Mr. GUINANE. How much would that Christmas bonus amount to? Mr. THORNTON. We might contribute as much as $500 to the fund, but that would be distributed among the grain samplers and inspectors and all; it must be 20 or 30 men involved there. That is sort of a custom that has been going on at the port, so I am told, for 50 years. Mr. GUINANE. Why?

Mr. THORNTON. Just sort of a Christmas present or Christmas bonus-I wouldn't call it a bonus; like sending a fellow a case of whisky, instead of whisky, we get up a pot of money, and the freight forwarders contribute to it.

Mr. GUINANE. It wasn't that they might be careless at times with the wheat on their inspection?

Mr. THORNTON. No. We didn't try to buy influence, if that is what you have in mind.

Mr. GUINANE. You recall the incident on the steamship North Anglia, do you, in February 1953? I will refresh your recollection with a statement furnished the committee by the Office of Compliance and Investigation [reading].

On February 17, 1953, the steamship North Anglia received 231,470 bushels of wheat at elevator B. The Anglia then moved to Sunset Elevator at Galveston. Prior to loading at Sunset, Department of Agriculture grain inspectors found Sample grade Dark Northern wheat aboard; the following morning the inspectors went to elevator B where the steamship Stad Leiden was being loaded, and found it had Sample grain aboard, and ordered the ship unloaded. Thornton refused to permit the grain inspectors to interview Cannon or Carroll or examine elevator records.

Does that refresh your recollection?

Mr. THORNTON. Whoever made that report or last statement is wrong. I did not refuse to let the Government men interview Cannon and Carroll.

Mr. GUINANE. You did not?

Mr. THORNTON. No.

Mr. GUINANE. You recall this incident?

Mr. THORNTON. I recall the incident, yes; but they did not order us to unload the vessel. We voluntarily agreed to unload the vessel, and we did, the Stad Leiden you are talking about.

Mr. GUINANE. How did that sample grain happen to get on there? That is another mistake?

Mr. THORNTON. I wasn't there; I don't know.

Mr. GUINANE. In this instance, the Federal inspectors caught it, didn't they?

Mr. THORNTON. I don't know.

Mr. GUINANE. You are familiar with the United States official grain standards, are you?

Mr. THORNTON. No; I am not too familiar, only a smattering what someone has told me. I couldn't stand an examination on it.

Mr. GUINANE. You are sufficiently familiar to state whether under the official grain standards the maximum percentage of spring wheat that could be included in a cargo of No. 1 Hard Winter wheat, you are familiar enough to state that; are you not?

Mr. THORNTON. Only what I have been told, other classes 10 percent.

Mr. GUINANE. In No. 1?

Mr. THORNTON. Five percent.
Mr. GUINANE. No. 2?

Mr. THORNTON. Ten percent. I have been told that. I don't know that is true.

Mr. GUINANE. You mentioned that you did not unload the North Anglia.

Mr. THORNTON. No. We unloaded the Stad Leiden.

Mr. GUINANE. Did they order you to unload it?

Mr. THORNTON. No. I told them we would unload it. They took a sounding, and the Federal inspectors took a sounding of the boat and said that the grain wouldn't come up to the Grain Standards Act. We said, "Well, we will unload the boat." We shoved it down the dock, put our suckers in it and unloaded it.

Mr. GUINANE. Didn't they tell you every hold in the vessel was loaded with Sample grade frosted Canadian wheat?

Mr. THORNTON. No. They said it didn't meet the Grain Standards Act.

Mr. GUINANE. Isn't it a fact the only reason you permitted them to unload it after protesting, they got a ruling from Washington they would not issue you a certificate for any wheat out of the elevator, and that is the reason you permitted them to unload?

Mr. THORNTON. I don't know they got a ruling out of Washington. They said they would not issue a certificate. That was not a Bunge ship. That was another exporter's ship. We unloaded it, reloaded it, and sealed it.

Mr. GUINANE. On this Grain Standards proposition on 5 percent for No. 1 Hard wheat and 10 percent for No. 2 Hard wheat, a number of vessels were loaded where elevator records showed a very high percentage of Sample grade Dark Northern Spring wheat. You are familiar with those matters they were speaking about this morning when Mr. Cunningham was on the stand?

Mr. THORNTON. I am familiar with the records, but we have a man here to testify who made those records-Mr. Parrish. I have seen these records, but he made the record.

Mr. GUINANE. But you run the elevator, don't you?

Mr. THORNTON. I operate the whole terminal facility.

Mr. GUINANE. And none of those men in that elevator do anything unless you O. K. it?

Mr. THORNTON. I try to get it that way.

Mr. GUINANE. Yes, sir. Now, when your record showed that the steamship Eurytheus was loaded with 44.23 percent of Sample grade Dark Northern Spring wheat; was that true?

Mr. THORNTON. I don't know.

Mr. GUINANE. You haven't discussed this with Mr. Sweeney or others about the terrifically high loadings of Sample grade in loading ships?

Mr. THORNTON. I have talked to Mr. Parrish about it.

Mr. GUINANE. What did he tell you?

Mr. THORNTON. He doesn't know what went on the boat. That was his arbitrary markoff.

Mr. GUINANE. It did not represent the true amount of what went on the ships?

Mr. THORNTON. I don't know.

Mr. GUINANE. Why do you call this an arbitrary markoff?

Mr. THORNTON. He will explain it.

Mr. GUINANE. Your understanding is that it was an arbitrary markoff?

Mr. THORNTON. Most markoffs are arbitrary.

Mr. GUINANE. We agree with you. I don't believe there is any difference of opinion in that.

So, those chargeoffs to ships, as far as you know, do not reflect, accurately reflect, the real grades of wheat that went on those vessels? Mr. THORNTON. It may not or it may; we don't know.

Mr. GUINANE. Wouldn't you, as an elevator man, operating a huge elevator in this district, be charged with the responsibility of operating your elevator in accordance with the uniform grain standards so the Government could use the elevator?

Mr. THORNTON. We are willing to do what other competitors are doing in our area. We are willing to live up to the Grain Standards Act if the Federal inspection service will tightly supervise our competitors and see they do it.

Senator YOUNG. That is a poor attitude for a businessman to have. It would seem to be that anyone buying wheat would have to find out who is the least crooked. It becomes a vicious circle, doesn't it?

Mr. THORNTON. I will say it is a vicious circle, because of the elevator operators and lack of supervision at some points and tight supervision at others, like ours; we are tightly supervised.

Senator YOUNG. A Federal inspector wouldn't dare turn around and spit when you are loading a car, would he?

Mr. THORNTON. We have loads that come to us with all sorts of mix, and we wonder how they get the certificate up there.

Senator YOUNG. I don't think I would admit, if I was a businessman, that I wanted to be as crooked as the other man.

Mr. THORNTON. To stay in this elevator business, it is a rough business, and you have to meet competition with elevators that don't have Federal supervision.

The CHAIRMAN. They all have Federal inspection.

Mr. THORNTON. It is presumed so, but they don't.

The CHAIRMAN. Who would you say is responsible for permitting an area to be slipshod in its inspection?

Mr. THORNTON. I have complained to the head man, Mr. Murphy, at Washington, and I have complained here.

Senator YOUNG. By letter?

Mr. THORNTON. By letter and by verbal, and Mr. Funchess here, last April, I renewed the complaint. I started in 1949 asking when he is going to put resident supervisors in Houston and at Port Arthur; and he comes up with a statement that Mr. Murphy is a fine gentleman-and he is a fine gentleman.

Senator YOUNG. I think we should have copies of that correspondence.

Mr. THORNTON. I have copies of it, and would like to introduce it. Senator YOUNG. You have copies of the reply?

Mr. THORNTON. Yes, sir. I have enough copies for each one of you Senators here.

Senator YOUNG. I was referring to any letters you may have directed to warehouse officials in Washington.

Mr. THORNTON. There is a letter there addressed to Mr. Murphy in that.

The CHAIRMAN. In other words, what you mean here is this is your statement, and this is more or less a statement to the committee; and then you contend, in here are copies of communications, such as, of May 7, 1952, which is a memorandum from the Washington office, Galveston Wharves, addressed to you, by Mr. Nesbitt.

Mr. THORNTON. That is our eastern agent, and that is as a result of a conference he had with Mr. Murphy.

The CHAIRMAN. But this one on May 7 is signed "Sincerely yours, s/RAN."

Mr. THORNTON. That is R. A. Nesbitt. He is our eastern agent. He just put his initials there.

Senator YOUNG. I think this whole business needs a good investigation.

Mr. THORNTON. It will make an elevator operator happy if you could stop your competitors from doing things you don't want to do; but you have to in order to stay in business.

The CHAIRMAN. Do you know, among your associates in the business, in the export or in the port elevator business, of anyone who is complaining in the same manner that you are complaining about unfair competition?

Mr. THORNTON. Well, the fellow that has the advantage is not going to complain.

The CHAIRMAN. I know. But surely there must be someone else complaining. When I was usually the only one wrong or being picked on, I generally examined myself to see if I wasn't in error. Ι

Mr. THORNTON. I know other elevators that have complained, but I don't want to give the names; they complained about the tight supervision at Galveston and lack of tight supervision at nearby competing ports.

The CHAIRMAN. How many competitors have you here in Galveston?

Mr. THORNTON. Sunset Elevator of the Southern Pacific Railroad Co., and leased to the Continental Grain Co.; and they have 2 in Houston and 1 in Port Arthur owned by the Southern Pacific and leased to Cargill.

The CHAIRMAN. They are all using this as a port, all exporting? Mr. THORNTON. Yes. And the only Federal supervision they get is what they send out from the Galveston office. They have no resident Federal supervisor at either point, and that is what we have been complaining about.

The CHAIRMAN. You feel that the one that lives here and is here constantly is doing a tighter investigation on your operations than on the others?

Mr. THORNTON. Yes, sir. They sleep at our elevator. That is their headquarters.

The CHAIRMAN. And they have always done that?

Mr. THORNTON. Since I have been here, and I have been complaining a long time, Mr. Senator.

The CHAIRMAN. You don't think it was the question of operations at your elevator that compelled them to sleep there?

Mr. THORNTON. No, sir. We are willing to live up to the Grain Standards Act if our competitors are required to do so. But, as I said, it is a rough game when you have to do things you don't think you should do in order to meet competition in the way of liberal mix.

Senator ELLENDER. I have been skimming over the correspondence handed by the witness, and I find he has made complaint as to grain supervision in Washington on several occasions, and as stated, he has made efforts to try to correct conditions that have existed there a long time; and I think the whole correspondence should be filed with the committee and in due time take up with Washington this discrimination, and why permit it.

The CHAIRMAN. You desire it filed or made a part of the record? Senator ELLENDER. Yes.

The CHAIRMAN. It will be filed as part of the committee report. (The document referred to above is as follows:)

STATEMENT FILED BY E. H. THORNTON, SR., VICE CHAIRMAN AND GENERAL MANAGER, GALVESTON WHARVES, GALVESTON, TEX.

I wish to supplement the attached reproduction of correspondence that I had with Mr. W. F. Funchess, Galveston, and with Mr. E. J. Murphy, Washington, by stating that I had a number of verbal conferences, personal and telephone, with both Mr. Funchess and Mr. Murphy at which I verbally restated and renewed my complaint of the discrimination by the Grain Supervisory Division of the Department of Agriculture against our elevator B and the preference that was being extended to competing port elevators located in this immediate area. I personally told both Mr. Murphy in Washington and Mr. Funchess in Galveston that we continued to receive information; either direct or indirect, from our grain shipper customers that they were able to get a much more liberal mix at nearby elevators, competitors of ours, than the mix that we were able to assure them. We convinced ourselves that these statements given us by representatives of the grain shippers using our elevator were correct because we saw our private export grain business getting away from us, and we knew there was only one reason and that reason was that the grain merchants were able to get a much more liberal mix at nearby competing elevators than the mix that they were able to get at our elevator. As late as April of this year when I was in Washington, I personally renewed my complaint with Mr. E. J. Murphy and only recently I renewed my complaint personally with Mr. Funchess in Galveston. At the very beginning when I started complaining to Mr. Murphy at Washington and Mr. Funchess at Galveston about the discrimination against our elevator, both of these gentlemen admitted to me personally that my complaint had merit, but the said they were not able to do anything for me by giving the same kind of Federal supervision at Houston and other nearby competing elevators as we were getting. Mr. Murphy on several different occasions told me that he would have to get additional appropriations from Congress to enable him to establish a permanent resident Federal grain supervisory force at Houston and each time I urged Mr. Murphy to have Mr. Funchess at Galveston in the meantime to use his, Mr. Funchess', present force to give each of the port elevators in this immediate area, namely, the 2 elevators at Galveston, the 2 elevators at Houston, and 1 elevator at Port Arthur, equal and the same Federal supervision even though this meant that each of these 5 port elevators located in this immediate area might get only 50 or 60 percent Federal supervision. I told Mr. Murphy and Mr. Funchess that I did not think it fair to us for the Government to give us 100 percent Federal supervision and give these other competing elevators anywhere from 25 to 50 percent Federal supervision, or perhaps less.

After I realized that Mr. Murphy and Mr. Funchess were not going to give me any relief, I decided to issue instructions to our general foreman at the elevator and other top level employees at our elevator to exert every means and effort to give the grain exporters, using our elevator, the most liberal mixture that they could get by with on each ship that they loaded at the elevator. I told our elevator employees that unless we were able to give our exporters a more liberal mixture in the delivery of their grain aboard vessels at our elevator, we stood a good chance of losing all of our private export grain business to other nearby competing port elevators. There was nothing else that we could do to protect ourselves if we wanted to keep our large port elevator in operation.

In spite of my instructions to our elevator employees and their effort to comply therewith, we continued to suffer a loss in our private grain business to other