Mr. KELLOGG. In December 22, to December 26 Senator THYE. Mr. Kellogg, was this grain advertised as damaged wheat from Canada when it was sold? Mr. KELLOGG. Yes, sir. Senator THYE. Everyone of these firms that bought this grain bought it with the full knowledge that it came in under a reduced tariff and it was a damaged grain? Mr. KELLOGG. Yes, sir. Senator THYE. And that it was not to go into general milling and to be blended with other wheats for flour purposes? Did you understand that, and did the Bunge Corp. understand it in that manner when they made those transactions? Mr. KELLOGG. No, sir. Senator THYE. How in the world would all these firms know where you got these grains? Mr. KELLOGG. We told them. Senator THYE. You told them, whether it was Archer-Daniels or any other firm, you told them specifically that it was imported and it came in reduced tariff and came in as a feed grain and if it is milled and goes into channels of human food that we are all liable. Did you discuss it in that manner with them? Mr. KELLOGG. The opinion we had, Senator, was that a certain percentage, the percentage was not stated, could be mixed in other wheat and milled or mixed into wheat for export with the exception in the export end that it was our opinion that they could mix it, but not into wheat that went on the IWA. Senator THYE. That is the International Wheat Agreement? Senator THYE. Did you make that clearly known to the firms that bought from you? Mr. KELLOGG. Yes, sir. Senator THYE. And so that they would definitely make certain that in this accounting they let none of this wheat get into channels covered by the International Wheat Agreement where subsidies were paid, or that it went into the channels of domestic consumption so that it was competing with Government wheat that the Commodity Credit Corporation had definitely paid a subsidy on, because they acquired it under the Commodity Credit Corporation seal-up loans. Did you make it positively known to the firms that this wheat had come in from Canada and that you had imported for no other purpose except to have it go into channels of animal food? Mr. KELLOGG. No, sir. That I did not state. Senator THYE. You did not discuss that with them? Mr. KELLOGG. No. Senator THYE. In other words, you were offering wheat that you had imported, at reduced duty, so that you had the advantage of the difference there of some 14 cents a bushel and if somebody bought it and milled it, and put it into sales channels, the domestic processor or baker or user, would have no knowledge that it was imported under reduced tariff? Mr. KELLOGG. Well, sir, all of the people that we sold it to knew it was Canadian wheat. Senator YOUNG. Unfit for human consumption? Mr. KELLOGG. Canadian 5 Northern and Canadian 6 Northern. Senator YOUNG. If it was brought in here and mixed for milling purposes or for any other purpose other than feed wheat, it should ave been subject to the quota on imports from Canada, which is Mr. GUINANE. 795,000 Mr. MOSKOVITZ. I don't know; all this was taken up with Governnt authorities before, every pound of it that was imported and the Customs and officials in Washington formally notified us that this wheat could be brought in and could be used for milling purposes. Senator YOUNG. The custom officers advised it could be? Do you have anything in writing? Mr. MOSKOVITZ. In writing Senator? Senator YOUNG. Do you have that information in writing? Senator THYE. We want the letter that was referred to from the customs officials where they authorized you to proceed to do business with the milling firms with full knowledge this was imported Canadian wheat that came in under reduced tariff, for purposes of feed usage only, and wherein the customs officials advised you as you stated. Senator YOUNG. Do you want to read it in the record, then? (Mr. Moskovitz hands Senator Thye the letter.) Senator THYE. Let's read it in the record, Mr. Guinane. Mr. GUINANE. Yes; it is dated October 16, 1950, from the collector of customs, Mrs. Clara E. Sarvela, to Mr. Henderson of the Bunge Corp., 280 New Chamber of Commerce Building, Minneapolis, Minn. DEAR MR. HENDERSON: Pursuant to our conference on October 9, this office forwarded the following telegram to the Bureau of Customs, Washington, D. C., for its consideration: "62,138 bushels Canadian wheat invoiced as unfit for human consumption, for feeding purposes only, and not to be used for seeding entered under Duluth consumption entry 91 on October 2, analysis indicated this importation contained more than 30 percent by weight of damaged or frosted kernels, and classified by this office as wheat unfit for human consumption at rate of 5 percent ad valorem, paragraph 729, under authority Treasury Decision 47577 and reported as exempt from quota restrictions as provided in Treasury Decision 50404 Senator THYE. Mrs. Sarvela was not responsible for that decision. That was given, made in Washington and she was authorized by them. Mr. GUINANE. That is right. Senator THYE. Was not a question of local direction, was it? It was the Treasury Department decision. Senator YOUNG. I would like to hear the rest. I don't see anything about combining this wheat for human consumption. Mr. GUINANE. They are quoting the wire, this wire. Mr. Kellogg, did you have anything to do with making up this wire to the customs in Washington? Mr. KELLOGG. No; I don't remember. Senator THYE. Mr. Guinane is a commmittee staff member and has worked in finding what information the committee has on this question and for that reason he will ask many questions in the course of this hearing. He is authorized to do so, as staff counsel. Mr. KELLOGG. Can I see what that telegram says? Senator THYE. Mr. Guinane, you may proceed right from here and do the interrogating for the reason you have knowledge of the records because you have been making a thorough study and investigation of the matter. Mr. MOSKOVITZ. Just off the record, just for a point of information? (Discussion had off the record.) 34117-53-pt. 2- 2 Mr. GUINANE. Did any representative of Bunge Corp. have anything to do with drawing this wire to Customs in Washington? Mr. KELLOGG. I was just trying to freshen my mind. Mr. HENDERSON. I suppose I would have to. Senator THYE. What is your name? Mr. HENDERSON. Robert Henderson. Senator THYE. What is your relation with the Bunge Corp.? Mr. HENDERSON. Vice president and manager of Bunge Corp., Minneapolis. Senator THYE. In Minneapolis? Mr. HENDERSON. Yes. Senator THYE. And you are aiding in the furnishing of some information here? Mr. HENDERSON. That letter that you read, sir, was the letter that was addressed to me. Senator THYE. I see. Mr. KELLOGG. Mr. Henderson has the position that I had with the Bunge Corp. up to the time I retired. Mr. GUINANE. Did you answer my question? Did you have anything to do with drawing the telegram that went to the Customs at Washington? Mr. HENDERSON. No, sir. Senator THYE. Mr. Henderson, I believe we should swear you, you are answering a specific question. (Witness was sworn.) TESTIMONY OF ROBERT J. HENDERSON, VICE PRESIDENT AND MANAGER, BUNGE CORP., MINNEAPOLIS, MINN. Senator THYE. You may proceed. Mr. HENDERSON. When we first brought this wheat in from Canada, I went to Duluth, Minn., and appeared before the United States Customs to find out whether it was the custom or in the regulation, whether or not this Canadian wheat could be used for milling purposes and the office in Duluth to get this information and this is the information which you are now reading. Senator YOUNG. In other words, when you imported this wheat, you intended to have it go in milling channels? Mr. HENDERSON. No, sir; I did not. When we imported this, we did not know what usages it would have. Senator YOUNG. You didn't import it solely for feed purposes? Mr. HENDERSON. I can't tell you what our intentions were, but we later found out or were advised by the Treasury Department that this wheat was allowed to be entered into this country on 5 percent ad valorem basis and be used for milling purposes. Senator YOUNG. The purpose of the exemption was to allow this wheat for feed purposes, though, wasn't it? Mr. HENDERSON. The only way I can answer that question is in what I have already answered, that we had the customs at Duluth wire Washington to see whether it was permissible under the tariff, that this wheat could be used for milling purposes in the United States and we had their reply that it was permissible. Senator YOUNG. Let's have the rest of the letter. Senator THYE. Proceed and finish reading the letter, then, Mr. Guinane. Mr. GUINANE (reading): "Importer now advises that 1 carload approximately 1,500 bushels this importation sold to Minneapolis milling concern for experimental purposes and other orders for milling purposes pending. In view of development that this low-grade wheat will be used in minor proportions with other wheat for milling purposes and is thus actually fit for human consumption, should importation be classified as wheat and made subject to quota restrictions? Advise by wire collect." That is the end of the quote. There is quoted below the Bureau of Customs answer which was received in this office after the close of business Friday, October 13, 1950. This information was promptly telephoned to Mr. Sassman here in Duluth with the request that he advise you in the premises. This is the wire received: "Retel 9th concerning wheat under entry 91 classification as unfit for human consumption and exemption from quota approved." That is the end of the telegram. Apparently, the Bureau entertains no objection to the use of this type of wheat for milling purposes and has ruled that it is exempt from the quota restrictions. Signed, Clara E. Sarvela, collector of customs, Duluth, Minn. Who first conceived the idea of importing this wheat for other than feed or livestock purposes? Mr. KELLOGG. For the Bunge Corp., it was my idea and Mr. Henderson's idea. Mr. GUINANE. What was your idea at that time on importing? Mr. KELLOGG. Well as long as we had the ruling on it, we brought it in to make some money. Mr. GUINANE. You conceived the idea prior to the ruling, didn't you? Mr. KELLOGG. Well, we brought it in; yes. Mr. GUINANE. It was because of your idea and Mr. Henderson's idea that that wire was sent to customs asking for that ruling? Mr. KELLOGG. Yes. Mr. GUINANE. So you and Mr. Henderson first conceived the idea of importing this grain unfit for human consumption and bringing it in for other than feeding purposes, is that correct? Mr. KELLOGG. Well sure, we brought it in because we thought it was cheap at the time. Mr. GUINANE. Cheap for what? For feeding purposes, that was not true was it? Mr. KELLOGG. Yes, prior to the time that we brought any wheat in, we found there had been a considerable amount brought into Buffalo and I think that was probably 6 months before we bought any of it. Mr. GUINANE. And when you brought it in, what was your idea then as to the disposition? Mr. KELLOGG. We didn't know what we were going to do with it. Mr. GUINANE. If you didn't know what you were going to do with it, why did you see the collector at Duluth and get the customs permission? Mr. KELLOGG. We wanted to find out whether it was permissible or not. Mr. GUINANE. Before you got that decision, you could have brought all the wheat in you wanted classified unfit for human consumption ad valorem for feeding purposes? Mr. KELLOGG. Yes. Mr. GUINANE. Why was it you were so anxious to get a customs approval to bring it in for milling purposes, if you didn't have that in mind? Mr. KELLOGG. Well, from the port of Duluth, the demand for feeding wheat is very small. Mr. GUINANE. That is true, historically, it comes through Buffalo and other ports? Mr. KELLOGG. That is right. Mr. GUINANE. After you became interested in it, Duluth became one of the big importing ports for the wheat unfit for human consumption, didn't it? Mr. KELLOGG. I would say that the quantity imported was small compared with Buffalo. I am not sure of it, but I think that is correct. Mr. GUINANE. Did you ever import while an officer of Bunge any of this wheat for feeding purposes prior to 1950? Mr. KELLOGG. No, sir. Mr. GUINANE. So when you and Mr. Henderson got the idea that you would import this wheat you wanted to get customs to rule that you could bring in this wheat for milling purposes. Therefore, you had-must have had the idea to use it for milling purposes? Mr. KELLOGG. We had the idea we might; yes, sir. Mr. GUINANE. You were familiar with, as a grain dealer for many years, you received numerous bulletins from the Department of Agriculture on the International Wheat Agreement and other bulletins that went out to exporters and grain dealers? Mr. KELLOGG. I think so; yes, sir. Mr. GUINANE. And you were familiar with the announcment on International Wheat Agreement in July 1949, were you not? I will read one part of this to refresh your memory. This was a bulletin issued by the Department of Agriculture on July 29, 1949, and is a general statement: In order to encourage the exportation of wheat produced in the United States and wheat flour processed in the United States from such wheat, and in order to aid in the fulfillment of the obligation of the United States to export the quantity of wheat at the prices specified in the International Wheat Agreement, the Secretary of Agriculture, pursuant to Public Law 320, Seventh Congress as amended, offers to make payment to exporters under the terms and conditions stated herein: information pertaining and forms prescribed for use thereunder can be obtained from the Commodity Credit Corporation, Department of Agriculture, Washington, D. C. You will note in that statement that the subsidies are collectible only for wheat grown in the United States and flour processed from wheat grown in the United States? Mr. KELLOGG. I didn't see the bulletin, but I was familiar with it. Mr. GUINANE. And you probably received numerous announcements thereafter? Mr. KELLOGG. I don't think we got many of those, but I was. familiar with that. Mr. GUINANE. There were also press releases at the same time? |