Mr. KELLOGG. The wheat I sold that went to the gulf was sold over the telephone, as most of our business is done, and the wheat that was wheat sold to the mills-there are a few mills that we sold wheat to and their buyers, we are around with them everyday. Mr. GUINANE. And you sent salesmen down through the Southwest selling this wheat? Mr. KELLOGG. Hallet & Carey did; yes, sir. Mr. GUINANE. Under your instructions? Mr. KELLOGG. Well, I would venture to say yes, I was making an effort to sell this wheat and Hallet & Carey had contacts with flour mills that Bunge Corp. did not have. Mr. GUINANE. What was your instruction to Hallet & Carey? Mr. GUINANE. And to advise all purchasers it was Canadian wheat? Mr. GUINANE. And inform them, too, it could not be used under the subsidy program? Mr. KELLOGG. Yes, sir. Mr. GUINANE. You gave those instructions to whom? Mr. KELLOGG. To Mr. Dodge. Mr. GUINANE. Did you give those instructions to Mr. Vosika? Mr. KELLOGG. He had nothing to do with the sale of the wheat. Mr. GUINANE. Do you have anything in writing to show the instructions you gave? Mr. KELLOGG. NO. Mr. GUINANE. Nothing whatsoever? Mr. KELLOGG. No, sir. Mr. GUINANE. Did Mr. Dodge make quite a sales effort to sell this wheat in the Southwest? Mr. KELLOGG. Yes, sir. Mr. GUINANE. I would like to read into the record on the letterhead of Hallet & Carey, a letter signed by B. J. Dodge, salesman for Hallet & Carey. I think that is the title. He is salesman for Hallet & Carey. This letter is dated May 14, 1951, captioned "Memorandum of southwestern trip by B. J. Dodge": At Kansas City *** naturally I met with Walt Mulloy and found him busy buying No. 5 hard wheat for export, on basis of 16 over Kansas City option delivered the gulf. Also had a nice_visit with the manager of the Tex-O-Kan people, at Kansas City, Mr. Aaron Furhman. Found all of their wheat buying for mills is done through the Dallas, Tex., office. There is a possibility that later on Mr. Furhman might buy some Canadian wheat to work through Kansas City, but at the present time it doesn't look too good. *** At Wichita * * * I called on the Consolidated Milling Co., Mr. Russell Payne, buyer. * * * They are now owned by Rodney Mills at Kansas City, but do their buying direct. They will not touch the frost damaged wheat, but are prospects for spring wheat. Their demands for spring wheat will depend entirely on the outcome of the Kansas crop. I also called on the Wichita Flour Mills, at Wichita, a young fellow by the name of Fred Merrill, is now their wheat buyer, and he requested a 5-pound sample of the Canadian frosted wheat, which is being sent today. This account again will depend on the outcome of the Kansas crop, and a possibility of new subsidies and export business. Now, what did he mean in that paragraph: this account again will depend on the outcome of the Kansas crop and possibilities of new subsidies and export business. Mr. KELLOGG. I do not know. Mr. GUINANE. Do you recall seeing this letter? Mr. KELLOGG. No. Mr. GUINANE. Who would normally see this letter? Mr. KELLOGG. Mr. Kibler, who is now president of Hallet & Carey. Mr. GUINANE. And you kept in pretty close touch with their selling activities; did you not? Mr. KELLOGG. Yes, quite a bit. Mr. GUINANE. And you talked by telephone with a number of people that Dodge called on? Mr. KELLOGG. No, I don't believe I did. I think we left that to Mr. Dodge as he made the contacts. Mr. GUINANE. I will read further: At Houston, Tex. * * * I met Mr. Cowan and Mr. Roper. Mr. Cowan is the wheat buyer. They have a very large mill and also have a feed plant. They are owned by the Continental Grain Co., but have requested a sample for the 59-pound frost damaged wheat and seemed to be very much interested; of course, however, as all of the others told me, they say it will depend on the export demand. We have sent them a sample of the frost-damaged wheat and are quite optimistic that should conditions in export improve, we will be able to sell them wheat direct. Doesn't this indicate that your complete sales was aimed at export business and the collection of subsidies? Mr. KELLOGG. No, sir. Mr. GUINANE. I will read another part of a paragraph. Bill The big people in Texas are the Tex-O-Kan people at Dallas, Tex. Lathrop is the head of the grain department there, and operates under the name of Crouch Grain Co. They have both flour and feed business and have made fairly large sales of flour to the Bunge Corp. Bill Lathrop is an old friend of the writer's, having been in business for years at Kansas City under the name of Lathrop Grain Co. Think during the last few years, prior to his going with the Tex-O-Kan people, he was with the Commodity at Kansas City. This is a big setup and in order to make a trial on the frosted wheat, Mr. Lathrop gave me an order to load out one car and book it to them for prompt shipment. If this works out satisfactorily, and export business develops, this could be our biggest account in the Southwest. There were several other comments on the selling campaign, and you were generally familiar with it and I call your attention to the fact that I call it a campaign because of this lengthy memorandum and coverage he had on it, and you were generally familiar with his efforts? Mr. KELLOGG. Yes. Mr. GUINANE. Did you ever instruct Mr. Dodge to be sure and steer clear of export subsidies program of the Government, can you show any piece of paper or correspondence you have? Mr. KELLOGG. No. Mr. MOSKOVITZ. May I ask the witness a question at this point? Senator THYE. Yes, sir. Mr. MOSKOVITZ. Is it customary to give salesmen instructions in writing when they are where you see them every day? Mr. KELLOGG. We never do. Mr. NICHOLS. He has told everyone that this is Canadian frosted wheat. Senator THYE. It is also very significant that each one of those same prospective purchasers make reference to the foreign export business as an influencing factor as to whether they purchased it or not. Mr. NICHOLS. What a purchaser may be or may not do, is not the business of this gentleman. Senator THYE. There is no reference, no salesman's information to the purchaser that this is here under a reduced tariff. Mr. NICHOLS. This is not wheat they are talking about at all, all the time. Senator THYE. It does not state in the record it came in under a reduced tariff. Mr. NICHOLS. They all knew that. Senator THYE. I would say they just simply say it is 59-pound wheat. You knew 59-pound wheat is awfully close to 60-pound wheat, which is your weight of wheat, and they refer to a 59-pound and only frost damaged and they say nothing about reduced tariff. Mr. MOSKOVITZ. This was not No. 1 or 2 or 3 or No. 4 wheat. This stuff was graded to the agriculture standards and most of it was sold as sample grade grain. Senator THYE. The only question involved here is that the purchaser, your prospective purchaser said it all depended upon the export business and what it did. The correspondence shows Canadian wheat and 59-pound wheat was mentioned in the correspondence and no reference to the fact this was unfit for human consumption, Mr. MOSKOVITZ. It was not unfit for human consumption. Senator THYE. That is how you got it in here, under the reduced tariff. You couldn't bring in the grain unless it was graded as unfit for human consumption, that is the only basis you could bring it in. That is the way the volume came in under the reduced tariff, because if it had not come in under the label as unfit for human consumption, it could not have come in the volume it did. Mr. MOSKOVITZ. We told the customs that it was not going to be used as feed. We didn't tell them and try to get some ambiguous basis. We told them for milling purposes, Senator. Senator THYE. I know, and you know, the law relative to quotas and you know the tariff regulations. You couldn't help but know, being an attorney, or you gentlemen in the business that you are in. You couldn't help but know the quota restrictions and the tariff that must be paid on the grain. Mr. MOSKOVITZ. Knowing all that we asked the customs what the law was. Now you have these seven regulations on the books and the Government itself gives its interpretation and not some little collector of customs or some woman who can be imposed upon; the Commissioner of Customs in Washington, D. C., that is being asked. Senator YOUNG. Most of the wheat that was exported at that time was exported under Government-subsidy programs. Mr. KELLOGG. The subsidy program was in question. Senator YOUNG. If this wheat went into the Government-subsidy program, it would be illegal. Mr. KELLOGG. That is correct. Senator YOUNG. Why would you have contacted the exporters? Mr. KELLOGG. There was a lot of wheat that didn't go out under International Wheat Agreement for export. Senator YOUNG. Did you tell the wheat was mixed with any other wheat and, if it was, it would be illegal? Mr. KELLOGG. Yes, sir. Senator THYE. You have the records to show that? 34117-53-pt. 2- 3 Mr. KELLOGG. I really couldn't tell you, but I really doubt that. Senator THYE. You may proceed. Mr. GUINANE. I want to read a letter of May 18, 1951, written to the Brackett Grain Co., 614 Meecham Building, Fort Worth 2, Tex., attention of Mr. Ben M. Ferguson: Dear Ben It is written over the signature of B. J. Dodge of the Hallet & Carey Co. Mr. MOSKOVITZ. I think the last document should be marked in evidence because I don't know what the rest of the letter said. I think it should be all in the record. Mr. GUINANE. I will gladly do it. Senator THYE. He will give it for the record. Mr. MOSKOVITZ. Thank you, sir. Mr. GUINANE. Incidentally, Senator, if you are not aware of it, this was a memorandum of Dodge to Hallet & Carey, the home office. He referred to Canadian wheat in writing to his office but nowhere do you see on this memorandum that it ever mentioned Canadian wheat other than frost-damaged in reference to telling people to whom he was talking. On this letter to Brackett Grain Co. Attention: Mr. Ben M. Ferguson. Thanks very much for your letter of the 16th giving us the information on the No. 4 and No. 5 hard-wheat basis export. I know it is going to be difficult to interest any of the mills in the frost-damaged wheat at the present time and partially due to the fact that we cannot guarantee better than August shipment at the time, and partly because they want to wait and see what their own crop conditions in the Southwest are going to be before taking any further steps toward buying wheat. We have a feeling that there should be a better demand in June as we understand subsidies will again be in and we look for an increase in export business and domestic flour business at that time. Most of the mills in our territory tell us that their unshipped flour is down to a very low point. Insofar as this frost-damaged wheat being condemned, I can only say what I have told you before-that we have shipped perhaps a million and a half bushels into your territory and there has never been any thought that it might be condemned. As a matter of fact, there is no reason for it to be condemned as the wheat is sound except for the frost damage. In selling this wheat, we merely specify sample grade frost-damaged wheat, 59-pound or better, so the buyer in buying at that basis is not taking too much of a risk. At the present time we are quoting this frost-damaged wheat at 27 under the Minneapolis July f. o. b. Minneapolis. We have 100,000 bushels for August shipment, 100,000 for September, 100,000 for October, and 100,000 for November. Should we find that we can make earlier shipment, we will contact you in the hopes that somebody would go for prompt shipment. We figure our price on this frost-damaged wheat is still about 14 to 15 percent a bushel cheaper than your No. 5 hard wheat delivered Gulf. We appreciate hearing from you, and will keep you closely posted, and will also be glad to have any new crop news you care to give us. Yours very truly, Do you recall seeing that letter? Mr. KELLOGG. No, I don't. HALLET & CAREY CO., By B. J. Dodge. Mr. GUINANE. But you were vice president? Mr. KELLOGG. Yes. Mr. GUINANE. In May 1951? Mr. KELLOGG. Yes, sir. Mr. GUINANE. And Hallet & Carey operated under your direction, generally? Mr. KELLOGG. I was president of Hallet & Carey Co., but Mr. Kibler was the active head of Hallet & Carey. Mr. GUINANE. You know Mr. Dodge; of course? He could answer that Mr. GUINANE. What risk was he talking about? Mr. KELLOGG. Mr. Dodge is in the room. better than I could. Mr. GUINANE. We will postpone that for a while. I will continue on the letter. The last paragraph reads: At the present time we are quoting this frost-damaged wheat at 27 under the Minneapolis July f. o. b. Minneapolis. Then he says: We have 100,000 bushels for August shipment, 100,000 for September, 100,000 for October, and 100,000 for November. Should we find that we can make earlier shipment, we will contact you in the hopes that somebody would go for the prompt shipment. We figure our price on this frost-damaged wheat is still about 14 to 15 cents per bushel cheaper than your No. 5 hard wheat delivered gulf. You don't recall that that letter came to your attention? Senator THYE. But you were president of the company? Mr. GUINANE. Now, would you say that that letter was cautioning these purchasers of this wheat not to use it under the subsidy program? Mr. KELLOGG. I don't know what Mr. Dodge told them. Senator THYE. Let's have Mr. Dodge answer that question. Mr. Dodge, will you step forward, please? (Mr. Dodge is sworn.) TESTIMONY OF B. J. DODGE, HALLET & CAREY, LTD., MINNEAPOLIS, MINN. Mr. GUINANE. I have several other questions for Mr. Dodge and I was going to call him as a witness. Senator THYE. This one question right here should be answered at this time. Mr. GUINANE. Do you recall that letter, Mr. Dodge? Mr. GUINANE. What did you mean when you stated: In selling this wheat, we merely specify sample grade frost-damaged wheat, 59 pounds or better, so the buyer in buying at that basis is not taking too much of a risk. Further ahead, you state that it would not be condemned and he was not taking any particular risk in it being condemned. Did you go to Fort Worth? Mr. DODGE. Yes. Mr. GUINANE. Did you tell them about the possibilities? Mr. DODGE. I was fully aware of the International Wheat Agreement program. Mr. GUINANE. Why was your whole sales from these letters apparently based on export business and when subsidies came in? Mr. DODGE. That is because the Southwest Mills take grain out of Duluth on an export rate and substitute bills and Mr. GUINANE. You may go ahead. |