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who knows anything at all about it, knows that that is true, because it is inaccessible to trucks and to trains.

If you will look at all the big corporations in America like the Atlantic & Pacific Tea Co., you will find they have built modern markets along the railroad tracks where a train can roll up to the backdoor and a fleet of trucks can roll up to the front door and produce can go through. The Colonial Stores is another big chainstore operation and they have done the same thing:

I was willing to agree with you that financing is not the only thing, but I still think it is the most important thing.

The Secretary of the Department of Agriculture said that private capital should do this, but private capital has not done it for 100 years, and I do not believe that private capital is ever going to do it.

Mr. POAGE. Will the gentleman yield?
The CHAIRMAN. Yes, sir, Mr. Poage.

Mr. Poage. The gentleman suggests in his statement that he believes that private capital was not familiar enough with these problems. Isn't actually the problem not one of familiarity with what is happening, but there is plenty of familiarity with what is happening and that there are too many powerful private interests who are making too much money off the real estate and the rentals at the existing markets and they have too much of a stranglehold on most of the local governments to ever get a financing institution to assist and also to ever get private capital to move in and finance new markets as long as they can rent this property at a fast profit. Their feeling is: "Why should we let anyone else go in here and establish a new market?" "Is not that property held by people who are in a position financially to put their finger over here and say to the lifeinsurance company, “Don't make any loan there for a new market, and say to the city council, “Don't you make any loan here for a new market.” Isn't that what is happening, rather than lack of familiarity? Is it not a real familiarity with this means of making exorbitant profits? Is it not the actual familiarity of these people with the situation which prevents the establishment of new markets, rather than a lack of familiarity on the part of financial institutions. They know all about it and they know all about the people who will profit if they finance it, also.

Mr. Scott. Mr. Poage, I feel there is no difference of opinion between the Department and this committee on the urgent need for these facilities. It is our experience that there are so many factors, as you and the other members of the committee well understand, and to which you have just referred, Mr. Poage, that are preventing and are making it extremely difficult to get a plan worked out and to even get the sites.

Mr. PoAGE. Well, can you get it worked out simply by doing nothing ?

Mr. SCOTT. Mr. Poage, I am certain that the Department has been doing a great deal, as brought out in the statement. There are examples of many, many cities where they have been working and have aided the local people in developing practical plans and carrying them right on through to completion. In Philadelphia, one of the large markets where there is certainly an outstanding need for new facilities, they have been working on that for years and it appears that progress is being made. It is slow, but we have had to get local leader

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ship in there to get hold of some of these problems and bring the pressure to bear where needed in order to break the jam and get the plans laid out. Once they are laid out and are practical, it is our feeling that there are private funds that would come in.

The CHAIRMAN. Will the gentleman yield?
Mr. PoAGE. I yield to the chairman.

The CHAIRMAN. That just is not accurate, Mr. Scott. In the city of Richmond, Va., this committee was told that they had plans which had been approved and were ready to go forward with the building of the market several years ago. The market has not been built yet. The same thing is true in New York. I went up to New York and saw the plans which they had to build a new market in New York City, but the market has not been built. The Dock Street Market in Philadelphia is a bad situation; there is a bad situation in Baltimore, and a terrible situation in Boston and all over the country.

It is easy for us to sit back here and say that private capital should do this, but when we know full well that private capital is not doing it, it seems to me that if we are going to do anything to improve our distribution system and shorten the distance between the producers of the country and the consumers of the country, that this is one thing we can do. It will not cost the Government any money, because the amortized loan will be retired with the rents and the earnings of the property itself. The Government does not put out the money. The Government guarantees it and I do not know how you could work out a better bill than this one. I do not want to take the credit for the authorship of the bill, because I know every member of this committee has made a contribution to the drafting of the bill, as evidenced by the fact that in the past the House of Representatives passed it at one time by a unanimous vote and we; have not had any trouble getting the Rules Committee to give us a rule. The fact of the business is that the first money given to this committee to do any investigating was given to us for the one purpose of investigating this marketing situation. They gave us $50,000 and we were told that if we needed $150,000, we could get it.

Do you remember that, Mr. Poage ?
Mr. PoAGE. Yes; I do, Mr. Chairman.

The CHAIRMAN. Gentlemen, we have a rollcall in the House and we will have to suspend our hearing at this time for the day.

Off the record.
(Discussion off the record.)

Mr. Scott. Thank you, Mr. Chairman. We will be delighted to come back at any time and discuss this legislation in as constructive a way as we possibly can.

The CHAIRMAN. We shall resume the hearing tomorrow morning, if you can be back then.

Mr. SCOTT. All right, sir.
The CHAIRMAN. We will resume at that time.

The committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, the committee at 12:20 p. m. adjourned, to meet again at 10 a. m. on Friday, May 20, 1955.)

DEVELOPMENT OF MARKETING FACILITIES

FRIDAY, MAY 20, 1955

HOUSE OF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,

Washington, D. C. The committee met, pursuant to recess, at 10 a. m., in room 1310, New House Office Building, Hon. Harold D. Cooley (chairman) presiding.

The CHAIRMAN. The committee will be in order.

Mr. Scott, we will be glad if you will continue with your statement. I apologize for interrupting you and taking so much time when you were about to testify before. You might as well go ahead with your statement,

STATEMENT OF KENNETH L. SCOTT, DIRECTOR, AGRICULTURAL

CREDIT SERVICES, ACCOMPANIED BY WILLIAM C. CROW, CHIEF, TRANSPORTATION AND FACILITIES BRANCH, AMS, DEPARTMENT OF AGRICULTURE

(The prepared statement of Mr. Scott appears at p. 8.)

The CHAIRMAN. Mr. Scott, it seems to me that you have presented a splendid argument in behalf of this bill, but you wind up withholding your support.

Every paragraph of this statement is an argument in behalf of the bill. You say we should wait a while longer until we can attract private capital. We have been waiting 100 years to improve the markets in New York and these other places.

I can appreciate the difficulties that you point out at the end of your statement about bringing local groups together and creating this interest.

On page 3 of your statement, after you discuss your studies in these various places, many of which the members of this committee have visited with respect to the marketing facilities, you say this:

When each study is completed, the proposed facilities are set up in the form of a model set at a meeting of all interested groups at which the findings and recommendations are presented. Followup assistance is given as needed.

That is what the Department of Agriculture, through the Marketing Bureau, should bring these interested groups together for.

I know you have made some splendid recommendations in many of these places.

What we need, what we think this bill would provide is leadership to bring the groups together, to see that this situation is improved.

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You point out in this statement that these are interstate markets, because produce goes into these markets from just about every State in the Union.

And if you take that part, as the only justification for feeling that the Federal Government should take an interest in it, it is because these markets are impressed with the national importance. People from all of the States trade in them.

You say that finance is not the block or limiting factor. Certainly, it is one of them.

We have been told about cities that were ready to go ahead, to build markets, but there has not been any finance available. Richmond, Va., is one such. A witness came here and said that they had the plans and everything ready to start. Do you know whether they have ever started a market in Richmond ?

Mr. Scott. It is my understanding, Mr. Chairman, that finances have been arranged down there during recent months. I think the city has made some special arrangements for the financing:

I want to emphasize again, Mr. Chairman, we have studied our experience very carefully. We have tried as best we can to present to you an honest, candid appraisal of our experience. We are not depreciating the fact that financing is important. We do honestly feel that it is not the limiting factor.

It is such a complex problem.

As we point out here, we think that the getting of some real effective leadership in the picture among the local people, that are best able to bring all of these conflicting private interests together, is best, and to finally mold this thing into a good, practical plan.

The CHAIRMAN. That same argument could very well have been advanced by the department of some agency of the Government when we talked about housing. Why not let private capital do it. Private capital did not do it.

And there was the question of finance for tenancy farmers. And we have the Farmers' Home Administration. Private capital did not come into it.

I believe if we start and build a pilot plant, so to speak, and show private capital, that the Government is interested in this proposition, that we will underwrite it, you will find private capital coming in and putting up the money.

These are supposed to be self-liquidating marketing facilities, with the rent to be applied on the payment of the debts.

You have spent a lot of time and money, and the officials, the experts in the field of marketing, have visited a lot of the cities, and have drawn up a lot of plans. You have had a lot of meetings.

You say some facilities have been built in many places, but they have not been built in the places where we think some facilities are badly needed right now, such as Boston and New York, Philadelphia, Baltimore, Richmond, and other places. And, down in Raleigh, in my district, they did a job there. They pointed out how much could be saved by new facilities. Nothing has been done about it, because in every one of these cities you find a tremendously influential group residing there, who are the property owners, the people who are profiting off of these inadequate facilities right now.

This bill only authorizes $100 million. You know that would not do the job, but, at least, it would point the way. We could finance

one or two of these markets and it might even become unnecessary for us to expand further the Federal activity.

I think private insurance companies and other lending agencies might come in and take it over.

It seems to me that you and I and all of us have been talking for all of these years about doing something to improve our distribution system. You admit that this is a burden on our existing system, these antiquated markets. This is an effort that we have been trying to make here for 10 years to do something about it.

Mr. Scott. We certainly agree with you as you have just pointed out that in these larger cities there is a glaring need for this.

You mentioned Federal housing. Our feeling is that we need to get local leadership. We feel that the Department is being very helpful and has in many instances, in helping get this leadership together and to help them to think it through, get the plans developed, so that they are at the stage of going on. Using the Federal housing, for example, of a builder out here with a house. He gets the house all built. It is in the shape that he believes it is ready for an owner to move into. At that point he seeks his financing. He goes to the FHA oftentimes, and gets his insured loan.

The CHAIRMAN. If you could announce that you were going to Richmond or Raleigh or some other place that the representatives of the Federal Government were going to be there to explain the plan which contemplated self-liquidation of the project, to build new facilities, you would create an interest. People would come out to the meeting. Even then you are going to meet resistance of the vested interests that are now profiting from a lot of ratholes, such as in Washington Street and Dock Street, and these other places.

Mr. SCOTT. I think that is right. The CHAIRMAN. If we could furnish the leadership, it would help. This bill passed the House once by unanimous vote. It was reported by this committee, 19 to 1. There has been a great deal of interest in it.

I could send out a hundred telegrams, and fill this committee rooni with witnesses who favor the legislation. The people are still interested.

If private capital is going to move in and does move in, then we would not need this. I think that by creating this agency in the Department of Agriculture, it would help. It would not cost us anything. The evidence shows that with the personnel you now have it would probably not require another man to be added to the payroll. You could just go ahead and run the show and get these markets going. I do not think we ought to sit back and wait 10 more years.

Mr. King. Mr. Chairman, does your bill guarantee 85 percent of each bond that is put up, or does it actually guarantee 100 percent of 85 percent of the total ?

The CHAIRMAN. It is 85 percent of the total.

The local community puts up 15 percent, and the Government underwrites the 85 percent.

Mr. King. You are guaranteeing that 100 percent-only 85 percent of the total, but you are guaranteeing that they will lose no money. They cannot lose 15 percent.

The CHAIRMAN. Why not?

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