Senator YOUNG. Why do you think the President limited imports to 800,000 bushels of wheat?

Mr. HORAN. I don't know. I don't know why; no.
Senator YOUNG. And you are a customs collector.

Mr. HORAN. That quota, that purpose is not a customs require

ment.

Senator YOUNG. The Government limits imports.

Mr. HORAN. It limits imports.

Senator YOUNG. What is its purpose?

Mr. HORAN. I suppose to keep foreign wheat from the United States.

Senator YOUNG. Anyway, it is contrary to the spirit of the law. Senator THYE. You, yourself, were instrumental in changing the very label that this wheat had on it when it arrived in this port of entry, and you changed it from the words "unfit for human consumption," to something else. Didn't you have something to do there? Mr. HORAN. Yes, I permitted it, yes.

Senator THYE. You permitted it?

Mr. HORAN. Yes.

Senator THYE. Yet, you didn't collect the custom?

Mr. HORAN. No.

Senator THYE. But you did change the label?

Mr. HORAN. Yes.

Senator THYE. Were those cars unloaded?

Mr. HORAN. The cars of grain, the cars containing the grain moved in bond from Minneapolis to southern ports, as I recall it; they were not unloaded.

Senator THYE. Then would you refer to it as warehouse here?
Mr. HORAN. Those cars served as constructive warehouses.
Senator THYE. They served as constructive warehouses?
Mr. HORAN. That is right.

Senator THYE. So that you would refer to any car as a warehouse? Mr. HORAN. Not unless the contents of the car has been filed in the customhouse.

Senator THYE. In other words, you could take that grain as it arrived in here, and even though it had not been unloaded, a bushel had not been unloaded from those cars, and so forth, your records showed it had entered a warehouse and had been reloaded and shipped? Mr. HORAN. No, Senator, we are not talking the same language. Senator THYE. I want to understand your language.

Mr. HORAN. The record shows it was entered for warehouse, and it means that a particular shipment, a particular type of entry. Documents filed in the customs shows that for a particular type of in bond, but it does not necessarily mean the merchandise entered went into a warehouse. It is like cattle imported from Mexico.

Senator THYE. We never lose the identity of cattle. Let's get back to grain. It went out into the warehouse and was shipped out again. When it was shipped out you changed the name of the quality of the commodity.

Mr. HORAN. I changed the description on the in bond manifest, which said it was Unfit for Human Consumption, and when it went out of here it had a different label on it.

Senator THYE. And you, yourself, were responsible for the change in the label, so that the man that purchased it, and received it was

34117-53-pt. 2—6

looking at an entirely different label than that product had when it landed in this port.

Mr. HORAN. The custom office knew what was in the cars.

Senator THYE. HOW?

Mr. HORAN. From the description we gave them that I read out of this book.

Senator THYE. That description will permit the change from Unfit for Human Consumption to something else?

Mr. HORAN. I don't agree it did.

Senator THYE. Insofar as the customs officials, they might have known it, but so far as the public and the buyer, they didn't know it. In other words, you put a different quota on that product.

Senator YOUNG. May I ask another question?

Senator THYE. Yes.

Senator YOUNG. Before you changed this, did you consult with Mr. Johnson?

Mr. HORAN. Mr. Vosika did one time, in regard to wheat. I don't recall what the discussion was about, or what the result was.

Senator YOUNG. What was the reason for going over there?
Mr. HORAN. We went over the importation of low-grade wheat.
Senator YOUNG. Mr. Johnson, did he enter any objection to your
changing this classification?

Mr. HORAN. I don't think we discussed it with him.
Senator YOUNG. What did you go over there for?

Mr. HORÁN. I really don't know.

Senator YOUNG. Not the slightest idea?

Mr. HORAN. I remember walking over with Vosika, but I don't remember what about.

Senator YOUNG. What did you talk about?

Mr. HORAN. I don't recall.

Senator YOUNG. That's strange.

Mr. HORAN. No, Senator; that's not strange. I have been down to Mr. Johnson's office quite often, and I can't recall what we discussed each time.

Senator THYE. Has Mr. Johnson been up in your office?

Mr. HORAN. I think so, but I don't recall.

Senator THYE. From the standpoint of protocol, is it customary around the department for you to walk down to Mr. Johnson's office and mess around for a while?

Mr. HORAN. I go down there on business. I call and see if he is in, and go down there.

Senator THYE. Do you ever call and have him come up?

Mr. HORAN. I have no right to command Mr. Johnson to come up to our office, or any place. I might invite him up.

Senator THYE. What are Mr. Johnson's duties?

Mr. HORAN. He is the Chief of the Grain Branch of the Production and Marketing Administration, as I understand.

Senator THYE. What is your position?

Mr. HORAN. Assistant collector of customs.

Senator YOUNG. Did he enter an objection in any way to your changing his ruling?

Mr. HORAN. No; because I didn't discuss it with him.

Senator YOUNG. You and he he never contacted you?

Mr. HORAN. I will say no, not for the purpose of determining whether or not it should be done.

Senator YOUNG. Do you mean the officials of PMA, which is charged with the price-support program, knew nothing at all of this unusual volume of wheat, and you didn't discuss it at all? It was his duty to do something about price support, and to administer the program as he is charged with under the law. Under section 22 of the Agricultural Act, imports are to be stopped when they are interfering with the price-support program.

Mr. HORAN. It was his duty if he knew about it, and I don't believe we discussed it; no.

Senator YOUNG. Mr. Guinane, may I have that paragraph read again.

Mr. GUINANE [reading]:

Our customs people in Minneapolis feel it would be a mistake to have any wires go to Washington, except from the collector of the Houston office, after a conference.

Senator THYE. Who signed the letter?

Mr. GUINANE. Walter Vosika.

Mr. GUINANE. Does that refresh your recollection any?

Mr. HORAN. Not at all.

Mr. GUINANE. Would you state emphatically that you did not discuss and visit with officials of Bunge Corp., or employees of Kellogg Milling Co. in connection with that paragraph wherein Mr. Vosika said it would be a mistake to have wires going to Washington, except after conference and joint drawal?

Mr. HORAN. I do not.

Mr. GUINANE. You definitely state that is false?

Mr. HORAN. Insofar as my entering, it is false. There might be other customs people that he might have talked with. I don't handle the transactions that come over the counter itself, in the customhouse.

Mr. GUINANE. Who-would any other customs person, under your supervision make such a statement without your knowledge or approval?

Mr. HORAN. They could, but I am sure they wouldn't.

Mr. GUINANE. Your knowledge of the Duluth, of the customs collector at Duluth insisting that this not be deleted, wouldn't it be customary for another department or another deputy, or collector, if he had a different opinion, to refer that difference to Washington rather than make up his own mind as a perfect administrative decision? Mr. HORAN. Yes, if he had any doubt.

Mr. GUINANE. You did not have any doubt?

Mr. HORAN. As a matter of fact, I did refer that to Washington. Mr. GUINANE. But Mr. Vosika said some foreign customers had objected to this phrase?

Mr. HORAN. Representatives of foreign purchasers.

Mr. GUINANE. Did he tell you the foreign purchasers wanted to know what they were buying?

Mr. HORAN. No.

Mr. GUINANE. Did you ask him?

Mr. HORAN. No.

Mr. GUINANE. It didn't occur to you that that might be the reason at all?

Mr. HORAN. No.

Mr. GUINANE. It didn't occur to you that he might enter that wheat for consumption later to innocent purchasers, without that designation?

Mr. HORAN. No; it did not.

Mr. GUINANE. How many cars came through Minneapolis?

Mr. HORAN. On the constructive warehouses.

Mr. GUINANE. Constructive warehouse entry?

Mr. HORAN. I couldn't say.

Mr. GUINANE. Ten or five hundred?

Mr. HORAN. Ten.

Mr. GUINANE. Isn't it a fact that 500 cars came through, of the Canadian wheat?

Mr. HORAN. Probably 500 carloads came into Minneapolis, but I doubt if that many went in bond.

Mr. GUINANE. How many in bond, would you say?

Mr. HORAN. It is possible 500 cars went through.

Mr. GUINANE. You would really remember a difference between 10 and 500.

Mr. HORAN. It seems to me about half that many.

Mr. GUINANE. Your decision to delete the phrase and give them the phrase they wanted resulted in what work here at Minneapolis, as far as customs was concerned, in order to go through this constructive warehouse. They had to make entries?

Mr. HORAN. That is right.

Mr. GUINANE. And they had to make withdrawal entries?

Mr. HORAN. That is true.

Mr. GUINANE. The entry and the withdrawal entries were made simultaneously?

Mr. HORAN. The entries and the wheat was in the cars until the analysis was made.

Mr. GUINANE. The samples of the wheat, are you familiar with the way they take samples?

Mr. HORAN. Yes, sir.

Mr. GUINANE. Would that involve much work?

Mr. HORAN. It is a careful sampling, and it takes time.

Mr. GUINANE. How long a time would it take to sample one car? Mr. HORAN. One car wouldn't take long. Opening the car, climbing through and drawing the sample, 5 or 6 minutes.

Mr. GUINANE. And then the grain would be sent to an office and examined?

Mr. HORAN. That is right.

Mr. GUINANE. Are you familiar with the detailed process of inspection, and how that would take place, how long it would take? Mr. HORAN. No; I don't know. It depends on how busy the PMA people are.

Mr. GUINANE. Would you say a reasonable amount of time would be 1 hour per car?

Mr. HORAN. I would think so, but I would be guessing.
Mr. GUINANE. That would be 500 hours, wouldn't it?
Mr. HORAN. If there were 500 cars.

Mr. GUINANE. Your decision made it necessary for the Agriculture people to make these grain inspections, costing 500 man-hours of grain inspection?

Mr. HORAN. I suppose it could be interpreted that way; yes.

Mr. GUINANE. Now, that would cost the Government that much money, 500 hours, possibly $1,500 or $2,000. Did you show any interest in saving Government expense or doing anything, when you permitted them to make this so-called warehouse entry, and withdrawal, and everything?

Mr. HORAN. We save Government expense when we can, but when the importers import, we accept the entry, and it goes through. Mr. GUINANE. Who pays for the service?

Mr. HORAN. The taxpayer-we pay the inspector.

Mr. HENDERSON. The Federal appeals. We pay the inspector. The Government pays though. We pay the inspector.

Mr. GUINANE. How much does that cost Mr. Henderson for this inspection?

Mr. HORAN. I think it costs $3 a car.

Mr. HENDERSON. That is correct.

Mr. GUINANE. So it was $3 a car for 500 cars, and an additional expense to bring these cars down to Minneapolis?"

Mr. HENDERSON. I will not answer that. The service we gave to the customer was worth $3 a car to us.

Mr. GUINANE. So that he could defraud the Government?

Mr. MOSKOVITZ. I am listening, and I must protest. It is in the record, but the Bunge Corp. protests that they defrauded the Government until that evidence is in the record. I am sorry, Senator, but I must protest. I mean this with all my heart. I don't want to obstruct this investigation in any way, Senator.

Senator THYE. The grain entered at Duluth, and you bypassed the custom collector's office, and you entered it in Minneapolis, and then it went from Minneapolis down to Houston, Tex., and it was then sent from there to Galveston for the purpose of exporting, so the question is in our minds, why did it have to come to Minneapolis in bond, why did it not go from Duluth down to Houston, Tex., as in bond, rather than to have to stop here and compel this office to proceed with an inspection, and the necessary transaction of changing the records and having the grain reconsigned to Houston, Tex. I can't get it clear.

Mr. MOSKOVITZ. That is a matter of fact. It is a very fair question, and the Senator deserves an answer, but that is a far cry from suggesting, upon the basis of what has been introduced, that the Bunge Corp., or anybody connected with them had anything to do with defrauding the Government of one single cent. I want to answer the question the Senator asked. He deserves that.

Mr. HENDERSON. That was done at the request of the customer. I want to point out that the custom collector just referred to, and which is already in the Senate record, but apparently has not been called to the Senator's attention. That the custom collector had the authority to do this at a short time subsequent when it was first done in Minneapolis, and as a matter of fact offered to do it. On pages 41 and 42 of the previous hearing of this Senate it is listed.

Mr. GUINANE. We have that testimony that he made that decision in evidence.