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forth, and when you consider that the average for the United States is 67.3 percent increase, the point set forth in the declaration that the inadequate and obsolete markets and marketing methods are to blame for "increasing the price of food to consumers” is not supported by any factual data. Neither is the statement that modern facilities would make possible the saving of millions of dollars annually." The same reports carry various items of alleged savings possible under their market plans: cartage porterage, cold storage, vehicle lost time. It can be safely prophesied that the relocation and reconstruction of any wholesale market facility at a centralized point in any city in the country along the lines recommended by the Department of Agriculture, would not result in changing the cost of living to consumers. In many cases, dislocation of established market channels and procedures would probably result in increases.
(3) The declaration states that the failure to provide modern facilities: has been due largely to the inability of farmers, dealers, brokers, commission merchants, and others, individually or collectively, to obtain through regular financial channels the relatively large amounts of capital necessary for the construction of modern facilities.
When there has been need of improvement in this country in any industry American financial institutions have always stood ready and willing to provide the finances. They are noted for their shrewdness and sagacity and for their ability to truly and efficiently analyze the situation and the possibility of success. If there has been a failure to "obtain through regular financial channels” the money required for these so-called modern markets, it has been because the propositions submitted have been unsound, and there existed no justifiable reason for change. The fact that the bill provides for the $25,000,000 Marketing Facility Mortgage Insurance Fund with further provisions:
If there should not be sufficient money in the insurance fund to enable the Secretary to make payments to mortgages as provided
the Secretary may make and issue notes to the Secretary of the Treasury to obtain funds to make such paymentsindicates more than a reasonable doubt on the Department of Agriculture and the writers of the bill that the projects will pay out.
The $50,000,000 Market Facility Loan Fund described in this legislation is hardly sufficient to take care of all the markets which the Department of Agriculture insists are obsolete and antiquated, when you consider that the estimate for relocating the wholesale market in New York City alone is $140,000,000.
In their financing of these markets do they contemplate securing leases for the period of the loan or guaranty from the merchants? Forty years? If not, what assurance do they have that the merchants will stay for that period? And if they do, what assurance do they have that they will live and be in business profitably for 40 years? One witness stated here that one reason they could not get a loan was because 30 years was too long.
Certainly the experience of the Secretary of Agriculture or his subordinates does not qualify them to make decisions in loans of this kind, when sound financial organizations will not make such loans without Government guaranty, because they are unsound. The Reconstruction Finance Corporation, one of the Government's largest loaning agencies--and if I am not mistaken, a member of the com
mittee made the statement the other day that there were 40 or 50 Government lending agencies presently in existence-draws a distinction between operating loans and investment loans and is now authorized to make operating loans only. Then again this agency was designed to meet an emergency situation which private banks were not in position to handle and was never intended to compete with private enterprise. Loans made under this bill would always compete with private enterprise.
Under “Eligibility requirements” the bill provides:
(a) That the proposed market facility will reduce the cost of distribution.
(6) That it will be so located and designed to make possible direct loading and unloading of both rail and truck shipments into or from the buildings of handlers.
(c) That sufficient land for expansion be included; and that not more than one-third of the total cost of the facility is to be expended for the acquisition of land, graded and placed in condition for construction.
(d) That there will be no discrimination against any commodity or person in its operation.
(e) That rentals and other charges must be approved by the Secretary; and that reports must be made at regular intervals to the Secretary
(f) That title to the facility or any part thereof cannot be transferred or encumbered.
In another section it is provided that maximum charges which may be received for the use of the market facility shall be subject to the approval of the Secretary.
However, with all these precautions, at no point in the bill is there a provision for compulsory requirement of proof as to the financial soundness of the projects to be considered. Certainly the vague reports of investigation regarding the need for the facility by the Department of Agriculture do not fall in this category.
Regarding other provisions of the bill regarding nonprofit operation, cold-storage facilities, rail facilities, and control of operation, we submit:
(1) With respect to the apparent elimination of the provision that only market facilities operated on a nonprofit basis will be financed, it is our firm belief that inasmuch as the bill will be interpreted by the Department of Agriculture, section (12–f) reading: That the rentals and other charges for the use of the proposed market facility will be established at reasonable levels approved by the Secretary and designed to meet the obligations, defray the costs of maintaining and operating the proposed market facility, and provide reasonable reserveswith decision resting in the Department will be interpreted to prohibit anything but a nonprofit organization, cooperative or otherwise, meeting the requirements. This is the same as a nonprofit clause and certainly is contrary to American principles and condemned by our association.
(2) Likewise, with respect to the elimination of public cold-storage warehouses of more than 10,000 cubic feet. Maybe we should feel assured that the refrigerated warehouse industry is amply protected. But we don't. Why? Every report issued by the Department of Agriculture to date has recommended, along with other facilities, the « wzion of a public refrigerated warehouse, to be leased to private helstuals. Public cold-storage warehouses, in our opinion, are atsominated only until the market is built and the need for a public Befrigerated warehouse in the market areas has made their position effong enough to insist upon it, and the Government will then be asked to provide the same financial support and guarantees as assured in the art,
But let's consider for a moment that a public cold-storage warehouse will never be built in one of these markets. Department of Agriculture reports state and I quote from a typical report:
One plan that might be considered by the market management for providing refrigerated space on the market in addition to that provided by the dealers themselves in their stores, is to set aside one or more centrally located standard store units as semiprivate cold storage rooms. It would, of course, be necessary that the units so designated be properly insulated and that necessary referigeration equipment be installed. It would also be necessary to provide proper supervision. and later in the same report:
A limited amount of space could be provided on the market by the construction of one additional unit in the store building for produce wholesalers. As previously pointed out, the use of a store unit for this purpose would necessitate its complete insulation and the installation of refrigeration equipment. One store unit would provide roughly 13,500 cubic feet of gross piling space or 10,000 cubic feet of net piling space. In addition each report strongly recommends that a cold storage room of sufficient size to meet the needs of each tenant be installed in each store, to eliminate the present expense of public cold storate to dealers, et cetera.
Here again we have the Department of Agriculture interpreting the provisions of the bill. No matter how you read the description of "market facility" in H. R. 8320, it can only be interpreted to provide for installation of the semiprivate cold-storage room described in the report quoted above; and also permits the installation of not more than 10,000 cubic feet of cold-storage space in each store. In fact, inasmuch as the words "public cold-storage warehouse” is used in the bill, it could be interpreted as placing no limit on private cold storage in the stores to be provided in such market. But granting the first interpretation and using figures in 10 reports (all we had available) where a total of 780 store units are recommended, you have a potential total of 7,800,000 cubic feet of cold-storage space. I think this graphically describes our concern on this point, when you consider that the Department of Agriculture has gone on record in saying that 29 cities in 20 States require new markets.
A witness yesterday, Mr. Frost, of Richmond, stated, as near as I can remember his words, that if he had 10,000 cubic feet of coldstorage space in his store he would save at least 17 cents cold-storage charges and drayage on a basket of produce, which he now passes along to the consumer. This indicates the complete satisfaction on his part that the bill as written includes that amount of storage for each store.
(3) We have in the city of Washington two successful wholesale markets for agricultural commodities, one with rail facilities in the rear of the stores of wholesalers, as recommended by the Department of Agriculture, and one with team tracks nearby from which merchandise must be moved by truck to the stores of dealers. Yet both of these markets are competitive, neither has a distinct advantage over the other, and the requirements of the city are efficiently supplied.
It is interesting to add that the Department of Agriculture many years ago, prior to the passage of the Research and Marketing Act, favored and promoted the market which is now only equipped with team tracks and cannot have rail connection to the stores of wholesalers.
Also, insofar as the Washington situation is concerned and apropos of the contention of the Department of Agriculture that rail connection will create the huge savings in cartage and porterage mentioned in their reports, it is interesting to note that according to the figures of the Department of Agriculture 6,424 carlots of fresh fruits and vegetables were received in the District of Columbia in 1949. Records of the rail carrier serving the stores in one market, with also adjacent team tracks; and the team tracks in the other market, show that 972 cars were received by those dealers having side-tracks connection, a large number of which, however, were unloaded and distributed from the adjacent team tracks; and that 1,697 carlots were received by dealers in the other market at the team tracks. Yet these markets were competitive, and successful.
It is also interesting to note that a large chain-store organization in the city, with side-track connections, removed from the market, received 2,381 carlots of the total 6,424 reported by the Department of Agriculture or 37 percent, which did not move through the market to public sale to dealers in fruits and vegetables; and this was only one chain-store organization in the city. Figures are not available for the A. & P. Co., Acme, Food Fair, DGS, or United, but it would easily run the total to more than 50 percent.
(4) Centralization of wholesale markets is certainly not in step with the trend toward decentralization, now evident in all industry on account of the danger of bombing. Danger of destruction of all major food distributing facilities in our large cities by bombing at ona blow would be a serious threat to the safety and protection of our country.
(5) Just as night follows day, so Government aid is followed by Government control. This bill places full and complete control in the Secretary of Agriculture, not only in making the loans, but in the regulation and operation thereof when completed. The various reports that have been submitted by the Department of Agriculture call attention to the fact that while we have Federal laws, and in some cases State and municipal laws, on weights and measures, traffic, , sanitation, standard containers, grade standards, grading, and inspection, all localities do not have them but they should have them.
Hours of trading and collection and dissemination of information on supplies available, are two additional items which the Department maintains are not available and should be available, and undoubtedly would be, with the Secretary of Labor having the say over the regulations. In fact when you consider that the Department of Agriculture makes the investigations resulting in the recommendation for relocation of the wholesale market in a city; then approves either the guarantee of a loan made by others or makes the loan itself; and then lays down the regulations for the operation of such markets, rates, hours, et cetera, or must approve same, you have in the Secretary of Agriculture, the prosecutor, the defense, and the jury, in one package. This is not and cannot be the American way; and a continuance of
the dangerous socialistic trend is now entirely too evident in our daytoday affairs. The road to socialism is paved with good intentions. Socialism stifles free enterprise. We objected to the previous measures because they were contrary to American principles and a threat to free, competitive enterprise; and we most emphatically renew our objections on the same basis with respect to the bill now under consideration.
In concluding our objections to this bill we wish to impress upon you that we are not opposed to progress; we are not opposed to the relocation, improvement, or construction of wholesale markets; but we are unalterably opposed to the participation of the Federal Government in this matter from a financial or regulatory standpoint, through either direct loans, subsidizing, or guaranteeing such construction. It is our belief that no legislative enactments loans, guaranties, subsidies, controls, or regimentation will make the people of this country permanently and equitably prosperous and happy. Any State, municipality, county, or other political subdivision, worthy of the designation can act and work out its own problems without the paternalism of the Federal Government.
We sincerely recommend that this committee render an unfavorable report on this legislation, H. R. 8320, and all similar legislation.
The CHAIRMAN. Mr. Johnson, I was not in here when you began your statement. Are you speaking now on behalf of the National Association of Refrigerated Warehouses?
Mr. JOHNSON. Yes, sir, I am speaking on behalf of the National Association of Refrigerated Warehouses, as authorized by a unanimous resolution of the executive committee, which handles all affairs of the association.
The CHAIRMAN. You are in the cold-storage warehouse business here in the District, are you not?
Mr. JOHNSON. Yes, sir, I am vice president and general manager of the Terminal Refrigerating and Warehousing Corp. here in Washington.
The CHAIRMAN. And you operate a business at Fourth and D Streets SW?
Mr. JOHNSON. At Fourth and D, and at Eleventh and E Street SW., the various ice plants around the city, and a few ice plants outside of Washington.
The CHAIRMAN. And you operate the only refrigeration warehouse in the city?
Mr. Johnson. We operate the only cold-storage warehouse in the city of Washington; yes, sir.
The CHAIRMAN. In other words, you have now a complete monopoly on the refrigerated warehouse business in the city of Washington?
Mr. JOHNSON. I would not call it a monopoly.
The CHAIRMAN. Now, why is it that you are so apprehensive about private storage in terminal markets in the cities that might want to build them?
Mr. JOHNSON. I am speaking for the National Association of Refrigerated Warehouses, representing the members in various cities