Senator THYE. The shipment comes in and is labeled, a carload of that wheat, going across the United States to a point, a distant point, the cars are labeled and it comes in here without paying any duty on it? Mr. KELLOGG. Yes, sir.

Senator THYE. How many bushels came in in bond?

Mr. KELLOGG. A large amount, we have an exhibit here and we carried out exactly what it was.

Senator THYE. Was this that came in bond a part of that 5 million that came in?

Mr. KELLOGG. Yes, sir.

Mr. GUINANE. How much did Kellogg Milling Co. bring in-the total?

Mr. KELLOGG. Excuse me, I will have to see.

Mr. GUINANE. All right.

Mr. KELLOGG. 1,787,000 bushels.
Senator THYE. 1,787,000?

Mr. KELLOGG. Yes, sir.

Mr. GUINANE. Was that what came in bond?

Mr. KELLOGG. That is of the Kellogg Milling Co.

Senator THYE. That is a direct question.

Mr. GUINANE. What was the figure for Kellogg Milling Co. on this grain that was unfit for human consumption?

Mr. KELLOGG. 1,787,000.

Mr. GUINANE. How much of this wheat did Hallet & Carey bring in? Mr. KELLOGG. Hallet & Carey didn't bring in any wheat.

Mr. GUINANE. I just want to bring out again the setup of the three companies. The Hallet & Carey Co. is a wholly owned subsidiary of the Bunge Corp?

Mr. KELLOGG. That is right.

Mr. GUINANE. And where did you have offices of the Kellogg Milling Co.?

Mr. KELLOGG. In Minneapolis Grain Exchange, room 280 of that building.

Mr. GUINANE. Where does Bunge have its office?

Mr. KELLOGG. On the same floor.

Mr. GUINANE. It is adjoining?

Mr. KELLOGG. The Kellogg Milling is between the Bunge Corp. and the Hallet & Carey Co.

Mr. GUINANE. They are all adjoining offices?

Mr. MOSKOVITZ. They are on the same floor, the same corridor. Senator YOUNG. The Bunge Corp. is a wholly foreign-owned corporation?

Mr. KELLOGG. That is correct.

Mr. MOSKOVITZ. It is hard to say, Senator. I know at one time it did have some American stockholders in it.

Senator YOUNG. Practically all of it is foreign owned?

Mr. MOSKOVITZ. Yes.

Senator YOUNG. You will admit it is foreign owned?

Mr. MOSKOVITZ. Yes.

Senator YOUNG. As a corporation, they pay

Mr. MOSKOVITZ. They pay excess-profits taxes.
Senator YOUNG. As individuals they do not?

Mr. MOSKOVITZ. As individuals, I think that they pay the sam as home owned, the same taxes.

Senator YOUNG. Any profits they made, they paid no income taxes on it.

Mr. MOSKOVITZ. That is not true-they pay the same tax, those who own a foreign corporation-that part is subject to corporation tax. Senator YOUNG. Yes, but not

Mr. MOSKOVITZ. Any dividends, they pay the same tax as anybody else pays.

Senator YOUNG. As individuals?

Mr. MOSKOVITZ. As individuals.

Senator YOUNG. A foreigner does not pay income tax in this country.

Mr. MOSKOVITZ. He pays 30 percent up to fifteen hundred, and any difference above that he pays a greater percentage of tax.

Senator YOUNG. If he is a foreign citizen?

Mr. MOSKOVITZ. A foreigner who receives dividends in the lower bracket pays a higher rate than the American citizen does. Senator YOUNG. I never understood it that way.

Mr. MOSKOVITZ. The laws are not too kind to foreigners in that respect, as I understand them.

Senator YOUNG. I think you are wrong.

Mr. MOSKOVITZ. My best understanding is that the tax on dividends paid to nonresidents, alien individuals is 30 percent of all moneys received with no exemptions. It does not have the same exemptions. If he earns more than $15,400 then his whole tax is recalculated and he pays the same rate as an American but he got no deductions for charities and the other deductions the American citizen has. If he pays the same, it would be when he earns more money. Senator YOUNG. I would like the counsel to prepare that exact information for the record, please.

Mr. STANTON. Yes.

(The information referred to above is as follows:)

Bunge Corp., as a domestic corporation, is subject to the same taxes as other domestic corporations.

Dividends, salaries, and other determinable periodical gains paid by Bunge Corp. to nonresident alien individuals and foreign corporations are subject to a 30 percent tax under sections 211 (a) and 231 of the Internal Revenue Code unless (1) the taxpayer is an individual and has an aggregate income of the type covered by section 211 (a) in excess of $15,400; or (2) the taxpayer is engaged in trade or business in the United States; or (3) a lower rate is provided by treaty. Net capital gains of individuals are also taxable at 30 percent under section 211 (a), but only if the taxpayer is temporarily present during the taxable year.

A nonresident alien individual whose aggregate income of the type covered by section 211 (a) exceeds $15,400 and who is not engaged in trade or business in the United States is subject, unless otherwise provided by treaty, to a tax equal to the greater of: (A) the 30 percent tax provided by section 211 (a), or (B) a tax computed in the same manner as that applicable to citizens (except that only income of the type described in section 211 (a) and only charitable deductions and deductions applicable to such income are taken into account).

A nonresident alien individual or foreign corporation engaged in trade or business in the United States is subject to the same tax as a citizen or domestic corporation, except that only gross income from sources within the United States and only certain charitable deductions and deductions applicable to such income are taken into account.

Sections 143 and 144 of the Internal Revenue Code provide for withholding the above described 30 percent tax at source.

Information received by the committee indicates that some of the stockholders of Bunge Corp. may be citizens of Belgium, the Netherlands, Argentina, and Uruguay. The United States has tax conventions with Belgium and the Netherlands providing for a 15 percent, rather than 30 percent, tax on dividends (5

percent in the case of subsidiary corporations in certain circumstances in the Netherlands Treaty). We do not have tax conventions with either Argentina or Uruguay.

Mr. GUINANE. The totals of those amounts of the Bunge Corp. and the Kellogg Milling Co. is approximately 7%1⁄2 million bushels, is that right?

Mr. KELLOGG. Yes.

Mr. GUINANE. And while you were vice president in charge of Bunge Corp. you were also a partner in the Kellogg Co., a senior partner, is that correct?

Mr. KELLOGG. Yes, sir.

Mr. GUINANE. Were files intermingled between Bunge and Kellogg Milling?

Mr. KELLOGG. No, sir.

Mr. GUINANE. With Hallet & Carey? What part did they play in the importation of this wheat?

Mr. KELLOGG. None whatsoever. Now, to clarify one thing. There is practically all-practically all this wheat was bought from Hallet & Carey Co., Ltd., of Winnepeg and they have no connection with the Hallet & Carey in Minneapolis.

Mr. GUINANE. They have no present connection?

Mr. KELLOGG. That is right.

Mr. GUINANE. Do you have any contractual relationships so they were purchasing the wheat there, and you would get a kickback from the regular price?

Mr. KELLOGG. No, they didn't buy anything for us. They bought it and sold it to us.

Mr. GUINANE. And you purchased also from the Bunge Corp. in Winnepeg?

Mr. KELLOGG. Through them; yes.

Mr. GUINANE. How many bushels were purchased from Bunge Corp. of Winnepeg of this wheat?

Mr. KELLOGG. For Kellogg or for Bunge?

Mr. GUINANE. For both concerns?

Mr. KELLOGG. Bunge bought nothing.

Mr. GUINANE. And the Kellogg Co.?

Mr. KELLOGG. The Kellogg Co. bought nothing through Bunge. Mr. GUINANE. How much did Bunge buy?

Mr. KELLOGG. I am quite sure that is correct.

Mr. MOSKOVITZ. Yes, they did. They did buy from Bunge, Ltd. Senator THYE. Will you speak so the reporter can hear you.

Mr. MOSKOVITZ. We have a list here of all of our purchasers, right down to the bushel and this was prepared for the benefit of the Senators and I will be very glad to show it to you and it will speak for itself. Mr. GUINANE. I think we can bring out what we want.

Senator THYE. You are seeking information and therefore, you have the record before you. Answer the questions that Mr. Guinane has asked.

Mr. MOSKOVITZ. Will you repeat the question?

Mr. GUINANE. How much wheat was purchased either by Kellogg Milling Co. or the Bunge Co. of Minneapolis from the Bunge Co., Ltd., in Winnipeg.

Mr. MOSKOVITZ. From Bunge, Ltd., Canada?

Mr. GUINANE. Yes.

Mr. MOSKOVITZ. I want to add them up.

Mr. KELLOGG. Approximately 14 million bushels; is that correct? Mr. MOSKOVITZ. Över a million and a half bushels.

Mr. GUINANE. Did you have the figures there of the purchase price that Bunge, Ltd., paid for this Canadian wheat per bushel?

Mr. KELLOGG. Yes.

Mr. MOSKOVITZ. Yes; I have that.

Mr. GUINANE. What was that?

Mr. KELLOGG. The first purchase was $1.58%, in store.

Mr. GUINANE. That was the purchase price by Bunge of Winnipeg? Mr. KELLOGG. Yes.

Mr. GUINANE. From the sellers, was it not?

Mr. KELLOGG. Yes.

Mr. MOSKOVITZ. That is the purchase price paid by Bunge Corp. of New York to the Minneapolis office from the Bunge Corp., Ltd. Mr. GUINANE. Do you have information as to how much Bunge, Ltd., paid for this wheat in Canada?

Mr. KELLOGG. No; I do not.

Mr. GUINANE. What was the average price per bushel that Bunge Corp. paid for this Canadian wheat over the 3-year period? Mr. KELLOGG. I don't think we are

Mr. MOSKOVITZ. Yes; we do know what the average price paid over the 3-year period was. We have had to reduce it to a common basis, Senator, because, Mr. Guinane said and it is bought in the various ways-in store, in port, in many ways. It is bought in various ways, on f. o. b., Duluth, which reduced the wheat to a common denominator. The average price for 1950 was $1.82285; and in 1951, $1.877348, and in 1952, $1.89732. These represent our total costs f. o. b. Duluth.

Mr. GUINANE. In 1950, what was the average price of good United States wheat, domestic wheat, do you have that with you?

Mr. MOSKOVITZ. I don't have that.

Mr. KELLOGG. I don't have it either.

Mr. GUINANE. Well, we will pass that for a minute. Do you recall what the average price of domestic wheat was in 1950?

Mr. KELLOGG. No; I do not.

I would have to look that up.

Mr. GUINANE. Mr. Henderson, do you know?

Mr. HENDERSON. Well, I would say

Mr. KELLOGG. Mr. Henderson would know that, I do not.
Mr. GUINANE. Do you recall what it was in 1951 and 1952?

Mr. KELLOGG. No, sir.

Mr. GUINANE. How much over this price, the prices paid for Canadian wheat unfit for human consumption, was the price of the United States domestic wheat?

Mr. MOSKOVITZ. For the same grade?

Mr. GUINANE. For good United States No. 2 and No. 1 hard wheat? Mr. KELLOGG. I would venture that No. 2 hard wheat at the gulf was worth 25 cents a bushel more than this, that is a guess on my part. Mr. GUINANE. That is 25 cents a bushel more?

Mr. KELLOGG. I think that is about it.

Mr. GUINANE. Was United States wheat selling for about $2.50 a bushel during the period?

Mr. KELLOGG. That I couldn't answer.
Mr. GUINANE. You have no idea?

Mr. KELLOGG. No, because the wheat-our office here was not in the export business, that is all handled from New York but I know approximately, I would guess, that the Canadian wheat was probably 25 cents a bushel cheaper.

Mr. GUINANE. Who put on the advertising campaign to sell this Canadian wheat to the United States mills and dealers?

Mr. KELLOGG. That I don't know.

Mr. GUINANE. You do not know?
Mr. KELLOGG. No.

Mr. GUINANE. Who put on the advertising campaign for Bunge & Kellogg Milling to sell that wheat?

Mr. MOSKOVITZ. I don't like the idea of interjecting in these things. I think the witness should be left, but that is like the question asked, when did you stop beating your wife. Was there any advertising campaign, and then, if so, who did it?

Senator THYE. Let's frame the question in that manner. You may proceed and ask the question in that manner.

Mr. KELLOGG. There was no advertising campaign.

Mr. GUINANE. You made no effort to sell the wheat?

Mr. KELLOGG. Oh, yes.

Mr. GUINANE. What efforts did you make?

Mr. KELLOGG. By contacting buyers, either over the telephone or

in person.

Mr. GUINANE. Did Bunge do that itself?

Mr. KELLOGG. Bunge of Minneapolis?
Mr. GUINANE. Yes.

Mr. KELLOGG. Yes.

Mr. GUINANE. Did it do the selling?

Mr. KELLOGG. Mr. Henderson and myself.

Mr. GUINANE. Did Hallet & Carey have anything to do with it? Mr. KELLOGG. We sold some to Hallet & Carey, which they in turn sold to mills.

Mr. GUINANE. Who handled the clearing of customs documents forBunge?

Mr. KELLOGG. Mr. Vosika.

Mr. GUINANE. Mr. Vosika?

Mr. KELLOGG. Yes.

Mr. GUINANE. Was he head of Hallet & Carey, or the general manager?

Mr. KELLOGG. He is the traffic manager.

Mr. GUINANE. And also an attorney for the company?

Mr. KELLOGG. Yes, sir.

Mr. GUINANE. For the Hallet & Carey Co.?

Mr. KELLOGG. Yes, sir.

Mr. GUINANE. Which is owned wholly by Bunge Corp.

Mr. KELLOGG. No; that is not correct.

Mr. MOSKOVITZ. Hallet & Carey is not owned by the Bunge Corp.; it is affiliated and has common ownership. I am not trying to be technical about it, but I want to get the record absolutely clear. Mr. GUINANE. It is a wholly owned corporation of Bunge?

Mr. MOSKOVITZ. Somebody had insufficient facts who informed

you.

Mr. GUINANE. How did you go about selling this Canadian wheat? Will you relate some of the things you did?