Mr. LAMKIN. Yes, sir. Mr. TABER. Of these 574,000 who did not go into the pool, if they had gone in how many bales would they have been entitled to? Mr. LAMKIN. I think the figures there are a little confused. There were 1,031,000 participants in the 1933 cotton program. Mr. TABER. Yes. Mr. LAMKIN. Yes; in that program. Of that number there were 456,000 that took all cash. Mr. TABER. I thought it was 574,000? Mr. LAMKIN. 575,000 took cotton option contracts. Mr. TABER. How many of them took the cash option? Mr. LAMKIN. 575,000 took the option contracts. Mr. TAPP. Those are the ones that went into the pool. All of them did not go into the pool. Mr. LAMKIN. Of that number 575,000 took options. There were 132.000 that sold their options by direct sale, and the contracts were canceled. 443,000 of that number went into the pool and took the 4-cent distribution in the first instance, and later got a second distribution of $7.60 per bale. Mr. TABER. Now, how many were there that did not go into the pool at all? Mr. LAMKIN. That did not go into the pool at all, out of those that took options? Mr. TABER. No; that did not take any options at all. Mr. LAMKIN. 456,000. The CHAIRMAN. You mean that did not plow under at all. Mr. TABER. No; I mean that plowed under and got $110 for 10 acres. Mr. LAMKIN. That took the total in cash? Mr. TABER. Yes; that took the $11 an acre. That is what it figures, is it not? Mr. LAMKIN. It is owing to the productivity of the land as to what the price per acre was. Mr. TABER. How many of them took straight cash and no option? Mr. LAMKIN. Four hundred and fifty-six thousand of them. Mr. TABER. How many bales would they have been entitled to if they had taken options? Mr. LAMKIN. It all depends on what the land produced. Some of the land is more productive than other land. Mr. TAPP. Figured at about the same average, Mr. Taber? Mr. TABER. Yes. Mr. LAMKIN. Let us see what the average figure would be in there. Say about four bales to the person, and that will get you pretty close to it. Mr. TABER. About four bales to a person? Mr. LAMKIN. Yes, sir; about four bales to a person. Mr. TABER. That would mean about 1,800,000 bales? Mr. LAMKIN. Yes. Mr. TABER. If they were placed on a parity basis it would take 600.000 times $55, to put them on a parity basis with these people who went into the pool, 600,000 times $55 would be $33,000,000. Mr. TAPP. Yes, sir: $33,000,000. Mr. TABER. It would take $33,000,000 to put them on a parity basis, is that correct? Mr. TAPP. Yes, sir; that is approximately correct. Mr. TABER. That is approximately correct? Mr. TAPP. Yes, sir. Mr. MCMILLAN. What concerns me on that point is if this committee and the Congress recognizes this claim for the purpose of redeeming these certificates to the extent of $1,800,000, will not this group of 456,000 farmers have as much right to make a claim for $33,000,000 for the amount of money here that has not been paid to that group? Mr. TABER. That is the way it looks to me. Mr. MCMILLAN. And will not the question come up before Congress any number of times? Mr. BACON. How many farmers did not go into the program at all, who neither received cash nor went into the pool? Mr. TAPP. I will supply the exact figure for the record on that. I imagine some 20 percent did not go into it. The participation was somewhere around 80 percent on an acreage basis. Mr. BACON. That is close enough. I only wanted it approximately. Where was the cotton kept that was in the pool operations? Was it all in warehouses, or was some of it stored in farmers' barns? Mr. LAMKIN. No; all of it was in bonded warehouses through the Cotton Belt. Some of it was stored in the East, about 75,000 bales. Mr. BACON, Where? Mr. LAMKIN. Some of it was stored in the East. Mr. BACON. In the East? Mr. LAMKIN. I would like to make a statement, if you will permit. me, as to what I think is the viewpoint of most of these certificate holders. This cotton was authorized to be acquired by the Secretary for the purpose of distributing the proceeds to these cotton farmers. They were, at that time, in a very bad situation as everybody knows who lives in the Cotton Belt. Now, each one of them had a choice to make as to what he would do with his cotton option. There were 575,000 of these people, and of that number there were 132,000 that said, "I will cash my options in and take the money on them." That was the individual choice of these people. They could do as they pleased. So 443,000 of them said, "We will hold our cotton off the market and put it into the pool and take the 4-cent distribution and allow this cotton to be sold in the regular manner so as not to disturb the trend of the cotton market." As to the pool members who sold their cotton by contract of sale, their contracts were turned in and canceled. The pool members also had the choice of selling their certificates on the market if they wished, and there were 25,000 of those people who sold 342,618 bales at different periods where they could realize a profit on their cotton above the 10 cents a pound. Their certificates were also taken up and canceled. So you had all of the obligations that the Government put out brought in and canceled with the exception of those people who still remained in the pool. These people who remained in there received a second distribution, and they had issued to them another certificate, that is, the C-5-I certificate which they thought would be worth something. They anticipated they would collect some money from them. When the cotton program was closed there was found to be a surplus in the cotton fund of $1,800,000. Their thought is, I am sure, and we have numbers of letters from them, and just from the statements in and the trend of these letters they thought that all of this money would be distributed to cotton producers to the only accounts which were not closed, which are these C-5-I certificates, and they thought that this money then should be used for the purpose of taking up and retiring, canceling those certificates that they held. Mr. CANNON. But they received every penny their cotton brought. Mr. LAMKIN. Yes, sir; they received every cent that the cotton brought, less the carrying charges incident thereto. Mr. CANNON. When they went into the pool they expected to get only what their own cotton would bring at an increased price. Mr. LAMKIN. That is it. Mr. CANNON. And they got that. The Government has complied with every obligation; it has fulfilled every promise it made, and it has made them a fine profit. They have received everything that is coming to them, and any further payment would be a gratuity. I do not understand on what grounds they expect to secure further money from the Treasury. The Government has already lost a vast amount of money in its efforts to assist them. Mr. LUDLOW. What is the moral responsibility, if any, of the Government to take up these certificates? Mr. LAMKIN. Actually there may not be a moral responsibility but the holders of the certificates have come to believe that the certificates should be taken up by the Government and a final settlement made on them. The CHAIRMAN. Is there any legal responsibility? Mr. LAMKIN. No, sir; I do not think so. As these people went into the pool this vast amount of cotton was held by the Secretary. It remained in the warehouses, and you could not segregate it because these people were entitled to seven-eighths Middling cotton settlement on it and this cotton was of grades, and staples of all kinds. So, they all had an undivided interest in that lot of cotton. Now, that cotton was sold. We sold the cotton, and on the cotton which carried a premium the pool received the value of seven-eighths Middling cotton and the Secretary got the premium on this cotton. This is one of the ways in which he accumulated this $1,800,000. The CHAIRMAN. How much has Uncle Sam lost on the whole performance? Mr. LAMKIN. He gained about $1,800,000 on this particular program, and he lost the difference between 5 cents a pound and whatever that cotton that the F. C. A. sold cost the Government. The CHAIRMAN. How much has been lost? Mr. LAMKIN. We do not know. Mr. TAPP. We do not have that figure. I understood you were going to ask the clerk to secure that information from the Farm Credit Administration. The CHAIRMAN. It is a very large amount, is it not? Mr. LAMKIN. It may be. The CHAIRMAN. It is a great deal more than $1,800,000. Mr. MCMILLAN. If the Government is not legally or morally responsible for the payment of this fund do we take it that you are down here in support of this resolution, or are you opposed to it? Mr. LAMKIN. I am absolutely neutral on that, I am here only to present to you the facts. The people holding these certificates think their certificates should be taken up and canceled. Mr. LUDLOW. The Government's loss on the entire program would be a great deal more than $1,800,000. Mr. LAMKIN. No, sir; not on this program. The CHAIRMAN. How much has the Government lost on the whole business? Mr. LAMKIN. I could not tell you that. The CHAIRMAN. Can you not give us any estimate? Mr. LAMKIN. No, sir; we have no figures on that at all, because I do not know what they paid for the cotton. Mr. MCMILLAN. The committee, I am sure, is very much interested in your views about this matter, and it seems to me you should be in a position to tell us how much the Government lost. Mr. BACON. Was all of this cotton that was held by the Government, of which only a part was in the pool, stored in warehouses, or was not some of it stored around on the farms? Mr. LAMKIN. No; it was all held in Government warehouses, with a warehouse receipt on it. None of it was stored on the farms. Mr. BACON. Some people have told me that there was some leakage, and that some of this cotton was removed illegally from out of cotton storage and sold. Mr. LAMKIN. There was no cotton in this program that we did not at all times have warehouse receipts for. The CHAIRMAN. What is the time element on this matter? Does this have to be closed up by the 1st of July? Mr. TAPP. This appropriation calls for the funds to be available until June 30, 1939. The certificates have to be filed with the Secretary before July 31, 1938. Mr. TABER. There is nothing very urgent about this. If this is going to be passed at all, it would not make any difference whether it is passed by the 1st of May or June. Mr. TAPP. But if it is not going to be done, Mr. Taber, there is going to be a lot of work done in the next 5 or 6 weeks. These certificate holders are flooding us with applications for these payments, and we are going to have to take those and sort them out, and do a good deal of work on them, and if they are not going to be paid, we ought to know it. Mr. WIGGLESWORTH. Many of those applications involve only a dollar or two? Mr. TAPP. Yes; some of them involve only a dollar or two, and many of them are already in, of course. Mr. BACON. If nothing is done, this $1,800,000 will be covered into the Treasury on the 1st of July? Mr. TAPP. $1,300,000 has been covered in, and the other $500,000 has not been covered into the Treasury. Mr. CANNON. Mr. Lamkin or Mr. Peyton-whichever one of you prefers to answer-we would be glad if you would explain to us just what the Secretary's cotton account is. Mr. LAMKIN. I can explain that to you. The Secretary acquired his cotton from the Farm Credit Administration. Mr. TABER. And for how much? Mr. LAMKIN. For about 5 cents a pound. Mr. TABER. How many bales? Mr. LAMKIN. Approximately 2,450,000 bales. Mr. CANNON. At approximately a loss of about 10 cents a pound? Mr. LAMKIN. You mean a loss to the Government? Mr. CANNON. A loss to the Government of about 10 cents a pound. Mr. LAMKIN. I do not know what the cost to the F. C. A. was. Mr. CANNON. The cost to the Government was approximately 15 cents a pound. Some of it was bought at 14 cents a pound, some of it at 15, and some at 16; but the bulk of it was bought at 16 cents. So, just in rough figures, we can say, subject to revision, that the cotton cost the United States an average of about 15 cents a pound. It was turned over to the Secretary at that time at 5 cents a pound, which was approximately a loss of about 10 cents a pound. How much did the 5 cents a pound amount to? Mr. LAMKIN. Let me see; I may be able to give you the figures on that. Mr. TABER. It was 2,400,000 bales. Mr. PEYTON. It would be $25 a bale. The CHAIRMAN. There would be that much loss. Mr. PEYTON. No, it would be that much which it would cost the Secretary of Agriculture at 5 cents a pound. Mr. LAMKIN. That would be at $25 a bale multiplied by 2.450.000 bales, which would be approximately the sum he paid to the F. C. A. for the cotton. Mr. PEYTON. About $61,250,000. Mr. LAMKIN. Out of those 2,450,000 bales there were 827,000 bales delivered on futures contracts. Those contracts were delivered on the basis of 912 cents, July, with differentials with different months of about eight points a month. So that would cut down the amount that they paid to the F. C. A., because that amount of cotton only cost 91/2 cents. Mr. TABER. That cost the Government 912 cents a pound? Mr. LAMKIN. Yes; that cost the Government 912 cents. That was the basis on which those futures were handled. Mr. CANNON. How many bales of cotton did they turn over to you? Mr. TABER. Is the 827,000 bales of futures part of that 2,500,000? Mr. CANNON. That is what I was trying to determine. Mr. LAMKIN. Was this a part of the 2,500,000 bales? Mr. TABER. Yes. Mr. LAMKIN. Yes. Mr. TABER. Was it 2,450,000 bales, or 2,500,000 bales? Mr. LAMKIN. Two million four hundred and fifty thousand bales. Mr. CANNON. How many bales were there in the spot account? Mr. LAMKIN. Approximately 1,600,000 in the spot account, and 827,000 bales of cotton futures. Mr. CANNON. Going back to where you were, with all of the spot account for which you paid 5 cents a pound, the amount that the |