WHEAT AND COTTON

HEARING

BEFORE THE

SUBCOMMITTEE OF HOUSE COMMITTEE

ON APPROPRIATIONS

CONSISTING OF

MESSRS. JOSEPH W. BYRNS (CHAIRMAN),

JAMES P. BUCHANAN, EDWARD T. TAYLOR, WILLIAM A. AYRES, WILLIAM W. ARNOLD, ROSS A. COLLINS, WILLIAM R. WOOD, EDWARD H. WASON, FRANK MURPHY, AND GUY U. HARDY

COMMITTEE ON APPROPRIATIONS

JOSEPH W. BYRNS, Tennessee, Chairman

MARCELLUS C. SHEILD, Clerk

DISTRIBUTION OF GOVERNMENT-OWNED WHEAT AND

COTTON

HEARINGS CONDUCTED BY THE SUBCOMMITTEE, MESSRS. JOSEPH W. BYRNS (CHAIRMAN), JAMES P. BUCHANAN, EDWARD T.. TAYLOR, WILLIAM A. AYRES, WILLIAM W. ARNOLD, ROSS A. COLLINS, WILLIAM R. WOOD, EDWARD H. WASON, FRANK MURPHY, AND GUY U. HARDY, OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, IN CHARGE OF DEFICIENCY APPROPRIATIONS

WEDNESDAY, JULY 6, 1932.

FEDERAL FARM BOARD

STATEMENT OF HON. JAMES C. STONE, CHAIRMAN FEDERAL FARM BOARD

INDEFINITE APPROPRIATION FOR DISTRIBUTION OF WHEAT AND COTTON

The CHAIRMAN. Mr. Stone, the subcommittee has before it an estimate of the President requesting what might be called an indefinite appropriation to enable the Farm Board, of which you arethe chairman, to comply with the law directing the turning over of 45,000,000 bushels of wheat and 500,000 bales of cotton to the Red Cross.

There are really three indefinite appropriations involved, as set forth in the law and also in the report of the Bureau of the Budget as transmitted to Congress by the President. They are found in subdivisions (a), (b), and (c) of section 3 of the public resolution referred

to.

We would like to have you tell the subcommittee just why this is needed in the first place, and why it is necessary to make an indefinite appropriation rather than a fixed charge on the Treasury; and any other facts you want to present to the committee.

Mr. STONE. Mr. Chairman, I knew what you wanted with me this. morning and I dictated a statement, which I should like to read to you, and then I shall be glad to answer any questions any of you gentlemen want to ask me in regard to this.

The CHAIRMAN. We shall be glad to hear your statement.

Mr. STONE. H. J. Res. 418 directs the Farm Board to deliver 45,000,000 bushels of wheat of the grain Stabilization Corporation and 500,000 bales of cotton of the Cotton Stabilization Corporation.

to the American Red Cross or any other organization designated by it, on July 1, 1932, or as soon thereafter as may be practicable and further authorizes appropriation to be made covering

(a) Advances to repay loans held by commercial or intermediate credit banks. (b) Reimbursing the stabilization corporations for their net equity in the wheat or cotton used for donations at the current market value at the time of the donations.

(c) Carrying and handling changes between the date of the approval of the resolution and delivery of the wheat or cotton.

There is also a provision which reads as follows:

Such wheat or cotton shall be delivered upon application therefor, but only upon the approval of the President of the United States, and in such amounts to each organization as the President may approve.

It is obvious that two uncertainties exist:

(1) When the wheat or cotton will be delivered.

(2) The value of the wheat or cotton at the time of delivery.

So far as the first uncertainty is concerned, our best judgment is that if deliveries are started immediately that it would take not less than three months to complete same because of the volume involved. It is necessary for the Red Cross to make arrangements for the spinning or exchange of the cotton, and, of course, place and time of delivery and quality of cotton desired will depend on the goods into which it is to be spun and the mills which are to spin it. In the case of the wheat, the same uncertainties exist as to the use to be made and as to point of delivery.

It may be that the Red Cross or other accepting organization will take the position that the wheat or cotton shall be delivered to them only when they apply therefor and they may put off the time when application will be made from days to months.

Referring to the second proposition, as to the value of the wheat or cotton at the time of delivery, the obvious uncertainty which exists from it is as to what the value of the wheat or cotton will then be. It may go up or down.

Further, there must be taken into consideration, the present impossibility of determining the value at to-day's market of the wheat or cotton which is to be delivered. The committee will understand that cash wheat or spot cotton is not sold at a definite fixed price but that the price varies in accordance with the location, the grade, and the demand at the particular time that the commodity is sold. At the present time, in the Northwest high premiums are paid for protein wheat which brings to the holder thereof prices many cents in excess of the Chicago quotations. Cotton also has premiums, known as basis, for the different staples and qualities. It will be impossible to accurately determine the market values of the commodities delivered under this resolution until it is known what commodities, at what place and what qualities are actually delivered.

In order that the Federal Farm Board may be in a position to carry out the mandate of Congress for delivery of these commodities to the suffering when needed, it is, in our judgment, advisable to make an appropriation indefinite in amount, couched in such language as will require the expenditure of the funds solely for the purpose specified in the resolution. Such indefinite appropriations are justi fied by precedent in instances where Congress has been confronted