It goes on then to specifically authorize the use of the funds which we have, together with this fund, for defraying the expenses of carrying this cotton. That authorization is necessary because the question has been raised by Mr. McCarl as to whether we had authority to do that, whether the Secretary of Agriculture could continue to use this cotton fund that he has to carry this cotton after it has passed into the hands of the pool. Now, that is legislation.

Senator MCKELLAR. But it has passed the Senate-passed yesterday.

Mr. JOHNSTON. Yes, sir.

Senator BYRNES. I understand that it has passed.

Senator McKELLAR. I remember it.

Mr. JOHNSTON. Mr. Jones thought that it was so late that if it was taken up as a separate amendment here-he said that it could be introduced in the House and they could take it up as a separate amendment, but he thought that the time was so short, and that it was so late in the session that if it started as an independent bill through the House that it might get caught in the jam.

Senator McKELLAR. What is the number of that bill?

Mr. JOHNSTON. S. 3584.

Senator BÝRNES. Have you had the matter up with the Budget Bureau?

Mr. JOHNSTON. Yes, sir; there is a letter from Mr. Douglas with his approval.

Senator BYRNES. He has not submitted any estimates.

Mr. JOHNSTON. That is because it does not take any additional money at all.

Senator BYRNES. It does not make any change, apparently, in the amount of money involved.

Mr. JOHNSTON. It will not make a change that is not there now. I think you will see that very plainly when you get the letter of the Director of the Budget.

Senator HARRISON. In that report it states the date of the letter to Senator Smith. If we may have that letter, I think that will straighten it out.

Senator MCKELLAR. We can just ask the clerk to telephone and inquire about it.

Mr. JOHNSTON. Senator Smith has the letter, I understand, over in his office.

Senator BYRNES. All right. Do you gentlemen have anything further to present?

Senator MCKELLAR. I want to ask you what is the value of this cotton.

Mr. JOHNSTON. The value of this cotton on today's market would be about $65 a bale; about $130,000,000.

Senator MCKELLAR. And the Government has got actually a profit?

Mr. JOHNSTON. The Government has $60,000,000 and $40,000,000 loaned on this cotton, and there is a profit of about $30,000,000, which would go, if the cotton were sold on today's market, to some 450,000 cotton growers.

Senator MCKELLAR. What is the purpose about marketing that cotton?

Mr. JOHNSTON. What is the purpose of marketing it?

Senator MCKELLAR. What is the purpose about it?

Mr. JOHNSTON. The idea is this, under the terms under which the ha pool was set up, no part of the cotton can be sold prior to July 31, by 1934, unless on the basis of 15 cents a pound, middling, lengths %. st The margin is now 121⁄2 cents a pound.

the

Senator HALE. How about the marketing? What method is co pursued?

Mr. JOHNSTON. After July 31 it will be sold at the discretion of the pool manager, myself, with the approval of the Secretary of Agricul- ho ture. The policy that has been definitely adopted with reference to it an is that the cotton would be marketed, using the very best judgment of we had so as not to interfere with normal trade channels or the current wi crop, but with the idea of getting it on the market as expeditiously co as can be done without burdening the market and without forcing it 12 on an unwilling market.

Senator HALE. Of course, if it were all dumped on the market-10 Mr. JOHNSTON (interposing). You would crush the market. Senator HALE. It would bring down the price of the cotton. Mr. JOHNSTON. You have this situation: In that pool there are certain types; there are several hundred thousand bales of cotton in that pool that cannot be bought anywhere else. That is out. There is no overplus.

Senator MCKELLAR. That is the long staple?

Mr. JOHNSTON. For example, the 1932 inch and a sixteenth, had a peculiar tensile strength, above 17 pounds breaking strength; the 1933 crop fell below 15; and in the 1932 crop we have got that condition and the tire people have been begging and pleading us for any part of this particular cotton and if they do not get it they say that they will go elsewhere and buy it. There is a certain type of this cotton that Spain is using and they are now threatening to go to South America for it, and we think we are in a position where it can be fed into the market, and keep our customers, and keep the trade, and that that could be done regardless of the volume, because it will not affect the market, and we think that we should do that, and not simply sit back on it. That is not going to be the policy. It is not going to be the policy to dump it on the market and crash the market. Senator HALE. How long has the Government had this cotton? Mr. JOHNSTON. This cotton was taken over. It belonged to the Government, or subsidiary agents, such as market associations, to which the Government had loaned the money in 1930.

Senator HALE. In 1930?

Mr. JOHNSTON. Yes, sir.

Senator DICKINSON. It was a part of the old Federal Farm Board operations.

Senator MCKELLAR. Cotton does not deteriorate, Senator.

Mr. JOHNSTON. This cotton passed under the Agricultural Adjustment Act of May 12, last year. The Farm Credit Administration first was directed to reduce it to possession and acquire full legal title to all cotton in which the_Government had a pecuniary interest. Under that authority, the Farm Credit Administration turned over to the Secretary of Agriculture some 2,500,000. The Secretary of Agriculture was directed to take that cotton and transfer it to us as a part of the Agricultural Adjustment Program.

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Now, since that cotton was turned over to us a year ago today we have gotten rid of 500,000 bales. That cotton has been absorbed to by the trade and the stock reduced from 221⁄2 million to 2 million bales at this time, and in getting rid of that cotton we have not disturbed the market and we have accumulated a very fair little profit on the met cotton, in addition to taking care of the expenses.

Senator BYRNES. Where is that cotton?

Mr. JOHNSTON. That cotton is stored in approximately 1,000 wareik houses. About 75,000 or 80,000 bales are stored in Massachusetts and Rhode Island, and the balance of it is stored from Charleston all of the way across to Texas. The carrying charges, interest, we figure will run about 30 cents a bale a month. It is put in storage where the cost is very low. We have got a storage cost of an average of about 12 cents.

(Thereupon, at 12:15 p.m., the committee adjourned to meet at 10:30 a.m. the following morning, Friday, June 8, 1934.)

The subcommittee convened, pursuant to adjournment, in the committee room, Capitol, at 10:40 a.m., Senator Alva B. Adams (chairman) presiding.

Present: Senators Adams (chairman), McKellar, Hayden, Byrnes, Tydings, McCarran, Hale, and Dickinson.

STATEMENT OF HON. HARRY L. HOPKINS, ADMINISTRATOR FEDERAL EMERGENCY RELIEF ADMINISTRATION

Senator ADAMS (presiding). Mr. Hopkins, I think you may proceed and make such statement as you desire to make concerning the matters in which you are interested.

Mr. HOPKINS. The committee may be interested in a brief review of all funds appropriated by the Federal Government for unemployment relief. The first appropriation for unemployment relief was made by the Congress in 1932 when $300,000,000 were appropriated to be loaned to the various States by the R.F.C. on the basis of need as determined. That sum of $300,000,000 in loans was exhausted in May, 1933.

Senator HALE. Did that come from the funds of the R.F.C.?

Mr. HOPKINS. That all came from the R.F.C. There has been placed in the record and filed with the committee the breakdown of that fund, showing the States that received funds out of the $300,000,000 under the act of 1932.

(The break-down referred to is here printed in full, as follows:)

Reconstruction Finance Corporation funds made available to 42 States and 2 Territories under title I from July 21, 1932, to close of business, May 29, 1933