because the facilities were not there to permit the storage of frozen meat, there again it became necessary on the part of the Federal Government to move in certain shipping facilities that this Government had that the other government did not have, and unless you had such provisions within such a corporation as this, you could not move into that field without special legislation, and time would not permit you the time necessary for special legislation, and while I would disapprove of the Government doing anything that would involve us in the possession of such properties on the part of the Government, yet the Commodity Credit Corporation is an agency that must meet with emergencies and if they must meet with emergencies you have got to have certain provisions within certain sections there to permit you to cope with an emergency of that kind, and that is the only reason I see any basis of support for such a paragraph as this one here is, but there are times when you may have to have it. Mr. SANFORD. We gave that quite a lot of study and thought and discussion and argument among our own groups, and we wracked our brains to think of some situation where they had to have that power, just for the reasons that you have mentioned, Senator, and frankly, we could not come up with any. You mentioned frozen meat and I know nothing of frozen meat. Senator THYE. The only reason I made mention of that is this case in point in northern Mexico. If there wer 10,000,000 head of cattle that were starving in northern Mexico and you had to get that cattle off that range or you would have a situation down there that would be as difficult to cope with as the foot-and-mouth disease in itself, and there were no facilities to handle it, and you had to move, your border was closed, the market to the South was destroyed. Mr. SANFORD. Just what did they do? Senator THYE. I say, there would be a case of a corporation having to have the responsibility that they might move a couple of ships in there that had the frozen compartments or the frozen facility 74439-48- -9 compartments that could temporarily give relief during which the facilities were being constructed to meet it on a permanent basis. Mr. SANFORD. You say to move in ships? Senator THYE. Refrigerator ships. Mr. SANFORD. Did they have to buy them? Senator THYE. They would have to acquire them or lease them or something, and no other agency of government could enter into such a field except if it would be through a special provision of a charter of this kind. Mr. SANFORD. I think they are chartering ships every day to haul wheat to the occupied forces, the Army, or other agencies. Senator THYE. That would be an Army transaction, and it could be a normal transaction of merchant marine, but if in the event that you have to sit down and negotiate with a country in which matter you are going to give them 3 or 4 or 6 months, or even a year's relief, in a certain particular field, you would have to have someone who would acquire the responsibility of such a function. Mr. SANFORD. Of course, our basic objections to their acquiring real property is that then they own it, the tendency is to go on using it whether they have to or not. We would like to see that headed off in some way. I do not know how you can do it. Senator THYE. We all share that same feeling but you have got to have it from the standpoint of a safeguard in an administrative policy, but there are times when you cannot tie their hands exclusively from doing certain particular acts under an emergency, such as what I described to you. Mr. SANFORD. We were unable to think of a case at all where, if the facilities were available in the hands of anyone else, private industry or whoever else might own them, that they could not get the use of them through a contractual arrangement. That is the way we would like to see it done. In our paragraph 5, we recommend that the corporation be managed by an independent board of directors. Senator AIKEN. Do you mean the Department of Agriculture is to ke kept out of it? Mr. SANFORD. The present situation, of course, as you know, is that the directors are employees of the Department of Agriculture. They are appointed by the Secretary and serve at his pleasure, and we say it is perfectly obvious that such a board is nothing but a dummy board of directors. I think that has been discussed with you quite thoroughly before in the record I read of the GAO testimony. I do not know that you want to go into it further. Senator KEM. How would you make up the personnel of the Board? Mr. SANFORD. Mr. Slaughter is going to be the next witness, and he is going to go into that in some detail, so I am just mentioning these points that he is going to elaborate on. (6) We have attempted in our draft to urge this committee to write a bill that will endeavor to compel the CCC to utilize existing channels of trade rather than to maintain a duplicating system of its own, staffed, operated, and financed by the Government. |