Mr. SLAUGHTER. I think your suggestion is a good one. The Secretary of Agriculture will have all the facts and figures. (Information submitted by the Secretary of Agriculture, the Honorable Clinton P. Anderson, is as follows:) Hon. GEORGE D. AIKEN, DEPARTMENT OF AGRICULTURE, Acting Chairman, Senate Committee on Agriculture and Forestry,.. United States Senate, Washington, D. C. DEAR SENATOR AIKEN: Representatives of the Department who attended the hearings on S. 1322 before the Senate Committee on Agriculture and Forestry on March 15, 1948, over which you presided, reported that the grain trade testified that the Commodity Credit Corporation has been selling wheat at a price which exceeded cash market prices by as much as 50 cents per bushel. As the attached table clearly shows, this statement is exactly the reverse of the actual situation for all but one month of the current marketing year to date. From July 1947 through February 1948 the average price at which the Commodity Credit Corporation sold wheat has been more than 10 cents below the comparable cash market prices. For example, for every month from July through January, the invoice price of wheat delivered at Gulf ports was less than the Kansas City cash prices, adjusted to a Gulf basis-ranging up to more than 50 cents less in October. February was an exception to the situation which existed in each of the other 7 months of the marketing year. Due to the sharp break in the market early in February, the Commodity Credit Corporation invoice price of wheat delivered in that month, but which had been bought previously, was naturally in excess of the current cash market price. As you know, the Corporation is required by law (the act of July 16, 1943, 57 Stat. 566) to conduct its supply operations in such a manner as to obtain full reimbursement for all costs incurred. In the case of wheat, sales prices are determined generally on the basis of commodity cost at the time of purchase-plus amounts estimated to cover transportation, storage, handling, and other expenses incurred in delivering the commodity to f. o. b. vessel position, and a mark-up to cover damage, deterioration, and other contingencies. In addition, 1 percent is added for administrative expenses. There is enclosed a comparison of the Kansas City cash price of wheat, adjusted to include transportation and other costs involved in moving it to Gulf ports, with the price at which wheat that moved out of Gulf ports was invoiced by the Commodity Credit Corporation, for each of the months from July 1947 through February 1948. This comparison is typical of the total wheat operations of the Corporation under its supply prograin. Over a reasonable period of time, the average commodity cost reflected in the invoice price is less than the average cash market price, adjusted to part of delivery, largely because the Corporation follows the practice of making heavy purchases during the months when farmers are marketing their crops. With reference to questions raised regarding the general policy of centralized procurement of wheat, the Commodity Credit Corporation supply program has a number of distinct advantages in addition to the fact that it has resulted in a lower cost of wheat for the relief programs, as compared with the average market price. It makes possible the coordination of purchases with availability of supplies, so that prices at which the grain is purchased are advantageous from the standpoint of the Government and the taxpayer. At the same time, purchases when supplies are heavy during the marketing season increase the returns to farmers by stabilizing the market. Stock piling by one Government agency to meet over-all demand permits planned purchase operations. This avoids the competition between agencies which would result if each agency made purchases from time to time as its funds became available. In addition, by keeping the pipe lines filled, it is possible to make the best possible use of inland transportation and port and ocean shipping facilities, which must be used not only for wheat but also for a wide variety of other export commodities. These advantages are of extreme importance during a period of heavy world demand, such as that which has prevailed since the beginning of World War II. I trust that this information will clarify the record with respect to the testimony mentioned. Sincerely yours, CLINTON P. ANDERSON, Secretary. Comparison of the Kansas City cash price of wheat with prices charged by the CCC for wheat delivered at Gulf ports 1 Includes: Out elevation; weighing and inspection (onto cars); transportation (transportation costs have gone up twice since July, once in October, and again in January); weighing, inspection, unloading (into elevators); storage; loading to ship; conditioning; outweighing and inspection; transit loss; demurrage; overtime; and incidentals. 2 Includes 1 percent mark-up for administrative expenses. 3 Excess of invoice price over adjusted market price. 4 If 1 percent were added to the Kansas City cash market price adjusted to Gulf basis (column 3), difference would be increased to $0.136. the Senator AIKEN. May the Chair suggest that the witness be permitted to submit to the committee such facts and figures as he may deem pertinent to his testimony for the consideration of the committee. Mr. SLAUGHTER. And witnesses if possible. Senator AIKEN. Time seems to be of the essence in the consideration of this bill, with the charter expiring July 1, and there still has to be action taken by the House, and possibly a conference meeting, and besides having other work to do, time is running out, so the Chair would suggest that the witness submit such facts and figures as he might deem pertinent to the testimony which he has presented here this morning. As the Chair understands it, Mr. Slaughter is appearing here in behalf of his clients and is probably observing the ethics of his profession in whatever testimony he presents. Senator Thye, will you take the Chair at this time, because the calendar is being called this morning? Mr. SLAUGHTER. Would the chairman prefer to adjourn? Senator AIKEN. I do not know whether we could come back, Mr. Slaughter. How much time have you? Senator KEM. We all want to be in the Senate session and I would suggest that we not hold the hearing while the Senate is in session. Senator AIKEN. Would you prefer to recess until tomorrow morning and at that time may we ask the representatives of the Commodity Credit or the Department of Agriculture to give us such testimony as they may feel pertinent to the points which have been raised by the opposition to certain provisions of the bill here today. Senator KEM. And Mr. Slaughter will be given an opportunity to complete his testimony. Senator AIKEN. We will recess until 10 o'clock tomorrow and then continue your testimony. (Whereupon, at 12 o'clock noon, the hearing in the above-entitled matter was recessed to Tuesday, March 16, 1948, at 10 a. m.) 74439-4813 COMMODITY CREDIT CORPORATION CHARTER TUESDAY, MARCH 16, 1948 UNITED STATES SENATE, COMMITTEE ON AGRICULTURE AND FORESTRY, Washington, D. C. The committee met at 10 a. m., pursuant to recess, in room 324, Senate Office Building, Senator Arthur Capper, chairman, presiding. Present: Senators Capper (chairman), Aiken, Young, Thye, Kem, and Hoey. The CHAIRMAN. The committee will hear Mr. Roger C. Slaughter, who is counsel for the Board of Trade of the City of Chicago, Kansas City Board of Trade, and the Minneapolis Grain Exchange. He also appears on behalf of the North American Export Grain Association. STATEMENT OF ROGER C. SLAUGHTER, COUNSEL FOR THE CHICAGO BOARD OF TRADE, KANSAS CITY BOARD OF TRADE, MINNEAPOLIS GRAIN EXCHANGE, AND THE NORTH AMERICAN EXPORT GRAIN ASSOCIATION, KANSAS CITY, MO.-Resumed Mr. SLAUGHTER. Senator, I testified in part yesterday, and I think perhaps the record shows that I had leave to file my prepared statement as part of the record. If not, may I have that permission at this time, to incorporate the statement as part of my remarks. I am just testifying extemporaneously. May I have that permission? The CHAIRMAN. Yes. Mr. SLAUGHTER. Mr. Chairman, we had covered most of the statement yesterday but we had gotten down to the form of the corporation. Under S. 1322, the bill that is before you, it is provided that the corporation shall be managed by a board of directors of five, I believe, who shall be employees of the Department of Agriculture, appointed by the Secretary, the Secretary shall be chairman, they shall hold office at his pleasure, which we think is a mighty poor form for a corporation with $100,000,000 capital and a borrowing power of about $5,000,000,000. Now, you had some hearings here about a year ago on S. 350, which, as I recall, was a bill to extend the Commodity Credit charter past June 30 last year, and in looking through that record I think Senator Thomas hit the nail on the head, and so did Senator Thye. Senator Thomas was making inquiry about what sort of direction Commodity Credit has, and Senator Thye made the very obvious point that where you have got five employees of the Department of Agriculture appointed by the Secretary, holding office at his pleasure, you do not, in truth and in fact, have any board at all. You might just as 191 |