Mr. GUINANE. You knew at the time that the Commodity Credit Corporation was not the true consignee, didn't you? Mr. KELLOGG. I knew it was shipped on their permit. Mr. GUINANE. Isn't it a fact that the reason that it was shown as a consignee was to use the railroad transportation permit? Mr. KELLOGG. That is right. Mr. GUINANE. And it was used at that time so that the Government could get wheat into its ports to relieve distressed nations. Mr. KELLOGG. I don't think the permits were issued by the Government. They were issued by the elevator. That was my understanding, they were issued by the elevator. Mr. GUINANE. The elevator told them when they could ship wheat into this country? Mr. KELLOGG. I don't know. Mr. GUINANE. Did Mr. Vosika tell you that you could ship wheat in there after your conversation with Julian Scott? Mr. KELLOGG. I don't believe so, we follow shipping instructions. Mr. GUINANE. Now, why does the order for Kellogg Milling Co. describe the wheat as 21 cents a bushel, as later I understand the collector of customs changed it to a different figure? Why did you and Mr. Vosika describe it as 21 cents a bushel wheat? Mr. KELLOGG. I haven't the slightest idea. Mr. GUINANE. You knew it was bought in Canada, didn't you? Mr. KELLOGG. I knew it was brought in. These details were not brought to my attention. Mr. GUINANE. You knew it was a false permit? Mr. KELLOGG. I didn't know it was false. Mr. GUINANE. Did Julian Scott tell you it had been sold as wheat "unfit for human consumption" to the Commodity Credit Corporation? Mr. KELLOGG. No Mr. GUINANE. Why did you think it was to be billed to Commodity Credit? Mr. KELLOGG. The only thing I knew about it was that he would wire the firm. Mr. GUINANE. Then you knew they were not the true consignee? Mr. KELLOGG. No, I didn't. Mr. GUINANE. Did he? Mr. KELLOGG. No; he didn't. Mr. GUINANE. Did you in fact know he was selling it to Commodity Credit Corporation? Mr. KELLOGG. No Mr. GUINANE. Did he ever tell you what he did with it? Mr. KELLOGG. They were mixing it. Mr. GUINANE. Mixing it with whose wheat? Mr. KELLOGG. I don't know. Mr. GUINANE. Didn't he tell you with whose wheat, didn't he? Mr. KELLOGG. No, sir. Mr. GUINANE. You hadn't sold Commodity Credit Corporation any wheat had you? Mr. KELLOGG. NO. Mr. GUINANE. Whose grain did you think he was mixing it with? Mr. KELLOGG. They buy grain in the Southwest and they could have been mixing it with these gulf port wheats. Mr. GUINANE. You knew they bought wheat from the Southwest area? Mr. KELLOGG. Particularly, because all of our elevators were full of Government grain, supposedly. Mr. GUINANE. Weren't all elevators full of Government grain? Mr. KELLOGG. I won't believe that the important elevators were full of Government grain because they needed their space to turn over their business that goes through the ports. Mr. GUINANE. In the conversation that you had with Mr. Julian Scott, he told you he was making a lot of money. Mr. KELLOGG. He said he was making some money. Mr. GUINANE. You said in one of the letters that he had made a lot of money. Mr. KELLOGG. He was making money, because you are making money when you make 25 cents a bushel. Mr. GUINANE. Do you deny that he told you that he was mixing Canadian wheat with United States wheat? Mr. KELLOGG. No, he never told me. Mr. GUINANE. He never told you? Mr. KELLOGG. No. In addition to that he told me that nothing had gone into any wheat where anybody had collected a subsidy. Mr. GUINANE. You are acquainted with C. B. Fox Co., of New Orleans? Mr. KELLOGG. Yes. Mr. GUINANE. You have been dealing with them? Mr. KELLOGG. Yes, with 200,000 bushels of wheat the Kellogg Milling Co. sold that. Mr. GUINANE. Kellogg Milling Co.? Mr. KELLOGG. Yes. Mr. GUINANE. I want to read a letter under date March 6, 1952: Dear Willow: It was nice to have talked with you over the telephone_this afternoon. As I advised you, we have about 100,000 bushels of Canadian No. 6 Northern wheat, which will test around 54 pounds. This we can offer at 23 cents under the Chicago May, track New Orleans export. We are also sending you a sample of Canadian No. 5 Northern which will weigh 58 pounds or better. We have 100,000 bushels of this which we can offer at 2 cents under the Chicago May, track New Orleans export. I am sure that if you submit a sample of this to Mr. Winters Who is Mr. Winters? Mr. KELLOGG. He is in charge of the port of New Orleans. Mr. GUINANE. He was in charge of the New Orleans' public elevator? Mr. KELLOGG. Yes. Mr. GUINANE. He is the one who is supposed to have accepted $36,000 in graft payments? Did you know about that? Mr. KELLOGG. I read it in the papers. Mr. GUINANE (reading): I am sure that if you submit a sample of this to Mr. Winters of the dock board, you will find that he will permit this to be mixed into export No. 2 Hard or No. 2 Northern Spring wheat. Mr. GUINANE. What do you mean by that? Mr. KELLOGG. What did you mean, from what? Mr. GUINANE. From I am sure that if you submit a sample of this to Mr. Winters of the dock board you will find that he will permit this to be mixed into export No. 2 Hard or No. 2 Northern Spring wheat. What do you mean by that? Mr. KELLOGG. It is customary that when grade grain to go to these seaboard ports to the inspector to see if they can use it or not. the custom. anybody buys any lowsubmit the samples to That has always been Mr. GUINANE. And they just charge you regular storage charges for handling that? Mr. KELLOGG. We don't pay any storage for handling that in the gulf ports. We sold that to C. B. Fox Co. and whatever they did with it or got I don't know. Mr. GUINANE. You don't know what Fox had to pay for that service? Mr. KELLOGG. I imagine storage and elevator, we all pay that though. Mr. GUINANE. What do you call that wheat that is mixed, do they turn it out as good No. 1 or No. 2 hard wheat and not charge you an extra premium? Mr. KELLOGG. They don't. They do not do that, I know. Mr. GUINANE. So you have to Mr. MOSKOVITZ. Just a minute. What do you mean, that having in excess of 30 percent damaged kernel? Mr. GUINANE. It comes out all mixed, as No. 1 and No. 2 hard wheat. Mr. KELLOGG. It comes as a mixture. Mr. GUINANE. They sell it to the Government or to anyone they want. Mr. KELLOGG. We warn our buyers not to buy that. Mr. Fox understood from the conversations I had with him that the wheat was not to go into any I. W. A. wheat and I tried to sell him some wheat after that and he told me he hadn't any wheat going out into the countries where there was subsidy being paid so he still had it on hand and would have to wait until he got rid of it. Mr. GUINANE. Isn't it peculiar that in all the letters the Agricultural agents have, they didn't find any letter telling them not to use it in the I. W. A. program? Mr. KELLOGG. As a matter of fact I write very few letters. Practically everything I do in my business is over the telephone. Mr. GUINANE. And you had business conversations with Mr. Fox over the telephone; didn't you? Mr. KELLOGG. Yes, sir. Mr. GUINANE. Another paragraph in this letter: As soon as you receive this sample and talk with Mr. Winters, will you give me a call on the 'phone? If necessary, I could fly down there for a day and see what arrangements we could make for mixing this off. Now you were quite interested in giving him good service, were you not? Mr. KELLOGG. We are to all our customers. Mr. GUINANE. Was there a previous conversation that was had with Mr. Winters as to how he would mix this grain out with good wheat? Mr. KELLOGG. I haven't talked with Mr. Winters for a good many years. Mr. GUINANE. Why did you advise Fox to talk to Mr. Winters? Mr. KELLOGG. Because he was head of the elevator. Mr. GUINANE. You just guessed that he would do this, didn't you? Mr. KELLOGG. The first thing I knew about the $36,000 graft was what I saw in the newspapers. Mr. GUINANE. You notified Fox that this was Canadian wheat that he was buying didn't you? Mr. KELLOGG. Yes. Mr. GUINANE. When you sent that to Fox did he accept that Canadian wheat? Mr. KELLOGG. Yes. Mr. GUINANE. Did he pay for it? Mr. KELLOGG. Yes. Mr. GUINANE. Didn't he protest to you that the documents should not have described it as Canadian wheat? Mr. KELLOGG. No; not that I recall. Mr. GUINANE. Didn't you send him different documents so it was not described as Canadian wheat? Mr. KELLOGG. No. Mr. GUINANE. You don't remember any of that. Mr. KELLOGG. No. Mr. GUINANE. Mr. Kellogg, during the period of 1950, 1951, and 1952 and while you were vice president of Bunge Corp., of Minneapolis, did you, or did anybody in the Bunge Corp., of Minneapolis, pay any amounts of money to Galveston wharves either directly or indirectly or through Stone Forwarding Co. or any others? Mr. KELLOGG. No; we never did. Mr. GUINANE. Or gave you a good commission on your unfit wheat? Mr. KELLOGG. They never gave us 5 cents. As I told you before I never had anything to do with the export business of the customers. I had nothing to do with the export authorities at all. Mr. GUINANE. And do you definitely deny that you had any knowledge that Bunge Canadian "unfit for human consumption wheat" was mixed with Commodity Credit Corporation wheat at Galveston? Mr. KELLOGG. If somebody mixed it I don't know. Mr. GUINANE. You had no knowledge whatsoever? Mr. KELLOGG. No. Mr. GUINANE. Positive? Mr. KELLOGG. Positive. Mr. GUINANE. You never made any arrangement for anyone to do that? Mr. KELLOGG. No, sir. Mr. GUINANE. Now, when did Bunge Corp., Minneapolis, first make arrangements to sell Canadian "unfit for human consumption” wheat to Transit Grain, of Fort Worth. Mr. KELLOGG. Whatever date this shows. Mr. MOSKOVITZ. November 10. Mr. KELLOGG. November 10, 1950. Mr. GUINANE. And who made the arrangements to sell Canadian wheat to Transit Grain Co.? Mr. KELLOGG. I did. Mr. GUINANE. What was your conversation, where were they, what time, and with whom were the first conversations that you had? Mr. KELLOGG. With Mr. Scott. Mr. GUINANE. Was he up here at Minneapolis? Mr. KELLOGG. No; I talked with him on the telephone. Mr. KELLOGG. Yes, I knew him. Mr. GUINANE. You knew Leo Potishman for several years? Mr. GUINANE. What did you say to him relative to this Canadian grain or wheat? And what did he say? Mr. KELLOGG. He said he thought he could buy it and make some money with it. Mr. GUINANE. How did he say he was going to make some money? Mr. KELLOGG. I didn't ask him. Mr. GUINANE. You had quite a lengthy conversation with him, didn't you? Mr. KELLOGG. I talked with him via telephone a lot. Mr. GUINANE. You as a salesman of wheat and you didn't ask him what he was going to do with it? Mr. KELLOGG. Yes, I had an idea. Mr. GUINANE. What was your idea? Mr. KELLOGG. I thought he might mix it with export wheat. Mr. KELLOGG. No. Mr. GUINANE. Why not? Mr. KELLOGG. Because I told him not to do it. I asked him different times that he was sure that none of this wheat going into channels where the Government gets it. Mr. GUINANE. Did you advise him to be sure and not let the elevator mix it with Commodity Credit wheat? Mr. KELLOGG. I told him not to mix it in with any wheat with subsidy as it was checked. Mr. GUINANE. You told him to be very careful? Mr. KELLOGG. Not to do it. That was the only violation that I could see. Mr. GUINANE. Where did you see he would make big money then? Mr. KELLOGG. If you make 25 cents a bushel we consider that big money. Mr. GUINANE. How do you think he was going to claim subsidies? Mr. KELLOGG. You will have to ask Mr. Scott. Mr. GUINANE. Did you take any precautions at all to see that Transit Grain Co. did not put that grain on the subsidy program? Mr. KELLOGG. I did not. Mr. MOSKOVITZ. I would like to ask one question. Senator THYE. Counsel wants to ask a question. Mr. MOSKOVITZ. In addition to IWA wheat which is exported, the amount which is fixed by agreement, I have just made a rough check during the recess and I made a check of this in the 1951 and 1952 period. That it was close to 200 million bushels of wheat that is exported outside of IWA. Mr. GUINANE. Do you know how much of that was ECA or other Government programs? Mr. MOSKOVITZ. No, I don't. Mr. GUINANE. However, it was a fairly small amount outside of the Government. Mr. MOSKOVITZ. Did you think the Government |