Senator HUMPHREY. Yes, sir.

Mr. THATCHER. Ten or eleven cents is the charge if it is in the elevator.

Senator HUMPHREY. And, yes, sir, besides that he has paid every appraiser charge in the appraisal of that crib whether rejected or otherwise, but when the loan is approved he pays that plus the fire insurance and recording of the chattel and everything.

Mr. THATCHER. And even in going on further, what happens is this: The grain trade in dealing in the future, knows exactly what this is going to be. They know it will be $1.71.

So the next crop that we are going to market is depressed by that 10 cents deducted.

Senator AIKEN. Is this 10-cent charge a flat charge regardless of the month in which the grain is put under loan?

FRED CURRIER (Head, Loan Department, GTA). Ten cents in the beginning, sliding scale.

Senator AIKEN. It varies according to the months.

Mr. CURRIER. It depends on the date of deposit of the grain.
Senator AIKEN. That is what I wanted to get clear.

Mr. CURRIER. That is correct. And offsetting that, the farmer is carrying that cost, so he does have the carrying cost.

Senator AIKEN. Carries it himself until he puts it under loan?

Mr. THATCHER. The net effect that I wanted to make the net effect is that it is not 822 percent support price for 1955, it is not 76 percent for 1956; it is that price less the 10 cents, so that we have 771⁄2 percent support price presently and it will be 70% next year.

If the Congress wants it that way, so say and the farmers will know it. If you don't want it that way, then write the language in so that they can't take the arbitrary deduction.

The CHAIRMAN. Proceed.

Senator HUMPHREY. In reference to this matter

Mr. THATCHER. Mind you, that effects the whole cash market on the total crop now.

Senator HUMPHREY. I understand this; I have heard about this. before.

I was trying to allude to it yesterday in one of our discussions. Mr. THATCHER. In the case of a 900 million bushel wheat crop, it is $90 million taken from the wheat producers.

Senator AIKEN. How long has it been going on?

Mr. THATCHER. It began in the fall of 1951. I have reams of correspondence. I wrote Secretary Brannan. In my last letter I said:

Think of the fellow with 3,000 bushels of wheat. You will take $300 out of his loan. Go in a room with your God and ask yourself, is that a moral thing to do.

I have tried ever since to get it out. That is why I am now laboring on it here. If there is any one thing I am obsessed on, it is that deduction. I think it is unfair, and I think it ought to be removed.

(Information submitted by the United States Department of Agriculture on storage charges on commodities under loan is as follows:)

In order to give a complete answer to this question it is necessary to review in brief the evolution of Commodity Credit Corporation policy with respect to storage charges. In the earlier programs CCC paid storage charges for all commodities while in a loan status with the exception of corn and other feed grains. The reason for the difference in the case of corn is that nearly all corn was stored on the farm for a period of a few months to a year while the mois

ture content was being lowered. This was considered to be a normal part of the production operation and it is to the advantage of the farmer to have his corn and other feed grain in position where he can readily redeem them and utilize them in his feeding operation or sell them to neighboring feeders.

In the early years of CCC operations a much higher percentage of the commodities placed under loan was redeemed than has been the case recently. When commodities were redeemed the farmer was always required to bear the cost of storage so it did not make too much difference whether he paid storage initially or at the time of redemption.

About 5 years ago the question of difference in treatment of corn and wheat growers was raised and it was felt that with larger quantities of grain being delivered to CCC both commodities should be treated the same. The CCC Board took action to require that farmers pay cost of storage on all commodities while in loan status with the exception of cotton and tobacco. This gave rise to the difference in treatment of grain and cotton producers. At the time this action was taken practically all cotton and tobacco were redeemed by producers or pooled with substantial equity payments to growers. Accordingly, it made no difference whether farmers paid storage charges initially or at the time of redemption or pool settlement. In any event the farmer bore the storage cost which for tobacco or cotton is a much smaller percentage of the value than for grain.

In the past few years increasing percentages of the cotton crop have been delivered to CCC in satisfaction of loans and as a result CCC has borne the expense of storage of the commodity while it is in a loan status to the extent the cotton was forfeited to CCC. There are certain practices in the cotton trade which would make it more difficult to require the producer to pay storage charges through the maturity date of the loan than was the case with other commodities. However, before the details of the program for another year are announced the Board of Directors of CCC will be asked to review the situation to determine if the difference in methods of treatment of cotton and grain producers is still justified.

Senator HUMPHREY. In reference to the sales which are sometimes referred to as dumping of this spoliage, do you think that the adverse market effect would be prevented by requiring rotation of stock, in other words, by purchasing in the market at the same time that the CCC was forced to dispose of some supplies to prevent spoilage? Mr. THATCHER. Of course, I think spoilage should be avoided by rotating stock; surely I do.

Senator HUMPHREY. This I gather is one of the things that has not been done in terms of trying when you dump something into the market, to firm up the market by removing an equal amount through the CCC operation.

Mr. THATCHER. They have not only replaced stocks they ought to replace but have gone a little further, is the gossip. I don't know whether that is true.

Senator HUMPHREY. The gossip also is that the trade has even been using this so-called spoiled corn to replace good corn.

Mr. THATCHER. I don't know anything about that.

Senator HUMPHREY. I have some communications to that effect. On this matter of private exchanges that you referred to, Mr. Thatcher, do I understand that your reference to private exchanges between the CCC and the processors means in effect negotiated prices or negotiated deals without competitive bidding?

Mr. THATCHER. Yes, sir.

Senator HUMPHREY. And you are opposing that?
Mr. THATCHER. Seriously.

Senator HUMPHREY. And feel that if not in violation of the law, at least it is beyond what was intended?

Mr. THATCHER. I think so. I don't impute any bad motives to anybody in this thing. Let us get the record clear on that. I think

these boys that run the CCC program are fine fellows and doing the best they can do. I think they are careful.

The point I want to make is that the mills are able to get their premium wheat at a less price than they would have to pay for it if they went in the open market to get it.

And this private business has an adverse effect on our premium wheat market and a very serious one at times. I have one of my wheat men who will discuss this at length with you, if that is what you want. I have given you the essence of it.

Senator HUMPHREY. It appears there are certain things that can be done without change of law. There are some administrative practices that could be corrected. You were referring to the 10-cent deduction, for example. That could be done administratively. It was started back in 1951.

This matter of private deals is a matter that could be done administratively. But if it is not going to be done then we ought to do something about it in the new law. Is that your view?

Mr. THATCHER. Yes, sir.

I want to add also that the selling policies of CCC to the mills sets an effective ceiling on prices. prices. How in the world can a wheat man ever get parity under a loan program of 76 percent when the CCC only has to add 5 percent and some carrying charges to make its sales price?

Their transactions in the commercial market create a ceiling. The farmer could never hope to get 100 percent as long as that program is permitted to persist.

Senator HUMPHREY. Mr. Thatcher, you mentioned one point here in your testimony-I think your final point-that recommendations to the United States Department of Agriculture of all advisory committees should be available to the public and not kept secret as at present.

I want to say very frankly I never saw your testimony until about 5 minutes to 10 this morning, and during the week I have been concerned about this, off and on.

I feel, Mr. Chairman, that since we are in the process of trying to write a bill, and since we have been told that we need the best brains that the country can provide in making available information and coming to some judgment and conclusion, that all of these reports of the advisory groups to the Secretary ought to be made available to this committee and made public.

We have the responsibility for drafting this legislation, and I think we are entitled to take a look at the kind of advice that has been rendered to the Secretary of Agriculture to see whether it is good or bad in our judgment, to see whether it has been followed or not followed, and to see whether or not there is something out of it that could be helpful to this full committee.

I have heard a great deal about this advisory committee and it is almost one of the great secrets of the Government. You can get the names but you never get any of what the people do, get any of the results of what the names finally produce.

May I suggest, Mr. Chairman, that if it is within the realm of our jurisdiction, that we get these reports. I think they would have been helpful to us all the way along. I have not the slightest idea what is in the advisory reports.

As a matter of fact, I think I have only had the chance to talk to one man that has ever been on the advisory committee. Was not Mr. Mann on the corn committee at one time? That was a special committee, I guess.

Mr. THATCHER. Yes, the reason I bring it up, if I may make the statement

Senator HUMPHREY. Please do.

Mr. THATCHER. There are two members of that committee whom I know very, very well and have a very high regard for. I think they are all decent fellows, although let us face it: I don't think we ought to have the president of the Chicago Board of Trade or anyone like that on it.

These two men particularly I know very well. I have implicit confiidence in their good judgment and integrity, and I tried to get some information from each of them and they informed me that it was private; that they could not discuss it.

I said, "Well, do you make minority reports?"

"We just don't discuss it," they said.

So it stopped me cold.

I would like to know what their advice is. I have great confidence in those men. One is very close to cotton and the other is as close to wheat as any living man.

Senator AIKEN. May I say, Mr. Chairman, I think these men have access to a good deal of the material of the National Security Board. For that reason with other matters which do not affect agriculture, I find that they do have to be cleared by the FBI.

What they recommend to the Secretary, you know as well as I know-I probably should know if anybody does-but I do not know either.

But I do know they have to be cleared by the FBI, and they do have access to much material available to the National Security Board. Mr. THATCHER. That is proper. And I would say this: Naturally I want to protect it. But certainly, the arguments for cutting down support prices would not have anything to do with national security. Senator AIKEN. They consider a lot of matters which I am sure would not vitally affect the national security as well.

Mr. THATCHER. That information I would like to read.

Senator HUMPHREY. Whenever we have a situation where we do not get information, it is something that affects the national security. I think it has been way overdone. I cannot see that what the Agricultural Advisory Committee is going to recommend on soybeans or wheat or corn or oats or price supports or credit will be such a great secret that the Russians are not going to get.

They have been over here traveling all around the country. We have been giving them all of the advice in the world. They went into the Department of Agriculture and visited all of our farms.

I just think this is something we ought to have.

The CHAIRMAN. Any further questions?

Senator THYE. Before you leave the question of grain storage, is there a way that we could get information into the record whether the storage that was deducted from the producer, both in wheat and in corn, in the 1955 crop, that will be subject to redetermination either in July or in the spring of 1956 as to whether the farmer surrenders it or not to the Commodity Credit Corporation-that is the 1955 crop-is

that deduction also added into what the CCC is listing as storage charges?

I would like to get that separated to make certain that there is not an inference given out that this is what it is costing them when the producer is the man that has advanced the storage on that 1955 crop until sometime in 1956 when he surrenders it.

Mr. THATCHER. I think as fast as you can you ought by law put a stop to it. I think on the 1955 crop you should make a refund to these farmers.

Senator THYE. Is it charged in where the Commodity Credit gives out a statement that it has cost them so much a day to carry the commodities in storage? Does that include the 1955 crop of which the producer paid the advance storage on it?

Mr. THATCHER. I have no idea of that.

Senator THYE. That is what I would like to get in the record, whether the 1955 crops that are in storage, for which the producer has paid in advance, until the due date on that commodity loan, if that is included in the daily cost charges that are publicized. I would like to see that breakdown.

Senator HUMPHREY. That is something I would like to know.

Senator THYE. A specific breakdown on that and they show that it is commodities surrendered to the CCC and that it does not reflect any part of the commodity on which the producers still has a right to reclaim providing he pays up the loan.

The CHAIRMAN. I will get the information from the CCC.

(NOTE. The storage charges referred to do not include storage on commodities under loan.)

Senator HUMPHREY. One final observation.

The CHAIRMAN. Can you not relegate that to questions?
Some witnesses have come from a considerable distance.
Senator HUMPHREY. I shall not be long.

I think the most important observation of this G and A report is the available market in this country, which I have studied somewhat as I have looked over these preliminary studies in the five States. We have a number of industrialists, a number of financiers and commentators that point out the great world markets that we can get. I have been of the opinion that the best market in the world is the American market. We have a common currency and we do not have tariffs, and we have a common language and trade system and the greatest market in the world.

There is no amount of foreign trade in 1 year compared to what we could do with an agricultural program here in the United States, and we are spending much more to arouse a little foreign trade with people that do not even know how to talk to us, than we are trying to do something with our own people out here that can buy our refrigerators and buy our clothing and our processed goods, if they have something to buy with.

And I think this report will show, and my colleague will be equally shocked to learn, how many farms in our wonderful State are without adequate indoor sanitary facilities, for example, on running water; and in South Dakota the figures are around 40 percent or more. There is a market for you.

64440-56-pt. 8-25