Mr. DODGE. I think Mr. Vosika can explain that as to how this wheat would be used, probably billing out of Texas going east and the other billings would go out on the Kansas wheat and support basis. I think that is the answer to that, sir.

Mr. GUINANE. It still would be Canadian wheat for export?

Mr. DODGE. No, sir. It might be the billing which is O. K., but they were substituted for this other billing having gone to other billing, transit billing and they would substitute this other transit on the flour billing, going east or other directions which is common practice in transit.

Mr. GUINANE. Was much of this wheat sold directly as wheat? Mr. DODGE. I don't think any of it was exported. I sold to nobody but mills.

Mr. GUINANE. For the manufacture of flour?

Mr. DODGE. Yes, sir.

Mr. GUINANE. And you were always very sure you told these people that they couldn't claim subsidies?

Mr. DODGE. Apparently, I was negligent in the letter. Every one of these people knew they were buying Canadian wheat.

Mr. GUINANE. How is it that the written evidence shows that you were encouraging the use of subsidies?

Mr. MOSKOVITZ. I think he is characterizing the witness's testimony. I don't want to be technical, I think it is important here

Senator THYE. It concerns me very much sitting here and listening to the facts as we find them in the record that there is no reference to the fact that this is Canadian wheat that came in under reduced tariff and could only come in if it was damaged. If it had come in under any other classification, it would have been subject to higher tariff and imposition of a quota regulation of this Government. Therefore, it is of a great concern to me that this record finds no reference to the fact this was damaged wheat.

Mr. MOSKOVITZ. I am not an expert in the grain business, Senator, but the point I want to make before we go further and which I tried to make a while ago and didn't complete, was that the quota that was read by Mr. Guinane was fixed by the Presidential proclamation at 795,000 bushels per annum. Bunge sold less than 10 percent of all of this wheat that we are talking about and it is the competitiors that sold the other ninety-odd percent-bought and sold it. It is incredible that any man versed in the flour business himself might deal with a million or more bushels a year. Some of the big flour mills-and it came under the quota. They knew it didn't come under the quota. They knew it was Canadian wheat. There was no misrepresentation of any kind. It couldn't have been. It may be the customs was wrong in giving the interpretation but the fact is this, it did.

Senator YOUNG. Why does this letter specifically refer to the possible support or subsidies program?

Mr. MOSKOVITZ. I think Mr. Guinane read the memorandum and it tells what he meant by it.

Senator YOUNG. It appears from the record in that letter you expect to sell this wheat if the subsidies support program was stepped

up.

Mr. DODGE. It gets back to the question of transit and rates. They can't bring grain in from up in this country into that territory unless they can bring it on transit proposition and substitute tonnage.

If they want to export flour, made from this wheat, which they could do according to my understanding, which they could do, if they didn't go to International Wheat Agreement countries.

Senator YOUNG. How were you trying to sell the wheat in that letter, on a basis stepped up by a subsidized Government program?

Mr. DODGE. That is the buying business. That was the buying. They don't buy wheat. If they can sell flour, they would cover in this substitute wheat and flour, the various grades of wheat. It is a very simple thing for milling businesses, Mr. Young.

Senator YOUNG. The inference is there, when you sold it you expected to find that it would find its way to export which much of it did later on.

Mr. DODGE. I don't think it is the inference at all. If they sold export flour for a different purpose, for a blend, they would take it for a blend, they wouldn't buy additional wheat.

Mr. MOSKOVITZ. They wouldn't buy wheat from the North unless they were able to sell export wheat from the South.

Senator YOUNG. I don't understand your logic.

Mr. MOSKOVITZ. We are very intricate kind of business which is known common talk in the trade, but not known to us lawyers and Senators.

Senator THYE. It seems to have a one-way traffic.

Mr. GUINANE. I would like to read another letter, Senator, if I may.

Senator THYE. Proceed.

Mr. GUINANE. It is dated February 19, 1951, and addressed to Acme Milling Co. of Oklahoma City, Okla. The letter is written by Mr. Dodge of Hallet & Carey Co.

GENTLEMEN: We are sending you under separate cover a 5-pound sample of frost-damaged wheat that will grade sample grade, and run 59 pounds or better in test weight. This wheat is sound in every respect except the frost damage, and we are quite confident that you will find after making tests on this wheat that you can use easily up to 10 to 15 percent. This sample is being sent at the request of the Brachett Grain Co., Fort Worth, Tex., Mr. Ben Ferguson, and we will keep him posted as to our making price.

We sincerely hope you will be able to use some of this wheat, and we look forward to trades with you through the Brachett Grain Co.

Yours very truly,

HALLET & CAREY CO.
B. J. DODGE.

I don't see any mention in it of Canadian origin.

Mr. DODGE. I didn't actually sell any grain. Most of the sales are made over the telephone and sometimes they are confirmed by letter and sometimes they are not confirmed. They are confirmed, of course, by a regular confirmation later.

Mr. GUINANE. Do you know wherein you described the Canadian frost-damaged wheat?

Mr. DODGE. Apparently, I didn't.

Mr. GUINANF. Apparently not.

Mr. DODGE. I do know that I told them, every single one, and warned them about the International Wheat Agreement. That is for sure.

Senator THYE. You are also sure these letters do not convey the idea to me as I sit here and listen to the reading of them that you ever referred to that, or you ever referred to Canadian wheat, or that it was

Canadian wheat that came down under reduced tariff, and this is the first time I have heard these letters read.

Mr. DODGE. The wheat is in the brokerage business and I left them with the understanding. I could tell they could use domestically exported, which is outside of the International Wheat Agreement. That was sales talk that I made to these people.

Senator THYE. It is strange that those also would not have anything in writing. I can't understand that.

Mr. DODGE. I can bring in every one of the millers and they will testify.

Senator THYE. I hope they will.

Mr. DODGE. I know they will.

Mr. MOSKOVITZ. There is one letter, Mr. Guinane. Go ahead and read it, for the Senator [handing a letter].

Senator THYE. Senator Young and I may not know what it is.

Mr. GUINANE. This is a letter dated April 24, 1951, on the letterhead of Bunge Corp., 42 Broadway, New York, N. Y. It is addressed to William G. Kellogg of that company.

DEAR BILL: With his letter of April 18, Mr. Henderson sent to us for my attention an exchange of correspondence between your customs broker and the Treasury Department, Bureau of Customs, and some other papers which I am returning herewith.

Upon examining these papers my personal opinion was that from a customs point of view there was no difficulty whatsoever in entering the merchandise on the preferential duty of 5-percent ad valorem and I was also convinced that the 5-percent ad valorem duty would stick, even though the merchandise was, at time of entering, unfit for human consumption and subsequently was made fit for human consumption, due to processing. However, we were rather concerned, once the wheat was made fit for human consumption through processing, whether same should not be retroactively put under the import quota, and this point we wished to check more thoroughly. Therefore, we had our customs lawyers go back into the matter and we thought it well to bring both the aforementioned points before him and I attach hereto his memorandum on the subject, from which you will notice that he concurs that there is no risk in bringing in the No. 5 wheat, either from a customs point of view or the quota point of view.

I thought it well to advise you accordingly over the telephone today, and I also pointed out to you that you must watch out that there might be some difficulty if, after processing, some of the wheat would become mixed with American grain on which a subsidy for export would be collected from the CCC, or if that mixed wheat would be paid for with ECA funds. The more serious of the two, we consider to be the subsidy angle and we like you to continuously bear this in mind. Yours very truly.

That was on April 24, 1951. Do you recall the letter, Mr. Kellogg? Mr. KELLOGG. Yes; it is from Mr. Meyer.

Mr. MOSKOVITZ. It is signed by Jack Meyer, an officer of the corporation. That signature is honored by banks for large sums of money in checks.

Senator THYE. You would never know it by looking at it, and there is absolutely nothing typed underneath to indicate who signed it. Mr. GUINANE. I want to ask

Mr. MOSKOVITZ. I assure you that the banks honor that signature, and I have seen it on checks of substantial sums of money. Mr. GUINANE. Do you believe you received this letter?

Mr. KELLOGG. Yes, sir.

very

Mr. GUINANE. What care did you exercise that purchasers were advised this wheat did not get into or under the support program or under ECA program?

Mr. KELLOGG. The same as I told him prior to receiving this letter.
Mr. GUINANE. That you were exercising care in doing that?
Mr. KELLOGG. Yes, sir.

Mr. GUINANE. But you never did put anything in writing to that effect?

Mr. KELLOGG. Looking through the correspondence, I write very few letters.

Mr. GUINANE. Although the correspondence we did see all appears to cover it up?

Mr. MOSKOVITZ. I object to that. I hate to be legal about this. Senator THYE. The fact of the matter is in listening to the reading of some of these letters that there is absolutely no reference to this as Canadian wheat.

Mr. MOSKOVITZ. I don't think the entire letter was read in the first instance. There was reference to Canadian wheat. That is why I ask that the entire letter be read or marked.

Senator THYE. And the fact it came in under reduced tariff.

Mr. MOSKOVITZ. As I pointed out, before, Senator Thye, when you bring in several bushels and you come with fifty-odd million, it couldn't possibly have come under the quota. Everybody knew that.

Senator THYE. Everybody also knew we had wheat going into channels of human consumption and the law is specific and the Presidential proclamation was there.

Mr. MOSKOVITZ. I know how the Senator feels on what is a proper interpretation and what it should have been, but the fact is again that it was not so interpreted as unfit for human consumption in the terms of grading it. It didn't necessarily follow the dictates of the pure food and drug act. It may be that the Senator disagrees with that, and the Congress will remedy the situation, but asking these people retrospectively to interpret when the highest authority in Washington has made a finding, is asking a little too much of them. Senator THYE. You may proceed.

Mr. GUINANE. I will read a letter of May 8, 1951 on the Red Wing Milling Co. letterhead. It is written to Hallet & Carey for the attention of B. J. Dodge and signed by R. G.

DEAR BEN: We ran into some difficulty on your export flour. Looks as though we will have to sell out the rest of the wheat we have coming from you. Inasmuch as the market on this type of wheat is stronger, perhaps you can work out a pretty good deal for us. Let us know what can be done.

Do you recall that letter, Mr. Dodge?

Mr. DODGE. Yes.

Mr. GUINANE. What was the difficulty he was speaking of?

Mr. DODGE. He probably couldn't make shipment in time, probably expected to sell export flour and there have been many difficulties. The Red Wing Milling Co. do some export business but not very much.

Mr. GUINANE. In the letter, the difficulty had nothing to do with subsidies?

Mr. DODGE. No, sir.

Mr. GUINANE. Now, this is a letter of May 3, 1951, to Red Wing Milling Co., the same writer of this letter, and to the attention of Mr. John Dengler.

I'm wondering if you won't find that as soon as the subsidies are again announced that there will be some export business, and you will be able to use that

frosted wheat to advantage yourself. It is almost impossible to buy in Canada at this time. We tried this morning to buy winter cargo but were unable to get an offer from the Canadian Wheat Board. Bunge does not seem to be interested in buying any more for Minneapolis or Duluth at the present time as they have quite a little bought for August, September, October, and November, but occurred to me that in the event that you do want to sell some of yours, we might load out a car and see how it will sell on the floor. I will be talking to you within the next day or two.

In the meantime, if I find anybody who is in the market for that type of wheat I will contact you.

Signed by B. J. Dodge.

Now, what did you mean that as soon as subsidies are again announced that there would be export business, as you stated in the past you were dealing only with nonsubsidy businesses?

Mr. DODGE. In the case of Red Wing, of course, he buys other wheat beside Canadian wheat, but in that particular case I would say the same thing about the one in Brachett Grain Co., that if they sell export flour, which they were

Mr. KELLOGG. If the subsidies were in favorable.

Mr. GUINANE. From Canada?

Mr. KELLOGG. Certainly not.

Mr. GUINANE. That is what you were speaking about is it not? Mr. DODGE. Frost damaged.

Mr. GUINANE. Canadian frost-damaged wheat?

Mr. DODGE. It could have been other frost-damaged wheat. Maybe it was our frost-damaged wheat from Montana and North Dakota.

Senator YOUNG. Which year, 1950 or 1951?

Mr. DODGE. We handled a terrific amount of frost damaged from Montana.

Senator YOUNG. How much?

Mr. DODGE. I would say three or four hundred thousand. It will show up in the records, in the records at the State inspector's bureau. Senator YOUNG. Frost-damaged wheat in our State in those years? Mr. MOSKOVITZ. It was mostly in Montana.

Mr. DODGE. It was mostly in the triangle area. It was as high as 50 and 60 percent of damage.

Senator YOUNG. The total area would be very, very small. I have been in the wheat business all my life and I think I am learning something today. I don't know of 500,000 bushels frost damaged in 3 or 4 years.

Mr. DODGE. I know 60,000 bushels I bought, that is one alone, besides some others.

Senator THYE. From North Dakota?

Mr. DODGE. From North Dakota and from Montana. I would say mostly Montana. There was some from the northwest corner of

North Dakota.

Senator THYE. You may proceed.

Mr. GUINANE. Here is another letter from Midwest Flour & Feed Co. under date of January 24, 1951, to Hallet & Carey Co. It says:

Trying to place that car millet at your reduced price. Used to sell quite a little, but of late not much luck.

Also trying them all out on the two loaded cars-heavy fine ground refuse. We find most of them stocked up, looking for bargains.

Give us

On this frosted wheat, is it sound and without odors? Does Government permit its use for blending with other wheats in making export flour? what information you can and airmail samples with particulars.