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Just how do you justify that sort of request of the Federal Government when your own municipalities and your own State legislature and your own financial people have, up to this time, anyway, rejected it either as a bad proposition or something which they feel they have no interest in?
Dr. Maxton. Congressman Hope, I do not think the State as such, if the State could express an opinion, feels anything other than that they would prefer private interests to build it. We have that preference first, and we would have that preference if this bill passes, and we will go to private interests for financing and simply get an insurance coverage for 85 percent so as to insure the loan.
We are not afraid of the net savings that would result from such a market, because we have records which prove in three markets that the savings would pay off the loan fund within a reasonable period of time and pay interest on it to the private loan agencies.
The State of Virginia, as you know from some of its representatives-I do not see any of them here this morning—is a little peculiar with respect to the use of State funds. However, some progress is being made. I think the State of Virginia also recognizes that produce comes into Virginia from many States, and they do not consider it entirely a State proposition. Neither do our municipalities, such as Roanoke, Norfolk, and Richmond, consider it a municipal proposition solely. The produce comes in from so many States and it goes out to so many States that it is of national importance and of national concern as well as of municipal and State concern.
Mr. HOPE. Well, you compared the market at this time with a public utility, and I think it does have some relation, to a public utility; but we do not ordinarily expect the Federal Government to finance the construction of public utilities in a State. Municipalities do it sometimes, but ordinarily it is done through private industry, As far as the Federal Government is concerned, the only instance I know of where the Federal Government has gotten into that field has been in the case of large power projects which, in most cases at least, could not be developed in any other way.
It just occurs to me that we are going one step further in this legislation than we have gone before. I am not expressing any opinion on the merits of the legislation at this time. I want to consider all of the testimony that may be presented. I know the situation is bad, and I would like to see it remedied, but I am somewhat reluctant to see the Federal Government set up a new agency here to make loans to build facilities that, to me, seem to be more properly something that should be handled by private capital in the first place and, if not handled in that way, then by the municipalities or the States. Unless some very good reasons can be advanced as to why we should take this additional step, I think I would be rather reluctant to go along with this legislation.
I want to ask you one more question. Do you think it is desirable to use this method of financing operations of this kind when it means, if you do, for the life of the loan at least, the market is going to be under the control and regulation of the Federal Government rather than being locally controlled and managed? Is that a matter that should be given some consideration in your opinion?
Dr. Maxton. By all means. I want as little Federal control as we can get, but Federal control is neither all good nor all bad, and I am
DEVELOPMENT OF TERMINAL MARKETING FACILITIES
materials, use, equipment, and other similar research and analysis, consistent with the needs for the improvement and development of proper, adequate, and efficient marketing facilities for handling perishable agricultural commodities.
SEC. 6. (a) There is hereby created a fund to be known as "the marketing facility mortgage insurance fund” (referred to in this Act as the "insurance fund”), which shall be used by the Secretary to make insurance payments under section 9 of this Act and to meet the expenses incurred in connection with the acquisition, operation, and disposal of market facilities acquired pursuant to the provisions of the insurance contracts in the event of default by the borrower, except that no part of such fund shall be used for administrative expenses incurred in carrying out this Act. There is authorized to be appropriated to the Secretary the sum of $25,000,000 to constitute such fund which sum shall remain available until expended.
(b) There is hereby created a loan fund, to be known as the “marketing facility loan fund” (referred to in this Act as the “loan fund”), which shall be used as a revolving fund to make loans or to purchase or contract to purchase obligations under sections 10 and 11 of this Act and to meet expenses incidental to the protection of the interests of the United States in market facilities on which loans have been made and are in default, including the acquisition, operation, and disposal of such market facilities, except that no part of such fund shall be used for administrative expenses incurred in carrying out this Act. The aggregate amount of loans and of purchases or contracts to purchase obligations under the provisions of sections 10 and 11 of this Act shall not exceed $50,000,000. There is authorized to be appropriated the sum of $50,000,000 to constitute such fund, which sum shall remain available until expended.
(c) The money in the funds created under this section not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the funds or invested in direct obligations of the United States or obligations guaranteed as to principal and interest by the United States.
(d) The Secretary shall make an annual report which shall include a complete statement with respect to the status of the insurance fund and the loan fund.
INSURANCE AND LOAN LIMIT
Sec. 7. The amount of any direct loan or insurance contract which may be made under this Act shall not exceed an amount equivalent to 85 per centum of the total cost of the market facility as determined by the Secretary: Provided, That in no case shall the borrower invest less than $45,000 of the total cost: And provided further, That the investment by the borrower shall always be a claim subordinate to the claim of the United States arising out of a loan or insurance contract under the authority of this Act.
INSURANCE OF MORTGAGES
SEC. 8. (a) The Secretary is authorized, upon application of a prospective mortgagor or mortgagee under a first mortgage eligible for insurance under this Act on a market facility, to insure such mortgage and to make commitments for the insurance of any such mortgage prior to the date of its execution.
(b) The aggregate amount of principal obligations outstanding at any one time on all mortgages insured under this Act, and on all mortgages with respect to which commitments to insure have been made, shall not exceed $100,000,000. (c) In order for a mortgage on a market facility to be eligible under this Act,
(1) the person obligated to pay thereunder shall be an eligible borrower;
(2) the market facility mortgage shall be one which is determined by the Secretary to be eligible for mortgage insurance;
(3) the mortgage shall be made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;
(4) the principal obligation (and fees and other charges chargeable under subsection (d) of this section) shall be in such amounts not in excess of the amounts specified in section 7 of this Act as may be necessary to enable the borrower to establish the market facility;
(5) the mortgage shall have a maturity satisfactory to the Secretary but not to exceed forty years from the date the mortgage is insured;
Government control and regulation of many of those things already. and you also have certain Government control and regulation of food, and I see nothing in this bill as proposed which will be harmful in any way to anyone concerned or which is going beyond what has already 'been done by the Congress and the Senate.
Mr. Hill. But you would not extend it to the railroads and truckers?
Dr. MAXTON. Oh, no.
Mr. Hill. On that same page, you start the second paragraph out by saying “I,” meaning yourself, and then you wind up by saying "we.' Just tell me who the "we are in favor of this bill. Whom do you really represent in that paragraph? It is a little bit confusing to
You start with “I” and wind up by saying "we.” Dr. Maxton. It is probably an error in English. I had a little trouble when I was in high school with them.
Mr. Hill. I have that trouble, too, of saying “I” when sometimes I mean “we.”
Whom do you mean by "we"? I just want to know. I do not want to embarrass you, but who are "we"?
Dr. Maxton. I have been delegated to speak for the Virginia Extension Service, and this statement has been approved. The director has read it and approved it, and this is the opinion of the extension service.
Mr. Hill. You would rather get a loan from the United States than the State of Virginia. I do not blame
The CHAIRMAN. It is a fact, Doctor, that in the markets of Virginia, just as in the markets of other States, distributors draw produce from many States in a wide area to those market areas?
Dr. MAXTON. That is right.
The CHAIRMAN. Particularly in the case of the market in Richmond. A lot of produce is brought up from North Carolina and sold in the market in Richmond, and certainly in some degree the Richmond market is impressed with a public interest in the sense that its operations extend beyond the State line.
Dr. Maxton. Oh, yes. We have no State lines when it comes to produce markets.
The CHAIRMAN. That is what I mean. So that, in providing this facility in the city of Richmond, you are providing a facility not only to serve the people of the city of Richmond but likewise all of the people who trade in that market place.
Dr. MAXTON. That is correct.
The CHAIRMAN. And the fact that you have not been able to promote the building of market facilities is all the more reason why the Federal Government should step in and make loan funds and insurance funds available, and you have every reason to believe, I presume, if the loan fund is made available and the insurance feature is contained in the bill, that you will be able to obtain local capital to finance the facilities, if the bonds are guaranteed by the Federal Government.
Dr. MAXTON. That is correct.
The CHAIRMAN. And the building of the market facility would benefit not only the city of Richmond, but the producers of North Carolina and other areas will likewise benefit?
Dr. MAXTON. That is correct.
Mr. Hill. That is true in every case. That applies to San Francisco; that applies to Cleveland; it applies to Denver.
The CHAIRMAN. That is right.
Mr. Hill. So your problem down in Virginia is no different from our problem in Denver?
The CHAIRMAN. That is the reason I take the position that this should be handled at the Federal level. For instance, your markets at Philadelphia, Baltimore, New York, and Boston likewise extend beyond State lines.
Mr. Hill. But you would not favor that the Federal Government should control all of the elements of marketing.
The Chairman. There is nothing like that in this bill. This bill only provides that the market facility itself, the physical property, shall be in such shape as to meet the reasonable requirements of the Department of Agriculture.
Mr. Hill. Let me ask this: Does not this bill provide, if I read it correctly, that the Secretary of Agriculture can make all of the rules and regulations in regard to the operation of the market, if they put this loan on it?
The CHAIRMAN. Rules and regulations for the operation of the market?
Mr. Hill. Sure. He can direct everything concerning the market, if he puts a loan on there.
The CHAIRMAN. What provision is that?
Dr. MAXTON. I would say that once the Federal Government ts up the sound fiscal policy to see the funds it has loaned are properly spent, and that the chances for revenue are good, that the Federal Government is liable to remain.
The CHAIRMAN. Section 10 on page 14 provides that the Secretary may make a loan from the loan fund if he finds that a borrower cannot obtain funds from a source other than the Federal Government.
The answer, of course, is that there is no purpose to try to regulate the operation of markets.
We thank you very much, Dr. Maxton. The committee will now take a recess until 2 o'clock. (At 12:01 p. m. a recess was taken until 2 p. m. of the same day.)
The CHAIRMAN. The committee will come to order.
I understand Mr. K. R. Slamp, representing the National Association of Marketing Officials, is scheduled to leave the city pretty early this afternoon.
We would be glad to hear from you now, Mr. Slamp.
STATEMENT OF K. R. SLAMP, REPRESENTING NATIONAL
ASSOCIATION OF MARKETING OFFICIALS
Mr. SLAMP. Thank you, sir.
The CHAIRMAN. I want to explain that the House has just had a roll call, and that is the reason that the Members are not present at the moment. : I am sure, however, that some of them will come in in a few minutes.
Mr. Slamp. I am here to represent the National Association of Marketing Officials. I have tried to bring together the consensus of opinion of the national association and not necessarily my own personal feeling about this matter.
The National Association of Marketing Officials has been interested in the improvement of marketing facilities for perishable foods for many years. In 1936 this interest was crystallized when the United States Department of Agriculture conducted research projects on the Philadelphia and New York City wholesale markets. Since that time the NAMO has been kept well informed on the progress of market facilities improvements through reports and advice from the Market Facilities Branch of the United States Department of Agriculture.
Since the House committee is probably well informed on the need for modernizing facilities for assembling and distributing perishables, this report does not propose to enter into detail on the excessive wastes and costs which are incurred in the handling of foods through antiquated facilities. Traffic congestions, overcrowded facilities, lack of proper warehousing, unnecessary loading and unloading and porterage costs, unsanitary conditions, are commonplace in many of our large terminal markets. The lack of centralization in handling separate lines of perishables and the lack of facilities for direct unloading of rail receipts cause unnecessary charges on the marketing bill.
If the observations of the National Association of Marketing Officials have been correct, one of the principal difficulties faced by most groups who see the need for and wish to act upon improvements, has been the lack of investment funds. The NAMO believes that the so-called Cooley bill, H. R. 8320, is a constructive method toward solving this problem. The proposal for a marketing facility loan fund is to be commended for its flexibility. The fact that its application would not be obligatory affords the opportunity for interested groups to apply for or reject the offered financial assistance.
The National Association of Marketing Officials favors this constructive legislation.
That ends the statement.
The CHAIRMAN. Thank you very much for your statement and for your appearance here. Let me just ask you one question, if I may.
Mr. SLAMP. Yes, sir.
The CHAIRMAN. Do you hold to the idea that these big terminal markets are impressed with the public interest for the reason that such great quantities of produce pass through the markets?
Mr. SLAMP. Yes, sir; I do.
The CHAIRMAN. In other words, the point that I have in mind as the justification for this legislation is the fact that so many different people from so many different communities in this great country of ours transact business in these centrally located terminal markets.
Mr. SLAMP. Yes, sir.
The CHAIRMAN. Kind of proceeding with the theory that what is everybody's business is nobody's business, we have tolerated this situation through the years. It now occurs to me that something should be done about it.
Do you feel that the farmers of the Nation, as well as the consumers
Ꭰ and as well as the handlers, have an interest in these markets?