Mr. DAVIS. There are three sources for funds that have been made available under the language of the appropriation item. One would

be the revenues from the processing tax, and as our budget that was submitted indicated, there may be some overrun that will be applicable to that.

The second source is the tax collected under the Bankhead Act itself. Those taxes could be applied to this.

And a final source is out of the $100,000,000 originally appropriated, and the difference, if any, would come out of the $100,000,000 already appropriated for the Agricultural Adjustment Administration, and made available under the language of this draft.

The CHAIRMAN. Do you have any estimate of how much you would get from $100,000,000?

Mr. DAVIS. Not until we know how much taxes we will get out of the Bankhead Act. We are not able to give you an estimate on that. The CHAIRMAN. You do not expect to get any taxes out of the Bankhead Act until next fall?

Mr. DAVIS. That is very true, but under the provisions of the act we can draw advances from the Treasury, in expectation of taxes to come in later on.

We will have no difficulty in getting money from the Treasury currently to finance this, as I understand, Mr. Jump.

Mr. JUMP. No; because in section 16 (b), the advance of appropriations made available to the Secretary of Agriculture for the Agricultural Adjustment Act are also made available for the operation of the Bankhead Act.

The CHAIRMAN. How much balance of the $100,000,000 have you? Mr. DAVIS. As nearly as we can tell, I think it is about $91,000,000. Mr. JUMP. That is on the basis of the Budget estimate for 1935, but looking forward through 1936 you will recall the other day we figured out that it would be optimistic to assert that more than $65,000,000 would be available at the end of 1936, and that $65,000,000 must be used to offset the possible shortage in the processing tax, operating on the basis of the approved program.

The safe answer is that the $100,000,000 is committed and there. will be probably an overrun on this bill in the difference between the cotton processing tax, the balance at the end of the time, and the amount that this Bankhead Act may cost. That will probably have to come out of the $100,000,000.

Mr. DAVIS. But the language of the item now before the committee does not involve an appropriation of any funds; it simply makes available funds now available to the Department of Agriculture, or the Agricultural Adjustment Administration.

The CHAIRMAN. You are uncertain as to whether the processing tax and the tax under the Bankhead bill will be sufficient to meet the expenses of the Bankhead bill?

Mr. DAVIS. That is right.

The CHAIRMAN. All of the $100,000,000 except about $65,000,000 is obligated, and that $65,000,000 is a sort of reserve to make up any shortage that may happen under either one of these acts?

Mr. DAVIS. That is exactly my understanding of it.

Mr. JUMP. Yes; that is the only prudent view to take of it.

The CHAIRMAN. Then it would be unsafe to pass any legislation providing for the $65,000,000 to be expended for other purposes than as a reserve to make up any shortage in the combined program.

Mr. JUMP. And there is in the background of the situation the possibility that they might have to use some of the $100,000,000 for this, or come in under section 16 (a) of this act at the end of the period and ask for money. That is in the future.

Mr. DAVIS. I think the $100,000,000 can be safely drawn on for the Bankhead Act.

The CHAIRMAN. Have you any estimate of receipts under the Bankhead Act?

Mr. DAVIS. I would like to leave that to the cotton section.

Mr. COBB. I do not believe there can be any estimate made. It is purely a matter of weather and the size of the crop.

The CHAIRMAN. You are pretty sure that there will be 10 million bales processed?

Mr. COBB. You mean ginned?

Mr. DAVIS. Ginned without tax?

The CHAIRMAN. No; you have a processing tax on 10 million bales. Mr. COBB. No; there will not be that much processed. Our annual consumption runs around 6,000,000 bales.

The CHAIRMAN. There will be 6,000,000 bales processed and the processing tax will apply to that?

Mr. Cовв. Yes.

The CHAIRMAN. What do you estimate will come from that? Mr. COBB. We have estimated roughly that that will be between $120,000,000 and $130,000,000.

Mr. DAVIS. Our statement that we submitted the other day shows that it looks now as if at the end we might have an overrun of $6,000,000 from the collections from our processing tax, and our commitments under our voluntary adjustment program. That is the excess. The CHAIRMAN. That includes the whole program?

Mr. DAVIS. Not the Bankhead Act. If that is true, that would be applicable to the expenses of the Bankhead Act.

Mr. JUMP. It does however, include the processing tax on the 6,000,000 bales just referred to.

Mr. DAVIS. Yes.

Mr. OLIVER. The receipts from the Bankhead Act will be postponed, of course. You have anticipated that, and that is the reason you are calling on the other sources of supply for necessary funds. Mr. DAVIS. Yes.

Mr. ARNOLD. Is it the intention to make the Bankhead Act selfsupporting?

Mr. CоBB. We cannot control that. It just depends on the weather. If we have more than 10,000,000 bales moving to market, every bale in excess of 10,000,000 will pay a tax according to the Bankhead Act.

Our hope would be to do what we have brought about by the adjustment program-that is, to have an adjustment in the size of the crop so that there will not be a large excess movement of cotton.

Mr. ARNOLD. If there should be a sufficient tax from the Bankhead Act, the amount that you anticipate using from the A.A.A. funds will be replenished with that fund?

Mr. DAVIS. The income from the Bankhead Act, in our system of accounting, would be used to meet the expenses as far as it goes. It might defray them all.

Mr. ARNOLD. If it does not pay them all, it would be a drain on the processing tax for the support of the Bankhead Act?

Mr. DAVIS. Yes; up to the point that it is used up, and finally on the $100,000,000 fund.

Mr. COLLINS. In addition to that, you have authority to have Congress make additional appropriations; that is expressly stated in section 16 (a).

Mr. DAVIS. Yes.

The CHAIRMAN. To clear up this particular subject, your estimates total, for the administration of this act, $8,250,000.

Mr. DAVIS. That is correct, including the allocation to the Bureau of Internal Revenue.

The CHAIRMAN. And if the surplus on the A.A.A. is 6 millions, then you will have a deficit and you will have to call on the $50,000,000 reserve.

Mr. DAVIS. Unless the Bankhead Act itself yielded 2 millions or more. If it did, that would wipe it out.

Mr. Cовв. It would only take 300,000 bales of cotton at the present price to take care of that entire load.

Mr. THURSTON. With three funds available, it is fairly certain that it will function.

Mr. OLIVER. The expectations of those who voted for the Bankhead Act will be realized, and the benefits to the cotton farmer will be very great if we only make 300,000 bales over and above the 10,000,000 bales?

Mr. CоBB. If we make the 300,000, it will finance this.

Mr. OLIVER. That will be a very pleasing story to tell in connection with the Bankhead Act.

PURCHASE AND DISTRIBUTION OF COTTON FOR RELIEF

PURPOSES

Mr. COLLINS. Mr. Davis, either the A.A.A. or the Bankhead Act permits the use of a certain amount of this cotton that is on hand for emergency relief.

Mr. DAVIS. That is under section 24. I am glad you raised that point, because I should have referred to it.

The final section of the Bankhead Act authorizes the Secretary of Agriculture

to develop new and extended uses for cotton, and for such purpose there is authorized to be made available to the Secretary not to exceed $500,000 out of the funds available to him under section 12 of the Agricultural Adjustment Act. This estimate given you of 6 million did not include any estimate of possible expenditure under that.

Mr. JUMP. There would be some relatively small expenditure, but we cannot plan that kind of a program in the short space of time that we had to plan for this act. However, the language of the appropriation covers expenditures under section 24 as well as section 16 of the Bankhead Act.

I think what you had in mind is a separate bill proposing to make available the $100,000,000 for the purchase and distribution of cotton for relief purposes. That is a separate bill that has not been enacted yet.

Mr. COLLINS. I thought there had been a bill enacted which permitted a part of the authorized expenditure to be used for the purchase of surplus cotton.

Mr. Davis. Not for cotton specifically. The Agricultural Adjustment Act does authorize the use of funds available for the removal of the surplus.

Mr. COLLINS. Have you anything in mind in that direction?

Mr. DAVIS. Not with cotton, under the funds we have available. We are doing something with pork, and it is possible we may do something with beef, and there have been certain other commodities like dairy products in connection with which we have operated and functioned under that provision. We have done something with wheat. But as to cotton, we have no plan under way, because there is a special bill pending in relation to that.

Mr. COLLINS. You know Mr. Hopkins is in need, and very great need, of a million and a half bales of cotton.

Mr. DAVIS. I did not know it was that much. How much could you use?

Mr. COBB. We had figured at one time, in working up material looking toward the thing Mr. Collins has in mind, 1,000,000 bales of

cotton.

Mr. COLLINS. I have understood that Mr. Hopkins could use a million and a half bales of cotton.

Mr. COBB. That would require funds entirely beyond anything we have.

Mr. COLLINS. I also understood he could use a low-grade cotton. I think it would be a good thing for the entire cotton industry if that could be made available, the work to be done with the labor that he has in his organization.

Mr. DAVIS. That would require a sum of money for low-grade cotton that we could not make available.

Mr. COLLINS. However, the law exists, so that this committee, if it wanted to, could make part of this money available.

Mr. DAVIS. A specific law for cotton has not passed.

Mr. COLLINS. We can do that under the A.A.A. act.

Mr. DAVIS. For the removal of surplus.

Mr. COLLINS. Yes.

Mr. JUMP. That amount for the removal of surplus must come out of the processing tax; that is the trouble with it.

enough processing tax fund to cover it.

You would not have

Mr. COLLINS. But we are appropriating money in this act to come out of the processing tax fund.

Mr. JUMP. But only for administration of this Act and the research under section 24.

The CHAIRMAN. The point you make is that the processing tax is not sufficient to do it, even if you are authorized to do it?

Mr. JUMP. Yes.

Mr. OLIVER. The question that has been raised, of course, relates to the general proposition of relief.

Mr. COBB. I will just say this, that if that type of program were financed out of the processing tax we would have a deficit, for that sort of a program would probably cost between 100 and 150 million dollars, even on a low grade of cotton basis.

The CHAIRMAN. Aside from all of that, the fund realized by the processing tax is dedicated to go back to the farmers.

Mr. DAVIS. Absolutely.

Mr. COLLINS. That becomes an argument, Mr. Chairman, about which there is a considerable difference of opinion.

If you take a million and a half bales of cotton off of the farmers' hands, you are rendering direct relief to the cotton farmers.

Mr. OLIVER. That is true; but at the same time, the money would be used for the purpose of helping the unemployed.

The CHAIRMAN. The processing tax is dedicated to the benefit of the farmers.

Mr. COBB. It is already obligated by Congress.

TRANSFER OF FUNDS TO CARRY OUT PROVISIONS OF COTTON CONTROL ACT

The CHAIRMAN. According to the draft of the item as sent up by the Budget it contains this provision:

That the Secretary of Agriculture shall transfer to the Treasury Department and is authorized to transfer to other agencies out of funds hereby made available for carrying out said act of April 21, 1934, such sums as are required to carry out the provisions of said act, including administrative expenses and refunds of taxes.

Do you contemplate transferring any of these funds to any other agency, aside from the Revenue Bureau?

Mr. JUMP. To play safe, we simply included the exact language in the A.A.A. Act covering transfers in administrative amounts of the act into the coming year, because the vicissitudes in administering legislation of this character are such that you do not know today what is going to happen tomorrow.

We are very glad to have had this broad provision in the three-A act; but outside of the Treasury transfers it has only been used in one case to the extent of $3,000 paid to the Bureau of Labor Statistics for getting us some figures that we needed. All the other transfers have been to the Treasury Department.

The CHAIRMAN. So far as you now know you do not contemplate. or have in mind any transfers to other departments of the Government?

Mr. JUMP. No; but there may be some. But in any event, the language, I think, probably is superfluous, because of the provisions now found in section 601 of the Economy Act covering interdepartmental transfers.

But for the sake of avoiding any legal complications we made the provisions in the three-A act fully available for the Bankhead Act. The CHAIRMAN. And any transfer you might make would only be for a small amount, to procure certain data, or something of that kind. Mr. JUMP. Probably so, but I would not want to bind myself to that, Mr. Chairman, in connection with an act of this kind.

Mr. COLLINS. Would you not have to submit a request to the Budget Director, in case you desired to make a transfer?