they showed that it was needed, and the loan could be repaid, I do not have any fear about what might happen because while the 75 men have the right to begin with, if they do not acquire and are not permitted to acquire fee-simple ownership in any part of it, there is very little control that they could exercise.

Mr. BANOV. I do not want to be stubborn. I do not want to be mulish about it. If a corporation is set up, the stockholders control that corporation within the limits of the law.

The CHAIRMAN. Would you want to exclude the possibility of private enterprise operating these markets?

Mr. BANOV. No, indeed.

The CHAIRMAN. As long as private enterprise operates you still have the fear of monopoly. If you recognize the principle that you would be justified in financing private enterprise in the marketing business, there is always the possibility that the ultimate ownership might come into the hands of one man who might be greedy and selfish and might want to operate a monopoly. I think that we can trust that to the people who would be administering this law in the years to come, and to the public itself, because I think the public would become so outraged for it that they would not stand for it long.

Mr. BANOV. Well, sir, I have complete faith and confidence in your judgment.

The CHAIRMAN. I am glad somebody has. I do not know whether I have much in my own or not.

Mr. BANOV. I know about you. I am originally from South Carolina, and I know enough about the Congressman from North Carolina to have confidence.

Mr. ANDRESEN. Let me make another observation. It seems to me that under the Packers and Stockyards Act there they have a local authority, an organization that controls the facilities in the handling of livestock. They also control who is to operate on that yard.

Now, there are sometimes commission men operating in that yard wha do not always live up to the regulations, they commit some act that is not proper business dealing, and they have a right to appeal, if this local authority kicks them off, they have a right to take it up with the Packers and Stockyards Administration in Washington and a hearing is held. I do not think this is patterned after that. So just how far you want to go to give Government control over an agency of this kind, and when I say Government control, I mean Federal control, is questionable. In the stockyards cases, or the handling of livestock, very little, if any, money is advanced by the Federal Government. They are all privately financed. They are corporations, but they are classed as a sort of public utility on the basis of that, where the Government, in order to protect both consumer and the producer, sort of lays down a certain rule or regulation of business conduct.

This legislation of course does not contemplate that because I assume that especially in the City of Brotherly Love you would not find any unfair practices.

Mr. BANOV. I heartily agree negatively.

Mr. GRANGER. There is no reason why it might not be declared a public utility in the future.

The CHAIRMAN. If the municipality financed it and controlled it, I do not think you would ever get into the difficulties which the gentleman speaks of or thinks that we might get into.

There

Mr. BANOV. I do not want to be taking up too much time. are two other points I want to bring up. One has to do with the interest rates.

The measure there mentions 4 percent as the limit. It does not provide the manner of establishing who will be the mortgagee. Under this bill-I think I have the figure down here-I do not have it. The CHAIRMAN. "Mortgagee means the original lender Mr. BANOV. That is right.

The CHAIRMAN. "Under a mortgage, and his successors and assigns approved by the Secretary." That means that if some bank or insurance company became the original lender, that bank or insurance company would be the mortgagee. The Secretary would have to approve the person to whom the money is being loaned.

Mr. BANOV. The person to whom-the question I am interested in is the person who does the lending.

The CHAIRMAN. Right on the same pages, "Mortgagor means the original borrower," et cetera.

Mr. BANOV. I am talking about the mortgagee who is lending the

money.

The CHAIRMAN. The mortgagor is the one that borrows the money and loans the money to the mortgagee.

Mr. BANOV. I understand that. I am interested in the mortgagee, the man who is lending, not borrowing, the one who writes the check or the organization which grants the funds.

The CHAIRMAN. What is the question about that?

Mr. BANOV. Our question about that is that the way this law is worded now, you are setting up duplication of conditions whereby, let us say, the 61⁄2 million dollar project like the one in Philadelphia at 4 percent per annum, if my figures are correct, that is something like $240,000 a year interest. All right. That is a pretty fine plum for some mortgagee to get, would you not say, a guaranteed loan by the Government at 4 percent?

The CHAIRMAN. Do you think the interest rate is too high?

Mr. BANOV. Yes, sir; I think that anything which has the guaranty of the United States Government, which has to my mind

The CHAIRMAN. If you will look at section 6 on page 9, you will see it is to the effect that the mortgage is not to exceed 4 percent interest on the amount of the principal obligation outstanding at any one time. If the local authority that wants to build this facility can negotiate with the bank at 2 percent or 22 or 3 percent, that is so much better, just as a maximum, they cannot pay more than 4.

Mr. BANOV. I will use a little example. I am also speaking from what I can understand. I do not want to get myself in trouble with these statements, but I understand on very good authority that a parallel situation on insured loans or loans insured by the Government comes under the FHA. I think title 70, if I am not mistaken. It has to do with the setting up of housing projects, big housing developments, apartment developments, and these are insured loans, and I understand that the builders of these projects, the way things are set up now, I am drawing a parallel to show what could happen, to see if there is not some way to avoid it, I could take and get an architect to draw the plans, buy land, thirty or forty thousand dollars worth of land, pay about $10,000 for architects, get a builder to agree to build it or do the building myself if I happened to be a builder, and before a single brick was laid I would be able to show a profit on my investment

by what I understand to be a bonus of some sort for the privilege of granting the right to be the mortgagee, to some lending organization. Do you follow me there?

The CHAIRMAN. I follow you, but I do not see how you could apply that to this provision here while this 4 percent is only a maximum interest rate, and it stands to reason that any borrower would negotiate with the idea of obtaining the most favorable interest rate possible. I just cannot visualize a borrower being willing to pay 4 percent, if he can get the money for 2 or 21⁄2. I might be able to get it for 21⁄2 with the Government guaranty.

Mr. BANOV. That is it. This is just the opinion of a citizen. I think that the maximum of 4 percent is too high. I think anything that is gilt-edged, it is a loan guaranteed by the Government.

The CHAIRMAN. That figure of course the committee will consider later. We are glad to hear your views on it.

Mr. ANDRESEN. Let me ask a question on this money business. I assume that you need probably $20,000,000 in Philadelphia to put up the proper kind of a market.

Mr. BANOV. Six and one-half.

Mr. ANDRESEN. Could you do that under present day costs? The costs have gone up here considerably in the last 6 months.

Mr. HILL. Would that include the land, too?

Mr. ANDRESEN. If the city of Philadelphia would float 61⁄2 million dollars worth of bonds, they could probably put them on the market at 11⁄2 percent. Has that ever been discussed?

Mr. BANOV. No, sir, it gets back to a point I made, I believe it was before you got here, that it is not strictly a Philadelphia problem, and in many other cities it is not strictly a local problem, because the market serves many cities, in many cases many States, so there would be no particular reason for Philadelphia to assume the responsibility of floating a bond issue.

Mr. ANDRESEN. Would it be built within the city limits of Philadelphia or outside of the city limits?

Mr. BANOV. I do not think there is any restriction on it. I think the plan which is merely one of any number of plans which could be submitted, that particular plan calls for location in the city. That does not mean that Joe Doakes could not come along with a plan outside of the city.

Mr. ANDRESEN. You have to build it where you can get different railroad facilities that will be able to come into this market, but I would think either by act of your State legislature or any other State body that you could create the authority where they could issue bonds and the bonds would be sold at a low rate of interest, because I think it should be financed on the basis where the income would be sufficient to pay the bonds over a period of years.

Mr. BANOV. That is all true except that past experience has indicated that these municipalities and States are reluctant to do it. It is primarily due to the fact that there is too much inertia on the problem. It is one of those things that is not dramatic enough to arouse public interest sufficiently to do something about, yet I think we are all agreed that something should be done for the sake of the farmer and others involved.

Mr. ANDRESEN. This is just as much to the advantage and more so to the consumer than it is to the farmer.

Mr. BANOV. It is pretty hard to dramatize, pretty hard to sell on the basis of getting them aroused to want something of this kind.

Mr. ANDRESEN. I think you could easily dramatize it. You could advertise that if we get this market, you will get bananas for 25 cents a dozen, eggs at 10 cents, and so forth.

Mr. BANOV. I would be glad to handle the advertising and the public relations, but I would not want to pay the cost of the advertising. That is the whole thing, sir, the thing is that I think we all agree that there is a need, but there is a question of getting the ball rolling. That is the purpose of the bill, to get the ball rolling.

Mr. ANDRESEN. Of course, the business interests that occupy these facilities are in the wholesale business; it seems to me they ought to get together and do a little dramatics in order to put it over, because I think it would be a money-making proposition for them, especially as you say if the rents are too high at the present time.

Mr. BANOV. In this particular case maybe they could. I know they are very sticky when it comes to getting their hands in their pockets. I still say that one of the good things about this bill which I consider about as broad minded and circumspect a piece of legislation as I in my experience have ever seen, I think one of the fine points and why it is so valuable a piece of legislation is that it is getting the ball rolling. People have been talking about miserable marketing conditions for some years in common with the weather and nobody has done anything about it. Now, they are doing something about the weather, they are beginning to see the clouds. I think something should be done about the markets. I think that is what this bill purports to do.

The CHAIRMAN. May I call attention to the fact that on page 15, subsection (6), there is a provision to the effect "that if at any time it shall appear to the Secretary that the borrower may be able to obtain a loan from a source other than the Federal Government upon terms and conditions generally comparable to the terms and conditions applicable to loans under this section, the borrower shall, upon the request of the Secretary, apply for and accept such non-Federal loan in sufficient amount to repay the Secretary."

If after the end of 10 or 15 years, it appears that the concern is going in such fashion that it may be able to obtain a loan, the Secretary may suggest and require that they refinance.

Mr. BANOV. Yes, sir. I will say this. I notice the bill limits the transportation into these markets to rail and truck facilities. I mean there is a very practical case of why that is too strict a limitation in respect to Philadelphia market, because the probable location of this market is within almost a stone's throw of several large deep water piers, and under this, the way this works, there could be an exclusion of steamship borne commodities, and in the future who knows, they may be using airplanes, too. It could be a limitation there. I think that the wording there could be changed to include any type of transportation.

The CHAIRMAN. It does necessarily exclude the water transportation or air transportation. It is contemplated that it shall be acces

sible to rail and truck transportation, but if a city could locate its market where it would be accessible to rail, trucks and water and air transportation, it would be desirable to have it that way.

Mr. BANOV. That may be true. I guess there would be no reason why that would not be inclusive enough.

The CHAIRMAN. Thank you very much, Mr. Banov.

Mr. BANOV. Thank you.

The CHAIRMAN. Mr. E. L. Frost, of Richmond, is our next witness.

STATEMENT OF E. L. FROST, CHAIRMAN, RICHMOND MARKETING AUTHORITY, RICHMOND, VA.

Mr. FROST. I want to thank you for permitting me to appear before you. I believe I can answer some of the questions that seem to have been on your minds.

In Richmond we have a market authority. We have the authority but we have not the money.

The CHAIRMAN. Mr. Frost is the chairman of the Richmond Marketing Authority, Richmond, Va.

Mr. FROST. May I further say that I have been in the fresh fruit and vegetable business for 50 years. I celebrated on October 27, 1949, I started in '99, my fiftieth year in business in the same house, and just as up-to-date and modern as it is humanly possible to be.

I am past president of the National League of Wholesale Fresh Fruit and Vegetable Distributors, and I believe that I have come in contact with, over the eastern part of the United States, many of the difficulties pertaining to the distribution of fresh fruits and vegetables.

I jotted down one or two of the things, and then I have jotted down some little things that I have heard said since I have been here. One thing that you gentlemen would like to see, that if the producer and consumer, they are the two, if you are going to raise up the amount the producer gets and lower the amount that the consumer pays, it is possible to do those things with adequate facilities. If it is, then the Government would be inclined in needy cases to help them with the finances.

It seems to me that the saving to produce distributors and consumers through the modern adequate methods of handling undoubtedly can be accomplished through these markets and the financial help of the United States Government, and if we could only get the city and State to join in, they just don't join in because if you will, they think it is not a city and State matter, it is an inter

state matter.

You come in the store and see the stuff which is represented from the different States. Somebody, if he is from Colorado, I will show him Colorado stuff. I will show him stuff from California. It is interstate. It comes from all of the different States. We have it there. It is an interstate matter and not a local matter.

Consequently you cannot get States to help do a thing that is interstate, and they in the city say it is State and interstate.

We have a marketing authority, and it is in fine shape. This bill was not defeated, as the gentleman said on the committee this morning. That bill was this revolving bill that we tried to get before the State legislature, and asking for a revolving fund to loan to the markets to