FEDERAL SURPLUS COMMODITIES CORPORATION FRIDAY, JUNE 11, 1937 HOUSE OF REPRESENTATIVES, The committee was called to order at 10:30 a. m., Hon. Wall Doxey, presiding. Mr. DOXEY. The committee will come to order, please. Gentlemen, I understand we have met this morning for the specific purpose of taking up the etxension of time for the purchase of surplus agricultural commodities and to discuss the general purpose of the Federal Surplus Commodities Corporation. Mr. Tolley and Mr. Tapp and some other gentlemen from the Department are here. I am going to let you gentlemen proceed in whatever way you desire, Mr. Tolley. (The bill under consideration is as follows:) [S. 2439, 75th Cong., 1st sess.] AN ACT TO extend the time for purchase and distribution of surplus agricultural commodities for relief purposes and to continue the Federal Surplus Commodities Corporation Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in carrying out the provisions of clause (2) of section 32 of the Act approved August 24, 1935 (49 Stat. 774). as amended, the Secretary of Agriculture may transfer to the Federal Surplus Commodities Corporation, which Corporation is hereby continued, until June 30, 1939, as an agency of the United States under the direction of the Secretary of Agriculture, such funds, appropriated by said section 32, as may be necessary for the purpose of effectuating said clause (2) of section 32: Provided, That such transferred funds, together with other funds of the Corporation, may be used for purchasing, exchanging, processing, distributing, disposing, transporting, storing, and handling of agricultural commodities and products thereof and inspection costs, commissions, and other incidental costs and expenses, without regard to the provisions of existing law governing the expenditure of public funds and for administrative expenses, including rent, printing and binding, and the employment of persons and means, in the District of Columbia and elsewhere, such employment of persons to be in accordance with the provisions of law applicable to the employment of persons by the Agricultural Adjustment Administration. In carrying out clause (2) of section 32, the funds appropriated by said section may be used for the purchase, without regard to the provisions of existing law governing the expenditure of public funds, of agricultural commodities and products thereof, and such commodities, as well as agricultural commodities and products thereof purchase under the preceding paragraph hereof, may be donated for relief purposes. Passed the Senate May 24, 1937. EDWIN A. HALSEY, Secretary. 1 STATEMENT OF DR. H. R. TOLLEY, ADMINISTRATOR, AGRICULTURAL ADJUSTMENT ADMINISTRATION, DEPARTMENT OF AGRICULTURE Dr. TOLLEY. Mr. Chairman, I will open briefly, and then call on Mr. Tapp, president of the Federal Surplus Commodities Corporation, and Mr. Wilcox to explain the activities of the Corporation if the committee desires. Mr. DOXEY. Very well. Dr. TOLLEY. As I understand it, Mr. Chairman, the bill which has passed the Senate extends the time for purchasing and disposing of surplus agricultural commodities for relief purposes and continues the Federal Surplus Commodities Corporation. Under section 32 of the Agricultural Adjustment Act as amended, approved August 24, 1935, 30 percent of the customs receipts were appropriated for the purpose of diverting from the normal channels of trade surplus agricultural commodities. The Comptroller General at the time ruled that the legislation as passed by Congress did not permit the use of these funds for purchasing agricultural commodities for relief purposes. That difficulty, as you remember, was eliminated by an amendment in the appropriation bill last year, and one of the things that this bill proposes to do is to make possible the continuation of that activity. The other thing which this bill proposes to do is to continue the Federal Surplus Commodities Corporation which, as the law now stands, will pass out of the picture at the end of this fiscal year, on June 30, 1937. The Federal Surplus Commodities Corporation functions as an arm of the Agricultural Adjustment Administration for the purpose of handling commodities which are acquired under section 32 funds in the distribution of those commodities for relief. The Administration feels that it would be very desirable to continue its function and to continue the authority to use section 32 funds for the purpose of purchasing surplus farm commodities that can be distributed to relief agencies. From an operating standpoint we have found the Federal Surplus Commodities Corporation à very useful instrument, and we would like to have it continued as an operating unit. So much for the general statement, Mr. Chairman, and I now suggest that Mr. Tapp be called and be permitted to make such statements as he desires, and to answer such questions as the committee may have to ask him with respect to the operation of the Federal Surplus Commodities Corporation. Mr. DOXEY. Dr. Tolley, we thank you, and, without objection, we will now hear Mr. Tapp. Mr. BOILEAU. Mr. Chairman, has not the committee already reported this bill out? Mr. DOXEY. Yes. Mr. BOILEAU. That was my understanding. Mr. DOXEY. After the bill was reported out there was a request by some members of this committee to bring it back to the committee for the purpose of having a hearing, so that the hearing would be made a matter of record, to see just what the Corporation has done. As I understand, that is the principal purpose of this hearing. Mr. BOILEAU. Yes. There has not been any effort to have the bill tabled, has there? Mr. HOPE. May I make a brief statement, Mr. Chairman. Mr. DoXEY. Yes, Mr. Hope. Mr. HOPE. Let me say this: I was one of the members who made the request. I did not happen to be here when this bill was reported out by the committee. As I understand it, that report was made one morning without much consideration by the committee and without any information being furnished the committee except a letter from the Department of Agriculture. Mr. DOXEY. Just some general discussion. Mr. HOPE. And that could not have been very long, because I did not hear it; I was not more than 5 or 10 minutes late to the committee meeting, and the bill had been reported out when I got here, but I did not know it until several days later. I was one of the members who requested that the bill be brought back to the committee, primarily for the reason that if we get the bill passed, it will likely have to be by unanimous consent, and no doubt some question will be asked for information which cannot be answered unless we develop the information through hearings. My idea was not to try to table the measure in any sense, because I think it has served a very useful purpose, but I thought we should have adequate information on any measure of this importance, especially when we are likely to have to go before the House and secure unanimous consent if it is to be passed. Mr. DOXEY. Well, with that statement I am sure that every member of the committee would want all the information we can have before we go before the House, and that is the purpose of this hearing this morning. Mr. MITCHELL. I want to find out about one or two things Mr. DoXEY (interposing). Mr. Mitchell, may I say that Mr. Tapp's statement is for the purpose of furnishing you with the facts and figures in regard to the administration of business transactions by this corporation. Mr. Tapp, you appreciate the fact that our time is quite short this morning; the House meets at 11. I think it would be the better policy, if satisfactory to the members of the committee, just to let you make your statement in your own way and when you have finished we will have questions by the members. Just keep in mind that the House meets at 11; but, of course, the committee can do whatever it wants to about staying over that time. STATEMENT OF J. W. TAPP, PRESIDENT, FEDERAL SURPLUS COM- Mr. TAPP. Mr. Chairman and gentlemen of the committee, one point in addition to those discussed by Mr. Tolley: The funds provided for the purpose of removing surplus dairy products as provided under the Jones-Connally Cattle Act and in section 37 of the August 1935 amendments to the Agricultural Adjustment Act will not be available after June 30, 1937. No provision was made in the 1938 Budget for the continuation of those funds, since it was assumed that the section 32 funds would be available for the removal of sur plus dairy products if this bill you are considering were passed. So in enacting this legislation at this time, in addition to continuing the purchases which have been handled from section 32 funds, you would also continue the removal of the surplus dairy products. Mr. ANDRESEN. Those commodities can be purchased under the provisions of this bill? Mr. TAPP. That is right. Mr. HOPE. Let me ask you a question right there: Under section 32 you could still go ahead and purchase surplus dairy products irrespective of whether the Surplus Commodity Corporation is continued or not, could you not? Mr. TAPP. There are two things to keep in mind. We could not do that under the ruling of the Comptroller General, and could not use section 32 funds Mr. HOPE (interposing). You mean you could purchase them but you could not dispose of them. Mr. TAPP. I do not think so; I do not think we could continue to purchase them because it is necessary that they be diverted [we have got to divert them] from the normal channels of trade. Mr. HOPE. Now under subdivision 2 of section 32, you do not make any disposition of those commodities which you buy except through relief channels; is that correct? Mr. TAPP. We do only to a minor extent, by diverting them into byproducts. There are two general lines of activity available under clause (2) of section 32, diverting the commodities from the normal channels of trade, by purchases for relief or diverting the commodities through conversion into byproducts. Mr. HOPE. Yes. Mr. TAPP. Such as tobacco into nicotine. The other is the diversion of commodities into relief channels. Mr. HOPE. I notice in your report for last year that apparently all you have done, practically all of it, has been to divert these purchases into relief channels. Mr. TAPP. That is true so far as the Federal Surplus Commodities Corporation is concerned. Mr. HOPE. Yes. Mr. TAPP. The byproducts operations are carried on by the Secretary of Agriculture in the Agricultural Adjustment Administration. Mr. HOPE. Under section 32. Mr. TAPP. Under section 32. During the fiscal year 1937, to date, surplus agricultural commodity purchases for diversion into relief channels from funds provided in section 32 and section 37 have amounted to $13,937,000. A breakdown of that amount shows expenditures for the major items as follows, dairy products, $3,000,000; citrus fruits, three and a half million; eggs, two and a half million; deciduous fruits, $2,850,000; potatoes, $375,000. Approximately $11,187,000 of those funds were from section 32, and $2,750,000 from section 37. Mr. LORD. Mr. Chairman, may I ask a question? Mr. DoXEY. Yes, Mr. Lord. Mr. LORD. Now, previous to this organization and the Surplus Commodity Credit Corporation set-up, the crops purchased were disposed of by the Red Cross, were they not? Mr. TAPP. The Red Cross disposed of a part of the Farm Board's stock of cotton and wheat; that is, it took over some of the Farm Board's cotton and wheat in 1932 and 1933, I believe. Mr. LORD. But it distributed what you are now distributing, did it not? Mr. TAPP. No: it did not. I understand that during the flood they received donations from a number of canning organizations and various groups and those goods were distributed by the Red Cross, but they do not maintain a regular organization for distribution to relief clientele. Mr. LORD. They did before your corporation was organized, did they not? Mr. TAPP. Only to the extent that Congress donated a part of the Farm Board's stocks of cotton and wheat to the Red Cross; so far as my knowledge goes. Mr. LORD. Yes; but they were distributed by the Red Cross? Mr. LORD. So that your corporation has taken over the work that they did at one time? Mr. TAPP. Well, it took over the organization that was operating under the direction of the Federal Emergency Relief Administration, and Congress in that statute provided for relief to be carried. on with the State agencies. The Red Cross activities, so far as distribution of cotton and wheat were concerned, was limited to the donations to them as a result of congressional action. Mr. ANDRESEN. This corporation turns over whatever it purchases to relief organizations? Mr. TAPP. Yes. Mr. ANDRESEN. And it does the distributing? Mr. TAPP. Yes; we purchase the commodities and transport and distribute them in wholesale quantities to State relief organizations. We do not handle the distribution to individual relief clients; that is done by the local agencies. Mr. COOLEY. From whom does this corporation purchase the tobacco it buys? Mr. TAPP. We did not handle any tobacco, for relief, of course. Mr. COOLEY. I am not talking about relief; I am asking about purchases of tobacco that have been made. Mr. TAPP. Tobacco for nicotine purposes; is that what you mean? Mr. COOLEY. My question was, who does it buy the tobacco from? Mr. TAPP. The Department has made payments on tobacco diverted into nicotine, which was held by farmers cooperative associations. Mr. COOLEY. Where? Mr. TAPP. In Kentucky, southwest Virginia, and in Tennessee. Mr. ANDRESEN. Do you get orders for the distribution of these commodities; is that how you know where there is need for them and when it is necessary to buy them? Mr. TAPP. We work it the other way, Congressman Andresen. Commodities are purchased where there is a surplus and then distributed in accordance with the relief program and relief needs of the various States as reported to the Corporation by the various State relief agencies. Mr. ANDRESEN. In other words, what you do is to buy them and store them until there is a demand from the relief sources? 152420-37-ser. d-2 |