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The Chairman. I want to ask one question. I am not sure about it. Are meats sold and dispensed through the markets which ordinary farm produce and vegetables go through?
Mr. DiVito. Meats, groceries, tobacco, fruits, and vegetables are all within the radius of the market.
The CHAIRMAN. In other words, any marketing facility should have facilities for handling all perishable agricultural commodities?
Mr. DiViTo. Yes, sir.
Mr. DiVito. It should not be limited to fruits and vegetables alone.
The CHAIRMAN. One of the nice things about that would be that an ordinary merchant, retail merchant, could go to one market center and buy all of his supplies for the store without having to shop in various sections of the town.
Mr. DiVito. Yes. Successful markets have found that when they offer those facilities, those are the ones that usually flourish very nicely.
The CHAIRMAN. We will be glad to have you present your next witness.
Mr. DiViTo. Mr. Meyers is from Richmond, Va. He is a member of our legislative group of the National Association of Produce Market Managers, and he has his own comments to make.
The CHAIRMAN. Thank you very much. We will be glad to hear from Mr. Meyers.
STATEMENT OF C. E. MEYERS, MEMBER, LEGISLATIVE COMMITTEE,
NATIONAL ASSOCIATION OF PRODUCE MARKET MANAGERS, RICHMOND, VA.
Mr. MEYERS. I feel that the committee has asked me to say something about our Richmond, Va., situation, which you have heard about before, and I think that I can speak somewhat as a representative of the rural interests, as I have been president of the Ruritan National and of the Southern States, a farmer cooperative, and vice president of the Richmond Credit Association, which serves 25 counties around Richmond.
I became interested in this market situation in Richmond about 1938 when the Ruritan Club of Hanover County appointed me on the committee to work with the city council and the civic organizations in the city of Richmond. Dr. Maxton of VPI made a very thorough survey
of the market situation in Richmond at that time. It appeared after many hearings that the city council was interested in a parking lot and retail merchants on the main business street and were not interested in a wholesale produce market. The recommendation at that time was that the city should build the market. I have no record, and I have investigated somewhat where cities have gone out and built and established wholesale produce markets. Benton Harbor is probably as near an exception, but that is a growers' market, different from a distributors' market. Cities sometimes, and often prepare facilities for selling at retail, especially when parking is involved, but they are not inclined to be interested in the wholesale market facility.
In 1943 I submitted a plan to Southern States Cooperative, & farmers' organization, based on the Maxton report, but built around
Southern States business, a service to the farmer. That plan was approved and $1,500,000 was available to carry on that project, which would have included the Richmond wholesale produce market. While this organization was trying to secure a location, the Richmond City Chamber of Commerce called upon Mr. Crow of the United States Department of Agriculture, and his staff to make a resurvey of the Richmond situation, and that resurvey was made and when the facts came out in 1943, the conditions had changed very definitely, and it was evident that the wholesale produce market in Richmond was not a proper project for a farmers' cooperative to build and handle. The farmers around Richmond bring only 14 percent of the food distributed through the Richmond center. Richmond is a regional interchange market, largely.
The CHAIRMAN. That means 86 percent of the food consumed around Richmond or in Richmond comes from places outside of Richmond.
Mr. MEYERS. From Florida, from all over the Nation, California and Florida, Georgia, North and South Carolina, and Maine, and by the name, 48 percent as much stuff comes from the North into Richmond as comes from the South into Richmond. You would normally think, and we did when the Southern States Cooperative was interested, we were thinking that all of the produce that came in there was going north to the population centers, but when Mr. Larson from Mr. Crow's office made the study, we found out that there was 48 percent of the produce coming into Richmond that came from the North, and 52 percent came from the South. So Richmond is about midway on the Atlantic coast, and many persons think it is the logical major interchange market for the eastern United States.
I think that when our program got going we had letters from the State Commissioner of Agriculture in Georgia, also from Florida. We have comments from the Southern Vegetable Growers Association, all advocating a large market development in Richmond and as a service to the entire Southeast.
Southern States naturally rested when we found these facts of 1943, and the chamber of commerce carried the ball. I happen to have been appointed by the late Governor Tuck to the Marketing Authority for Richmond.
The CHAIRMAN. Do not refer to the late Governor Tuck. He is very much alive.
Mr. MEYERS. I mean the past Governor. I had late in my. mind and changed it in my mind. The recent Governor Tuck. For 2 years the authority was not getting anywhere, and they decided that they should have a full-time executive secretary, and I resigned from the authority and was employed on a salary, which would be paid if and when, and the if and when has not happened yet. We got in touch with the investment bankers and we worked out a program and an insurance company agreed to purchase our bonds. Our authority has all of the authority in the world. It is an agency of the State. It does not enjoy the credit of the State, and it has no funds whatever, but it has authority of any corporation to issue bonds or borrow money, to condemn property, right of eminent domain, and to enter into and carry on business, but without a credit to start with, we have not gotten very far.
We had this conditional commitment from an insurance company that they would buy $1,200,000 worth of our bonds at 4 percent if we
could get 100 percent of the fruit- and vegetable-produce dealers to sign a 30-year lease. Mr. Frost yesterday told you that he was 70 years old, a very wealthy man, a proprietor, but he was not signing a 30-year lease, and practically all of the produce dealers in Richmond that are wealthy men, whose signatures on the 30-year lease would amount to anything, are upward of 65 years of age, without members of their own families to carry on their business. Most of them are proprietors.
Well, half of the produce dealers signed that contract to lease the facilities for 30 years, and the other half did not, and therefore we lost our market.
The CHAIRMAN. If you were to construct a modern market in Richmond, you would not regard it entirely as a Richmond institution, but you would regard it as an instrumentality constructed for the purpose of serving a large area?
Vir. MEYERS. It would be a regional market.
Mr. MEYERS. That is right. It would be serving the eastern part of the United States more specifically, but it would serve all sections of the Nation and of the world, because food from all over the world comes into the city of Richmond.
The CHAIRMAN. Is it your opinion that if the loan is made available and the market is constructed that it may be handled in a manner which will result in liquidating the loan over a period of years?
Mr. MEYERS. I have no doubt whatever, and if I were a wealthy man, I do not know how I could put my money, and was willing to take just 4 percent on it, where I could invest the money where I would feel it was more safely invested than a produce market.
The CHAIRMAN. You think it would be a self-liquidating project? Mr. MEYERS. I think so, without question.
The CHAIRMAN. To substantiate that statement, the fact is that many of the big private corporations have done exactly for themselves what we are trying to do for the community.
Mr. MEYERS. The toll bridges are a good example; a toll-bridge bond, revenue bonds for toll bridges were low as molasses in cold weather a few years ago.
Now all of the investment bankers are glad to get them. They have had a good experience.
There is one thing in the statement made by Mr. Hogan that I would like to emphasize. That is we have innumerable records where markets have paid out adequate, it seems to me, for investment bankers to have confidence in revenue bonds of wholesale produce markets, but somehow or other they have not accepted it. Cleveland paid out. It was financed by the railroads and paid 6 percent with their money. They paid out in 20 years. And then it is difficult to find, I don't know of any case except for gross mismanagement that has been shortly corrected, where a market has not been successful. I understand a large market was not very successful for a while, it changed management, and now it is one of the most profitable markets in the country.
Of course, mismanagement can wreck any business, we know that, but under an authority we have just about as many safeguards for getting good business management as you would have in any type of organization.
Mr. HOEVEN. You state that this would be a good investment at 4 percent. How is that that local capital is not interested in that venture?
Mr. MYERS. That is a thing that is hard to explain as we stated in our committee statement. We have nothing to begin with, not a penny. I am inclined to think, in fact one investment banker said, "If you can raise $100,000 of junior money, why, I can sell your bonds at 4 percent.” But we do not have a penny for junior money.
Mr. HOEVEN. What, if anything, has been done in a cooperative field, for instance, in establishing a new market? Anything at all?
? Mr. MYERS. There is no record where I know of it where dealers have financed a market. Railroads financed markets until the Federal courts put them out of business because of this Kansas City situation.
Mr. HOEVEN. What would be wrong if dealers got together and cooperated in such an adventure?
Mr. MYERS. Nothing at all, except they never have done that.
Mr. MEYERS. Probably. However, the produce-market business is a peculiar business. Occasionally you will see a wealthy man like Frost, who is a produce dealer, but the men that Frost and men like Frost support, and that is three-fourths of the dealers in Richmond, he extends liberal credit to good operators who have no funds of their own, or practically no funds. A man can take a few thousand dollars and do a tremendous business in fresh fruits and vegetables if he has good credit.
Mr. HOEVEN. You take the case of Mr. Frost, who testified yesterday, and you tell this committee he is a wealthy man. He was complaining that his competitor was making some progress, had a better plant than he did. Why does he not invest his own money and compete with his competitor the way he should?
Mr. MEYERS. He did not bring out he was really not a competitor, he is in one type and the other man is in another type.
Mr. HOEVEN. He was making a comparison with someone else who he said was getting along, and he was complaining because he did not have adequate facilities. Why does he not invest his own capital and get the job done?
Mr. MEYERS. If there is a profit in it, he could, but I think this is true
Mr. HOEVEN. You say it is a profit at 4 percent.
Mr. MEYERS. It is a good investment, if it is secure, and there is nothing back of it to secure it initially.
Mr. HOEVEN. In other words, you want the Government to guarantee it.
Mr. MEYERS. Exactly. Our Virginia law, the act that we presented to the Virginia Legislature, and that only missed by a fluke, was not 65 percent of first mortgage, it was 40 percent on second mortgage. That is really our need in Richmond. I do not know, although I am in favor of this bill, and generally
The CHAIRMAN. In regard to Mr. Hoeven's question about individuals undertaking to build these markets, actually the market that we contemplate building probably is too large for any one particular individual to undertake to finance, is it not?
Mr. MEYERS. That is probably it, but I think the other thing there is this
Mr. HOEVEN. I did not want to limit my statement to an individual. My question was why do not a group of these people get together and establish their own market.
The CHAIRMAN. That is what he is saying now, that maybe they should, but for some reason they have not.
Mr. Hoeven. Let us get at the reason. That is the thing I want to know.
The CHAIRMAN. They have their investments already in these areas. They are faced with the necessity of selling that property and going out an acquiring other property and building other facilities, and, as it developed here in the course of these hearings, some of the property owners that are operating in these rat holes at enormous and outrageous rents, they do not want to give it up because it is a racket and they are nothing but leeches and bloodsuckers, and highjackers. In many instances, that is all they are, because of the enormous rents they are charging.
Mr. MEYERS. I think I can answer that question.
The CHAIRMAN. It is easy to see why they would not want to give up that sort of situation and go out in the interest of the public and try to improve it.
Mr. MEYERS. We built a toll bridge in Richmond, Lee Memorial Bridge, and it was a mint for money. Why do not private industries build toll bridges besides the Lee Bridge? I think you have the same situation here. Private industry built toll bridges at one time. They built ferries and operated them. But if you build a bridge over a ferry, the ferry goes out of business. When the toll bridge becomes a monopoly, the Government takes it over.
The produce market is a monopoly as complete or more complete than the Potomac Fourteenth Street Bridge. If you get a modern market that will handle produce economically and effectively, it becomes more of a monopoly than the Fourteenth Street Bridge over the Potomac.
The railroads used to build these markets. They have gone out. Why? Because they became monopolies and the Government put them out of business, and no railroad has attempted to finance a market since the Kansas City case.
The CHAIRMAN. They meet with competition from truck companies, too.
Mr. MEYERS. Yes.
The CHAIRMAN. I have been trying constantly to get this thought across, that all of these markets are so impressed with public interest, so many of the people from such wide areas deal in them, that you might say that the market is everybody's business, and actually nobody's business. Nobody seems to be doing anything about improving them. They mentioned here yesterday Denver, Colo., and Kansas City. Actually I understand that the railroad companies, actuated by selfish interests, built those markets.
Mr. MEYERS. Yes, sir.