Delaware, is hereby authorized and directed to institute or cause to be instituted such proceedings as are required for the dissolution of said corporation under the laws of the State of Delaware. The costs of such dissolution of said corporation shall be borne by the Corporation. Upon such transfer the rights, privileges, and powers, and the duties and liabilities of Commodity Credit Corporation existing under the laws of Delaware, in respect to any contract, agreement, loan, account, or other obligation shall become the rights, privileges, and powers, and the duties and liabilities, respectively, of the Corporation, and the enforceable claims of or against Commodity Credit Corporation existing under the laws of Delaware, shall become the claims of or against, and may be enforced by or against the Corporation. PART II. STATEMENT ON A BILL TO PROVIDE A FEDERAL CHARTER FOR THE COMMODITY CREDIT CORPORATION A. ANALYSIS OF PROPOSED CHARTER SUBMITTED HEREWITH The proposed charter submitted herewith would create a Federal corporation with corporate succession until July 1, 1950, only. Management of the Corporation would be vested in a Board of Directors of 11 members. The Secretary of Agriculture would be Chairman of the Board and the 10 remaining members would be appointed by the President by and with the consent of the Senate. Five of these would serve as full-time directors. To provide representation for some segments of agriculture, provision is made that among the Directors there be appointed a farmer, a representative of an agricultural cooperative organization, a representative from the private grain trade, and a representative from the cotton trade. Section 3 of the charter submitted herewith sets forth the purposes of the Corporation and the powers that it may exercise. The section provides that in carrying out these purposes and in exercising the enumerated powers, the Corporation shall act only to the extent that its activities have been approved in annual budgets and in accordance with law. This section further provides that the Corporation shall use the usual and customary channels of private trade; that in conducting its business the Corporation shall not discriminate either in favor of or against any form of business enterprise; and that the Corporation shall not acquire real property except that it may lease office space for the necessary conduct of its business. Section 8 provides that in actions at law to which the Corporation may be a party, either party to the action may claim a trial by jury. Other sections of the bill incorporate the recommendations of the General Accounting Office submitted to this committee on January 20 and February 26. B. THE CORPORATION SHOULD BE GRANTED CORPORATE SUCCESSION UNTIL Three compelling reasons demand this: (a) The General Accounting Office has pointed out that the activities of the Corporation are now governed by a maze of statutes, Executive orders, and directives. In 1946, as of the date of hearings before the House Committee on Appropriations, then considering the Government Corporation appropriations for 1947, Commodity Credit's activities were affected by no less than 104 public laws, 23 Executive orders, and 3 Presidential proclamations. In the report of those hearings, set out in fine print, and covering 59 pages of the text, are the corporate charter, the Corporation's bylaws, and pertinent parts of the governing statutes, Executive orders, and directives. An example of the confusion and inability to fix responsibility that result from this maze of statutes, Executive orders, and directives is found in the operation of the act of July 15, 1947, Public Law 188, the Second Decontrol Act of 1947. That act specifically charges the Secretary of Commerce with the responsibility of controlling all exports. Yet on September 8, 1947, the Department of Commerce took the stand that the control of the export of agricultural commodities rested with the Secretary of Agriculture. This stand was based on two Executive orders. Both predated the act of July 15, 1947. Neither was based on the export control law. Both appear to be based on provisions of the Second War Powers Act repealed early in 1947. In this instance, the maze of statutes, orders, and directives was in fact enabling one branch of the executive department to avoid a statutory responsibility imposed by Congress. (b) The Agriculture Committees of both Houses have held extensive hearings to obtain information on which new legislation affecting the Nation's agriculture might be based. This committee has announced its intention to introduce in the Senate during this session a bill by which a new policy for agriculture will be established. It is reasonable to suppose that the resulting law will eliminate the chaotic statutory situation now prevailing not only as to Commodity Credit, but to the Department of Agriculture and its other activities. At the same time, the new legislation should result in a statutory situation that will not permit the Department of Agriculture, through Commodity Credit or any other agency, to engage in activities that are not germane to agriculture. If this occurs, there will be no need for the broad powers provided for in S. 1322. And if Commodity Credit's charter is limited to 2 years, its authority may, in the interim, be tailored to fit the requirements of the new program. (c) The act of July 7, 1947, Public Law 162, established a bipartisan Commission on Organization of the Executive Branch. This Commission is to study and investigate the present organization and methods of operation of all departments, bureaus, agencies, boards, commissions, offices, independent establishments, and instrumentalities of the executive branch and to determine what is necessary to limit expenditures; to eliminate duplication and overlapping of services, activities, and functions; and to consolidate, abolish, and define services, functions, and activities. Former President Hoover has been named Chairman of the Commission. Senators Aiken and McClellan are members of the Commission. A committee has been appointed to study the organization of the Department of Agriculture. That committee has, it is our understanding, commenced its investigation. If Congress were, prior to receiving the recommendations of this special-study group, to establish within the Department of Agriculture a corporate agency with perpetual existence and broad powers, the agency, so established, would stand as a huge Gibraltar about which recommended eliminations, consolidations, and cost-saving operations would need to flow. The accomplishment of recommended changes would be impossible. We, therefore, submit that a 2-year period of corporate succession is adequate at this time. C. SPECIFIC AUTHORITY TO PROMOTE THE GENERAL WELFARE NEED NOT AND SHOULD NOT BE INCLUDED AMONG THE POWERS OF THE COMMODITY CREDIT CORPORATION All agencies of the Government exist for the primary purpose of promoting the general welfare. To specifically grant authority to promote the general welfare to a Government agency is therefore unnecessary. If specifically granted, the grant either is meaningless or is available to the agency's personnel to extend the field of the agency's operations beyond any limits Congress might attempt to establish. It may be that in the past no improper action has been taken by Commodity Credit as a result of the possession by it of the power to promote the general welfare. We do not criticize the motives prompting the use of Commodity Credit funds to eradicate the hoof-and-mouth disease in Mexico which was accomplished by reverting to the power to promote the general welfare. On the other hand, this is not the purpose for which Commodity Credit exists, and it is an activity for which Congress should specifically appropriate funds. Acting on the premise that the possession of this authority would permit Commodity Credit's funds to be used for foreign relief, some Members of Congress and of the executive branch seriously suggested last summer that Commodity Credit's funds could be used to finance interim foreign rilef. That this sugges tion was seriously advanced should give this committee ample reason to strike from the proposed charter the grant of any similar authority. Assume that the suggestion was followed and that goods and commodities of all types were shipped to western Europe. Assume that even a small amount of heavy equipment, so shipped, found its way into countries now within the iron curtain and into countries that may, within the near future, be within that curtain. In the absence of congressional approval, it would be difficult now to justify the use of those funds for the promotion of the general welfare. It is our contention that in the present state of world affairs, Congress and Congress alone should determine what is in the interest of the general welfare, and, having made such a determination specifically delegate to administrative agencies the carrying-out of specific programs consistent with this congressional determination. D. COMMODITY CREDIT CORPORATION SHOULD NOT BE GRANTED CHARTER AUTHORITY TO ACQUIRE, HOLD, AND DISPOSE OF REAL ESTATE Congressman Hope, chairman of the House Committee on Agriculture, stated, on February 23 in the course of his testimony before the House Committee on Rules, that the primary purpose and function of Commodity Credit was to stabilize the prices of agricultural commodities. To date, stabilization programs for these commodities have been limited to loans on and purchases of those commodities. No stabilization program, to our knowledge, encompasses the acquisition of real estate or an inchoate interest in real estate. No need appears, therefore, to grant to Commodity Credit the right to acquire or hold real estate. To grant to Commodity Credit the right to deal in real estate, as provided in S. 1322, is to give to that agency authority to condemn in the name of the Government all manner and types of real estate. It is submitted that Commodity Credit Corporation, if it needs to acquire real estate, should do so under the authority of a special act implemented by a special appropriation. The proposed bill would, however, permit the Corporation to lease necessary office space. E. THE AFFAIRS OF COMMODITY CREDIT CORPORATION SHOULD BE CARRIED ON BY A BOARD OF DIRECTORS ACTING INDEPENDENTLY OF THE SECRETARY OF AGRICULTURE As proposed, the charter would impose no obligations on the directors. They would be appointed by the Secretary of Agriculture from among employees of the Department of Agriculture, serve at his will, and receive no compensation for this service. The Secretary, exercising the rights of the sole stockholder, would in fact be the Corporation. Under these circumstances, the corporate form is a mere fiction. It would presumptively be managed by a group powerless to determine policy. And in view of the broad discretionary powers contemplated for the Corporation, the fiction might be used as a shield to thwart the will of Congress and avoid adherence to any limitations save those expressly directed to the Corporation's activity. If it is intended to have directors who are not expected to direct, it would seem wise to avoid the fiction of a corporation-and grant to the Secretary of Agriculture the powers a corporation might exercise-making him annually responsible for the use of the $4,850,000,000 now available to Commodity Credit Corporation. Even if the powers of the Corporation are to be used only in accordance with law and with budget programs present and approved by Congress, the Corporation's affairs should be managed by persons other than ones who might reflect the opinion of the Corporation's largest debtor. Under other provisions of the law, the Corporation is authorized to loan funds to the Secretary of Agriculture. An anomalous situation results when a banking institution's debtor, and in this case a potentially large debtor, can dictate the banking institution's business policies. If by chance any member of this committee holds stock in a lending institution, it is safe to say that he would not approve a provision in that institution's charter by which its major debtor could impair the stockholder's investment. We submit that the investment of the United States should not be impaired to any greater extent. F. COMMODITY CREDIT CORPORATION SHOULD BE COMPELLED TO UTILIZE EXISTING CHANNELS OF THE TRADE RATHER THAN TO SET UP A DUPLICATE SYSTEM OF ITS OWN, STAFFED, OWNED, AND OPERATED BY THE TAXPAYERS (a) In storing and disposing of commodities that have been acquired after default on loans, the cash grain commission merchants presented requests for use of their services in movements of grain which would normally have moved by their services. As Commodity Credit Corporation moved grain from country or primary markets into use, staffs of Government workers were employed to do about the same job that these commission men had always done, and for which the commission men still maintained their own employees. At times the Commodity Credit Corporation used the services of these commission men; at other times it did not. There seemed to be no definite policy in Commodity Credit Corporation as to how far it would circumvent the normal trade channels, and how far it would use them; and to the trade it appeared that each new Government grain program was "playing by ear" when it came to using or not using all the traditional trade services. There was never question that these services of the trade were necessary in normal times, i, e., times when the Government agency was not dominating the movements of its important part of the crop. Each new circumvention of the normal trade was explained as emergency in nature, something that would not last long, yet, it has lasted already more than a decade in its effect on normal trade channels. (b) In the operation of its purchase programs Commodity Credit Corporation should be required to use private trade channels. Under the subsidized feed wheat program, Commodity Credit frequently moved wheat over long distances and around established segments of the grain trade and sold directly to customers or users who had been trade customers over the years. The grain trade has feared, with considerable justification, the continuing growth of these operations dependent, as they are, on the whims and changing personnel in the Department of Agriculture and Commodity Credit. (c) Commodity Credit Corporation should be required to carry on its export program through established private export channels. Commodity Credit, as a Government agency, exercises a virtual monopoly in the procurement of grain and grain products, including wheat flour, for export. In so doing, it operates as a state trading agency. Their operation is repugnant to the principle of the American free enterprise system; is inconsistent with the aims of America's foreign policy; and falls within the type of state trading activity condemned by President Truman and Secretary Marshall. On March 1, 1948, President Truman, in his message to Congress on the extension of reciprocal trade agreements, stated: "In addition, by contributing to the lowering of trade barriers the United States can support the expansion of private trading as distinct from Government trading. The existence of trade restrictions is too often accompanied by Government participation in trading operations-extending even to trading by Government agencies. The preservation of our private-enterprise system at home is closely bound up with the reduction of trade restrictions and the encouragement of private international trade." On January 15, 1948, Secretary Marshall, in a speech at Pittsburgh, stated: "In the field of foreign trade, for example, this Government is pressing for international agreements to remove or minimize arbitrary restraints on business between nations and to eliminate harmful discriminations. Many of the restrictive practices we oppose appear in the system known as state trading, where the foreign commerce of a country is conducted by the government as the sole or dominant buyer and seller. ** * Commodity Credit's procurement practices, during 1947, were responsible in large measure for the rapidly rising price of wheat. On this, the following is quoted from a report of a subcommittee that investigated food shortages for the House Committee on Agriculture. The report was made on July 26, 1947, and at page 5 will be found the following language: "In purchasing such vast quantities of grain, the Commodity Credit Corporation of the Department of Agriculture has not always exercised the best judgment. As an illustration, during the month of December, it was announced that the Commodity Credit Corporation would not pay more than a certain specified price for wheat. Shortly thereafter, the market stabilized itself just above that figure. Consequently, the Commodity Credit Corporation did not purchase any sizable quantities of wheat, and its stocks were being depleted by export shipments. It became apparent that the artificial price lid applied by the Commodity Credit Corporation would have to be lifted if it was to acquire wheat. That was done, and the Commodity Credit Corporation returned to the market and purchased wheat in large quantities over a short period of time. Officials of the Commodity Credit Corporation testified at a hearing before the committee that on 1 day, January 20, 1947, the Corporation announced the purchase at Kansas City of nearly 20,000,000 bushels of wheat at approximately $2.08 per bushel, or a total value of over $40,000,000. Investigation and analysis have shown that this action set the stage for price advances which followed almost immediately, and continued until wheat approached $3 per bushel. "The action of the Commodity Credit Corporation in purchasing such huge quantities of wheat over such short periods of time tended to dry up the available supply of wheat at or arriving at terminal markets. Millers and others were forced to bid up the price of wheat to obtain sufficient supplies to fill flour orders. While the Department discontinued large purchases of wheat after January, it, nevertheless, continued to purchase flour in large volume, thereby maintaining a strong demand for wheat by flour millers in order that they could meet Commodity Credit Corporation commitments and domestic requirements. The wheat and flour purchases by the Commodity Credit Corporation set the stage for speculation in the grain market and resulted in price advances which continued until April." In this connection your attention is directed to the comment of the General Accounting Office presented to this committee by Mr. Weitzel on January 20 of this year. At pages 5 and 6 thereof, Mr. Weitzel comments on the profit realized by Commodity Credit Corporation from its dealings with other Government agencies, and urges that its dealings be conducted on a break-down basis. . He seems to advocate that direct procurement for resale be limited to procurement and resale to other Government agencies. We submit that this in fact should be the limit of the procurement activities of Commodity Credit. CONCLUSION We respectfully urge that in any grant of authority, this committee's action be guided by the policy of Congress expressed in section I of Public Law 162, supra, as follows: "SECTION 1. It is hereby declared to be the policy of Congress to promote economy, efficiency, and improved service in the transaction of the public business in the departments, bureaus, agencies, boards, commissions, offices, independent establishments, and instrumentalities of the executive branch of the Government by "(1) Limiting expenditures to the lowest amount consistent with the efficient performance of essential services, activities, and functions; "(2) Eliminating duplication and overlapping of services, activites, and functions; "(3) Consolidating services, activities, and functions of a similar nature; "(4) Abolishing services, activities, and functions not necessary to the efficient conduct of government; and “(5) Defining and limiting executive functions, services, and activities.” Senator AIKEN. Will Mr. Roger Slaughter take the stand now? STATEMENT OF ROGER C. SLAUGHTER, COUNSEL FOR THE BOARD OF TRADE OF CHICAGO AND KANSAS CITY, MINNEAPOLIS GRAIN EXCHANGE, AND THE NORTH AMERICAN EXPORT GRAIN ASSOCIATION, KANSAS CITY, MO. Senator AIKEN. According to this you are representing the Boards of Trade of Chicago and Kansas City, Minneapolis Grain Exchange, and the North American Export Grain Association, Kansas City, Mo. Mr. SLAUGHTER. That is right, Mr. Chairman. I am counsel for those organizations. Senator AIKEN. Are you talking about part II? Mr. SLAUGHTER. No, I am not, Mr. Chairman. I am going to talk about the draft of the bill which we have submitted. In that connection the committee, I am sure, is familiar with the very splendid recommendations made to the committee on two occasions by the General Accounting Office. They first filed a brief statement and then, as I understand it, at the request of the committee they went into this matter much more fully and prepared a draft, which is an excellent one, but I suppose lawyers being what they are you always want to try your hand at one too. In our draft we have tried to make it as simple as we can, and right at the beginning I want to say definitely that we are not here opposing the continuation of the charter of the Commodity Credit Corporation nor are we discussing the wisdom or unwisdom of the agricultural program. We are here to talk about the charter of a $100,000,000 corporation, that is, with a capital of $100,000,000, and with a borrowing and lending power of close to $6,000,000. |