APPROPRIATIONS FOR ADMINISTRATION OF SUGAR ACT OF 1937 AND CROP PRODUCTION AND HARVESTING LOANS

JANUARY 21, 1938.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. TAYLOR of Colorado, from the Committee on Appropriations, submitted the following

REPORT

[To accompany H. J. Res. 571]

The Committee on Appropriations, to whom was referred the joint resolution making appropriations available for administration of the Sugar Act of 1937 and for crop production and harvesting loans, report the measure with a favorable recommendation for its immediate passage by the House.

SUGAR ACT OF 1937

The amount recommended by the joint resolution for the administration of the Sugar Act of 1937 is $39,750,000, the amount of the Budget estimate recommended by the President in his letter to the Speaker of the House and printed as House Document No. 477 of the present session. The Sugar Act of 1937 was approved September 1, 1937, after the adjournment sine die of the first session of the present Congress. The only appropriation made at that session was in the sum of $250,000 for preliminary administrative expenses. The act provides for payment to producers with respect to sugar or liquid sugar commercially recoverable from sugar beets and sugarcane grown on a farm and which shall have been marketed (or processed by the producer) on and after July 1, 1937. Certain conditions are laid down by the act with respect to these payments, such as prevention of child labor in connection with the production, cultivation, or harvesting of a crop of sugar beets or sugarcane; wages of persons employed on the farms; the carrying on of approved farming practices for preserving and improving fertility of the soil on such farms, etc. The act also provides for the determination by the Secretary of Agriculture annually of an estimate of the consumption needs of sugar for the continental United States and for the establishment of quotas for

domestically produced sugar and sugar from foreign countries, including the Philippine Islands. An excise tax is levied by the act on manufactured sugar manufactured in the United States and an import compensating tax (in addition to any other tax or duty imposed by law) is also levied on imported manufactured sugar. The act authorized an appropriation not to exceed $55,000,000 annually for carrying out its provisions except those relating to sugar from the Philippine Islands.

The Department of Agriculture has completed the program for the first year of operation of the act and the sugar crops are about harvested. The Department of Agriculture, however, is unable to proceed with complete preparation for the making of payments under the act until it has sufficient funds to undertake the manifold and detailed duties imposed by this law. The Budget estimate submitted calls for an estimated expenditure for the fiscal year ending June 30, 1938, of $40,000,000, of which $250,000 has heretofore been appropriated, leaving a total requested by the joint resolution of $39,750,000. The $40,000,000 consists of estimated payments to producers of $39,684,000 on a gross estimated tonnage of sugar of 3,307,000 at the statutory rate of 60 cents per hundredweight. The remainder of the amount is for administrative expenses of the Department of Agriculture in the District of Columbia and in the field with provision for transfer of funds to the General Accounting Office and the Treasury Department for accounting, disbursing, and auditing expenses in connection with the functioning of the program.

The amount carried in the joint resolution with respect to the Sugar Act does not take into consideration any sums that may be payable to the Commonwealth of the Philippine Islands with respect to taxes collected or accrued on sugars produced from sugarcane grown in the Philippine Islands which are manufactured in or brought into the United States. Appropriations for such payments are authorized under the act.

The taxes estimated to accrue during the fiscal year 1938 from levies made pursuant to the act amount to $53,000,000 of which it is estimated that there will actually be paid into the Treasury during such fiscal year a total of $44,150,000, the remainder of such accrued taxes to come in with collections of the next fiscal year. Making allowance for expenses of tax collection and refunds and for sums which may hereafter be determined to be payable to the Philippine Islands on account of this fiscal year, it is anticipated that the estimated amount of accrued taxes under the Sugar Act for the fiscal year 1938 will be safely in excess of the $40,000,000 of direct appropriations plus any estimated amount on account of the Philippine Islands.

The appropriation becomes a matter of urgency as producers are entitled to apply for the conditional payments and as considerable time must elapse after the appropriation is made before applications can be passed upon and approved payments can commence.

The committee has inserted limitations upon the amount which may be used for administrative expenses for personal services and miscellaneous expenses in the Department of Agriculture in the District of Columbia and in the field and upon the total amount that may be transferred to the Treasury Department and the General Accounting Office for expenses in handling and auditing check payments. These limitations are substantially the estimated amounts allocated for these

purposes by the Department in connection with the appropriation request. The limitations are not applicable to expenses of local committees which may be incurred under the provisions of section 305 of the act.

CROP PRODUCTION AND HARVESTING LOANS

The act of January 29, 1937, following a long series of precedents dating back to 1921, authorized the Governor of the Farm Credit Administration to make loans to farmers in the United States (including Hawaii and Puerto Rico) for crop production and harvesting loans. The act authorized the appropriation of $50,000,000, together with any amounts collected for services rendered and from repayments of principal and interest on loans made under authority thereof. The First Deficiency Appropriation Act, fiscal year 1937, approved February 9, 1937, appropriated the sum of $50,000,000 and provided that such sum should be available until June 30, 1938. While the title of the act of January 29, 1937, indicates that the provisions of the act are applicable to the crop year 1937 the text of the act indicates that the act is not so limited but may be applicable to any calendar year. The operation of the act is, however, limited to the appropriation authorization therein of $50,000,000 plus the collections from services rendered and repayments of principal and interest on loans made under the act. The appropriation made by the First Deficiency Act was limited to June 30, 1938.

The committee recommends in this joint resolution that the unexpended balance of the appropriation of $50,000,000 made by the First Deficiency Act, fiscal year 1937, plus any collections heretofore or hereafter made from services rendered or from repayments of principal and interest under the act of January 29, 1937, be continued available until June 30, 1939, for the making and collecting of loans under the provisions of such act.

The extension of this appropriation is recommended by the President in a Budget estimate submitted in House Document No. 479 of the present session, though the committee in recommending the provision in the joint resolution does not deem it necessary to extend the provisions of the act of January 29, 1937, as recommended, for the reason that they are of the opinion that the life of such act is not limited but that its operation is curtailed by the amount of the appropriation authorization and the time limit on the appropriation made to carry it into effect. The recommendation to extend the life of the previous appropriation automatically makes it operative under the provisions of the act.

Of the appropriation of $50,000,000 and from the repayments that have been made of principal and interest, there remained as of December 31, 1937, a balance of approximately $32,000,000. It is estimated that $5,000,000 more will be collected on loans, made under the provisions of the act of January 29, 1937, during the calendar year 1938, but that only $2,500,000 will be collected early enough to be reloaned in 1938. This will make a total fund of approximately $34,500,000 to be available for the making of loans and for administrative expenses.

Crop loans are needed to meet the requirement of that class of farmers whose cash needs are small, whose financial condition is such that they are unable to procure credit from any source, and who,

but for the extension of credit by the Federal Government through the medium of crop production and harvesting loans, would require some other form of Government relief.

The necessity for prompt enactment of the joint resolution is due to the fact that planting in the southern part of the United States is imminent, and if assistance of this character, heretofore furnished by the Federal Government, is to be available in time to be of use, there should be little further delay in making the funds available to the Farm Credit Administration for initiation of the preliminary work incident to the making of the money available to the farmers.

There is incorporated in the joint resolution the following provision with respect to the making and collecting of crop loans: Provided, That loans under the foregoing appropriation shall only be made to borrowers, who, in the opinion of the Governor of the Farm Credit Administration, will undertake in good faith to repay such loans in accordance with their terms, and no such loan shall be made in any State unless the Governor of the Farm Credit Administration has reasonable assurance that State and local authority will take no action which will encourage the borrower residing therein to evade payment of such obligation.