Mr. KING. You take the individual bondholder, who puts it up, based on the Government guaranty--are you protecting him 85 percent. of his investment, or are you protecting him for 100 percent?

The CHAIRMAN. 85 percent. The local community puts up $15, the Government underwrites the other $85. In the event of liquidation, the $15 is already there; 15 percent would be put up by the local community.

Mr. KING. You mean that is put in, in cash?

The CHAIRMAN. That is right.

I would just like to say that I do not know of a bill that has had more consideration than this one. It has been worked over and over and over. It is not the handiwork of any 1 man or 6 men. It is the handiwork of every man on this committee, who has worked on it through the years. We have come to the place where we call it almost perfect, because it is not necessary even now to make any changes.

Mr. KING. I would like to ask Mr. Scott a question. In New York and Philadelphia-in both of those markets--they certainly need improvements in their facilities.

What percentage of the total produce going into the territory is now passing through terminals compared with 25 years ago?

Mr. SCOTT. May I ask Mr. Crow to answer that?

Mr. CROW. The answer to that depends, first, of course, on the definition of how many of the facilities in Philadelphia and New York you plan to include in your definition.

·

In Philadelphia, besides Dock Street, you have Delaware Avenue and there are some more facilities around the fringes, but if you mean the market areas collectively, leaving out the chainstores which I believe is the thing that you have in mind

Mr. KING. The great increase in the produce, that is not going into the wholesale market, would not even go into the new terminal, for instance, because of the rapid development of the chainstore warehouses that pull their stuff in directly.

Mr. CROW. That is correct. Our figures are not absolutely up to date, but around one-third of the products go directly to service wholesale warehouses and chainstore warehouses, located outside the market

area.

Mr. KING. You mean it is only one-third now in a market like New York now, two-thirds of all the produce consumed in the territory goes through Washington Street?

Mr. CROW. Not right now, because we do not have the current figures, but as of the most recent figures we had, it was running around one-third.

Mr. KING. Meaning that two-thirds does go through the wholesale market facilities?

Mr. CROW. Yes. These facilities are not restricted to the Dock Street market or to Washington Street, but include antiquated facilities in and around those streets that you are talking about in New York. Mr. KING. You have got the same trend in the business, even in Chicago, where they have a good terminal.

Mr. CROW. That is right.

The CHAIRMAN. Will you yield there for one question?
Mr. KING. Yes.

The CHAIRMAN. Was I not right in saying that 20 percent of the vegetables go through one market in New York City?

Mr. CROW. It was about 12 percent into the New York metropolitan

area.

The CHAIRMAN. Twelve percent of the entire production?
Mr. CROW. Into the New York City area.

The CHAIRMAN. It went into that?

Mr. CROW. Collectively.

The CHAIRMAN.. And then out to the area surrounding?

Mr. CROW. That 12 percent includes the volume going into New York City markets, directly to the chainstore warehouses, and to other establishments in the metropolitan area.

The CHAIRMAN. I know that. It goes into that area.

Mr. CROW. Yes, into the New York City metropolitan area. Mr. KING. As one who has been familiar with the PhiladelphiaNew York markets, and various other terminals for a long time, I am surprised that you think that two-thirds of the produce of the county still is moving through the wholesale houses. I would think that it is just the other way around, that two-thirds of the perishable produce is now being shipped direct without the wholesaler being involved there.

Mr. CROW. The percentage of nonperishables going around the wholesalers is much greater. It runs higher on the nonperishables than on perishables.

Mr. KING. Take the A. and P. Co., for instance, as an example, I would suppose that they buy 80 percent.

Mr. CROW. They do.

Mr. KING. Direct?

Mr. CROW. Yes.

Mr. KING. And you add them together with all of the other chains working in the territory, it would seem to me that it would amount to two-thirds of all of the perishable produce.

Mr. CROW. I do not mean to imply that the national chains, such as the A. and P. and the Safeway Stores, who have their own buying organizations and big warehouses, get only one-third of their produce directly at the warehouse. They get a very substantial majority of their products at their own warehouses, but I was using the figure on the total fruits and vegetables that go into the metropolitan area.

Of course, those chains get most of their products directly at the warehouse.

The CHAIRMAN. Suppose you take the A. and P. warehouse between Richmond and Petersburg, along the highway. The farmers do not deliver direct to that warehouse, do they? I have never seen them there.

Mr. CROW. On that particular one I do not know, but farmers do deliver directly to many chainstore warehouses.

The CHAIRMAN. That no doubt is true, but I have never seen any farm trucks there.

Mr. CROW. I have not, at that one, either.

Mr. KING. And they take carlots direct from all over the country that never touch the city terminal at all, the public terminal.

The CHAIRMAN. I do not mean to say that the situation is bad all over America, but I know it is bad in those spots like Boston and

New York and Philadelphia, these big cities, that need someone to put leadership and financing in there to induce them to do something.

Mr. KING. I asked the question because it has a bearing on the long time financing of big terminal facilities. If the trend of business follows its course over the last 25 years you may find yourself with some big terminals in the cities that will not be occupied, so that the financial plan could never work out.

The Philadelphia terminal, of course, proposes to encompass the food trade as a whole in such a way that only a part of that terminal would be occupied by the perishable food and vegetable business. If they can encompass all allied lines in a terminal, it would be a much better financial proposition.

Of course, I realize, after knowing of these plants in New York and Philadelphia for many years, that the basic problem is gaining the cooperation (1) of the principals in the business; (2) the city officials, the railroads, and everybody else involved.

While we might finance and build a new terminal, we cannot force anybody to go in there as a tenant, someone who, perhaps, at present owns his own property and is conducting a wholesale business. He might have a notion that he can conduct his wholesale business where he now is, irrespective of the big terminal that you create.

Mr. SCOTT. As I pointed out in my statement we think just as you have stated that the big problem here is getting all of these varied interests together and formalizing a practical and comprehensive, sound plan. That is the big hurdle. That is the big job.

Mr. JONES. On page 2 of your statement, down at the bottom, you say that during the past year the Department assisted 43 localities in planning, constructing improved facilities, and then you mention that in 19 of those counties the new facilities were built or are under construction, that is, were at the end of the year.

It might be helpful, I think, to the committee to know where these 19 new facilities were built. And also to give us some idea as to the approximate percentage of the produce that was being handled in those places as compared with the total, particularly in the larger terminals like New York and Philadelphia-those of that type. Where were these 19, mostly in small localities?

Mr. SCOTT. Mr. Jones, would you like that for the record?

Mr. JONES. I wish that you would put that in the record. I think it would be helpful to see where those facilities have been built. Mr. SCOTT. We will be very glad to do that.

(The information requested is as follows:)

Three of the 19 facilities constructed or under construction were grain-marketing facilities in North Carolina and Kentucky, and 3 were improved poultryand egg-marketing facilities in 3 States. New wholesale produce markets were completed or were in various stages of construction in 13 places: Boston (meat only); Savannah; Jacksonville, Fla.; Houston; Beckley, W. Va.; Jacksonville, Tex.; Indianapolis; Toronto; Louisville Nashville; Rochester; Carthage, Tex.; and San Juan. The volume of produce being handled in these places is much less than that handled in such places as New York and Philadelphia.

Mr. HOEVEN. Mr. Scott, anyone who has visited the Washington Street market in New York, as I have, and others have, fully realizes that it is a deplorable situation, something should be done about it.

Mr. SCOTT. Yes, sir.

Mr. HOEVEN. There are two observations that I would like to make. First of all, I am just wondering where in the world they would establish a new terminal market in the city of New York. It stands to reason that you have to have proper rail and water facilities, and you cannot establish such market clear out beyond the confines of downtown New York. It would mean the condemnation of valuable property on the waterfront to establish such a new facility.

It is my impression that the city of New York, and the State of New York, are not doing very much to remedy the situation.

The chairman has indicated that the landlords are running a sort of a racket. They get high rentals and do not do much to improve the property.

It seems to me that the situation is being condoned and permitted by the city of New York. What are they doing to alleviate that situation?

Mr. SCOTT. It is my understanding that you have described the situation very well. You have illustrated it so clearly.

One of the main problems is with the facilities that exist that there is a resistance to giving up what advantages they have.

If you have to seek a large new area, you get into all kinds of conflicting interests.

Mr. HOEVEN. It is my impression that the landlords in perhaps rather close cooperation with the city of New York would fight any attempt to establish new terminal markets.

Mr. KING. Will you yield?

Mr. HOEVEN. Yes.

Mr. KING. I think that there would be opposition because of vested interests, but I do not like to hear you refer to it as a racket, because the figures would indicate that it is not a very profitable racket any

more.

Mr. HOEVEN. I am not referring to the racket on the part of the wholesalers. I am referring to a racket on the part of the landlords. Mr. KING. Well, landlords are the operators to a great extent on Washington Street, also in Philadelphia, I would think.

The point is that wholesaling because of this inefficiency has had a hard time to exist.

They have not made much money.

Mr. HOEVEN. The gentleman said that it is his understanding the operators were also the landlords. Do you have any basis for such assertion.

Mr. KING. Just personal knowledge of a good many of these places that are owned.

Mr. HOEVEN. You may be correct, but it is my impression that most of these places are occupied by tenants and not the landlords. The CHAIRMAN. Mr. Crow should be able to answer that.

Mr. KING. I would say in both markets the principals own their own places.

Mr. CROW. We made a study of that aspect of the study in Philadelphia and in a number of other places.

We found that in city after city a fairly common figure for the percentage of merchants in the market owning their own buildings is about 15 percent.

The CHAIRMAN. Only about 15 percent? The other 85 percent are paying rent?

Mr. CROW. They are paying rent to somebody.

The CHAIRMAN. Paying rather high rent to somebody.

Mr. KING. That is surprising to me, all right, although I never had any factual basis for my belief on the thing. However, if the rental situation has improved in the last 10 years, so that the landlords themselves have been making a lot of money out of it, I think that the wholesale business in New York and Philadelphia, with their antiquated facilities, have had a hard time existing. The record of bankruptcy and of failure, I think, would show that it is not a very profitable racket for anybody.

Mr. HOEVEN. Do you feel that it would be quite essential to locate any new terminal market in downtown New York on the waterfront, and near railroad facilities, or should it be miles removed from docking facilities and railroads, which, of course, would again enhance the cost of hauling everything out to such a market.

Mr. SCOTT. May I ask that Mr. Crow comment on that? He has intimate experience with that.

Mr. CROW. I do not think it is necessary for these wholesale food markets to be located in the downtown business section of the city. They can be some miles away from there, but it would not be prudent for them to be miles away from the railroads. They would need direct rail connections in order to operate economically, as well as the streets and highways from the point of their location to every part of the metropolitan area.

For instance, after you raised this question a moment ago, I very hurriedly went down the list of 26 or 27 new markets that have been built, and noted that in all of the places but 5 they moved considerable distances from the business section. So that in fact they are moving out, but not away from a railroad track.

Mr. HOEVEN. New York is in rather a peculiar situation, being the largest city in the country, and having such extensive transportation facilities, both by water and rail.

It would appear to me that it would be more convenient to locate a new market near the waterfront and near the railroads, rather than attempt to build it clear out somewhere else.

Mr. CROW. There is a great deal of difference of opinion on this subject, or maybe I should say that the opinion has not crystallized as to where a new wholesale food market should be built.

There are proponents of the idea of building a new market up in the Bronx.

There are other proponents for building a new market by tearing down the Washington Street area and putting up new facilities there. There are still others who feel that it should be built on the vacant land just across the Hudson River on the New Jersey side.

The kind of market that can handle products efficiently is essentially a one-story operation, which would require much land.

There are still others that feel that they should seek a site nearer the center of population in New York City, which would throw them. over in the borough of either Brooklyn or Queens, just about on a line between the two, on the east side of the East River.