tion in different channels, those merchants have gone out of business. We need less facilities and will need less daily.

The CHAIRMAN. How can you need less facilities with that growing population?

Mr. GOLDSTEIN. Regardless of the growing population, which I recognize, the chains have, at least in our community, 75 percent of the business, and they do not buy but very little on the market. They get their cars in direct.

The CHAIRMAN. And they have modern facilities?

Mr. GOLDSTEIN. And they have modern facilities to handle them; that is correct. And where can the consumer save by this new market; where can the grower gain by this new market? That is the thing that was brought out.

I remember here maybe 15 years ago we had the pleasure of having Mr. Crow in Philadelphia. He tried to interest private interests to build a market and go on the same competitive basis as any other investor and made the remark "There is gold in them thar hills down in Washington." But you could not get private investors to go ahead and build a market and have no business for it. There is plenty of money around Philadelphia, and you know people would be glad, Mr. Cooley, if they could get an investment and the investment would be safe. And while I am on this thing, there are probably half a dozen people on Dock Street who have no financial interest at all, and you cannot get them to put a dollar in a lease for renting certain stores. I am talking of Philadelphia; I am not talking of any other place.. I know it is a national proposition, but you could not get them to put a nickel up, because they know it is not necessary. They know there are facilities there. There is space there, known as the old "welfare" building, owned by some church institute. They tore it down and built a new, up-to-date market. And they talk about these new,. up-to-date improvements. People will improve their facilities when they get the money to do it, and a lot of improvements now are being put into effect to do this job. And why should we take Uncle Sam's money and build something that I know will lie idle, positively will lie idle? Because, if you can get the produce men to sign a lease and put up their dough, I say go ahead and do it, but they will not do it. The CHAIRMAN. Well, if they do not do it, then they won't be bothered with the new building; but if they evidence an interest in it and want a brand new facility in a more desirable location, with sizable rail and truck transportation facilities, we are just trying to give it to them.

Mr. GOLDSTEIN. It is just like how many meals can you eat? You can only eat one at a time. There is enough, and we have enough. facilities there. We have facilities for 1,500 kinds of produce.

The CHAIRMAN. Can a railroad run into the Dock Street market? Mr. GOLDSTEIN. No; neither can a railroad of 20 cars of merchandise back up to a man's stand. That is most ridiculous. They can put in a railroad siding for the man who handles six cars of tomatoes, three cars of canteloupes or lettuce. Now you can spot 20 cars. But the State of Texas could not give you sufficient room to build a market in New York of that kind.

Mr. GRANGER. If I understood you, Mr. Goldstein, you said a moment ago, that you were president of this Association of Car Lot Receivers.

DEVELOPMENT OF TERMINAL MARKETING FACILITIES

23

The CHAIRMAN. Each loan will be amortized over a good number of years at a reasonable interest rate, and it is contemplated that the rents received from the property will liquidate the loan?

Mr. CROW. That is right.

Mr. GRANGER. Do I understand the chairman to say this is merely an insurance proposition?

The CHAIRMAN. Yes. It does have an insurance provision in it. In that connection, Mr. Crow, would you mind just taking a few minutes to explain the high spots of the bill?

Mr. CROW. The bill provides that in any locality where they have a large market that is presently insufficient, if the local people will develop satisfactory plans for an efficient facility and can make a showing that they will reduce the cost of distribution if they carry out those plans, they may make application to the Federal Government to insure up to 85 percent of the cost of the construction of such a facility, with a maximum interest rate of 4 percent. Private financial institutions would make the loan, and they, of course, could make a 100-percent loan if they wanted to, but the insurance would apply only to the maximum of 85 percent. Out of the interest collected, which could not exceed 4 percent, one-half of 1 percent would go to the Federal Government to pay for the insurance.

There is nothing in the bill that would require any city to build new facilities, and there is nothing in it that would require them to take advantage of this bill, if enacted, if they want to provide facilities in some other way.

Under this proposal they could request a direct Government loan only if they could show that they had the right kind of plan; that they were going to get signed leases from responsible people to move into it; and that they could not get loans from private financial institutions.

If they seek a direct loan from the Federal Government, the interest rate would be at the maximum figure of four percent. They stand the chance of getting a lower interest rate if they go to private financial institutions, because 4 percent is simply the ceiling in that case.

If they get a direct loan from the Federal Government and later some private financial institution should be willing to take that loan over, they may be required to refinance the loan with the private financial institution and take it out of the Government's hands. That, as I understand it, is the essence of the bill.

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

I will now call Dr. J. L. Maxton, extension agricultural economist, Blacksburg, Va.

Dr. Maxton, would you like to be heard now?

Dr. MAXTON. I certainly would, sir.

The CHAIRMAN. All right, Dr. Maxton. We will be glad to hear from you, sir.

STATEMENT OF DR. J. L. MAXTON, EXTENSION AGRICULTURAL ECONOMIST, BLACKSBURG, VA.

Dr. MAXTON. In 1776, John Adams introduced resolutions in Continental Congress to encourage agriculture. In 1779, George Washington in his last annual message made an appeal for a national board of agriculture. From those early dates up to the present, the response of Government to agriculture has been such as to lead us to

expect approval of H. R. 8320 as a continuation of a policy now 174 years old.

We have had production problems and these have developed into marketing pains. Few of us can enjoy these pains as did Rosalind's Orlando and announce we do not wish to be cured. We know the cure and sooner or later it will be used; but thank goodness this time, it is hoped, in the form of preventive medicine. The gains in agricultural production have made agriculture's problems largely those of distribution. One of the most important is the need for efficient wholesale marketing facilities for perishables.

Marketing and therefore marketing facilities became a Federal problem in 1913 when Congress authorized the creation of an office of markets in the department. This came about as a result of agitation by farmers and city people who complained about the spreads between farm and city prices. The handlers in many instances have been justified in their margins because the obsolete facilities available for their use made handling charges necessarily high. Marketing research in the facility field has uncovered the cause for a portion of the high costs of distribution. State agencies have assisted in this research work and have tried by various means to have improved wholesale marketing facilities built.

In 1939-41 certain Virginia agricultural agencies with help from the VAE, USDA, made studies of the existing marketing facilities at Richmond, Norfolk, and Roanoke. These studies were gone into in greater detail in cooperation with the Production and Marketing Administration, USDA, in the period from 1944 to 1949. Mimeographed reports of these studies are available in the offices of the Production and Marketing Administration of the United States Department of Agriculture. În 1940 the General Assembly of Virginia passed a bill permitting the creation of produce-marketing authorities as an implement to speed up the building of improved wholesale producemarket facilities. One such authority has been established for Richmond, but as yet there is no improvement in the physical market facilities for that city.

In the study of the Richmond market facility made in 1939 by State agencies and the Bureau of Agricultural Economics, USDA, it was found the facilities were built originally in 1913 to service 100,000 people and were then servicing 220,000, having expanded onto the streets. Only two of the wholesale independents had car-door unloading facilities at their place of business. The streets were narrow and congested and slowed up selling and delivery. A single dealer's books at that time showed extra cartage costs because of a lack of back-door rail facilities of $3,056, extra storage costs of $7,000, and unnecessary losses in spoilage and deterioration of $4,000. The study showed a saving possible then of $100,000 annually from a properly located wholesale facility for perishables with back-door unloading direct into wholesalers stores. It was also estimated an additional saving of $100,000 would result to buyers from time saved and reduced mileage traveled.

In 1946 a joint study was made of the wholesale marketing facilities at Richmond by certain Virginia agricultural agencies and the Production and Marketing Administration of the United States Department of Agriculture. After a thorough study to determine the facilities needed and their cost it was determined, at that time, that the dealers

Mr. GRANGER. Mr. Goldstein, I take it from your testimony that the making available of Government money over a long period of time might, in your judgment, cause some people to borrow money to build a facility that you do not think is necessary.

Mr. GOLDSTEIN. Will you repeat that? I did not get the whole question.

Mr. GRANGER. I say do you think because some persons might get this Government money over a long period of time it might induce them to build a facility or market that would not be necessary?

Mr. GOLDSTEIN. I honestly-the question is do you think they would build it if they could get Government money?

Mr. GRANGER. Do you think that would be an influence to them to get the money, just because they could get it from the Government? Mr. GOLDSTEIN. I certainly do. I do not think you could interest any private interests to do it. It has been tried now for 15 years or more, and the best proof is that they never did do it, because they could not get enough reliable people and this is going right that way-they could not get enough reliable people to sign leases to put themselves on a lease for any length of time in any new project.

Mr. GRANGER. Now, if that were true and some persons got together and decided they wanted to build a market and built it at some other place, that naturally would affect real estate that had been set up for that purpose; would it not?

Mr. GOLDSTEIN. Absolutely. I think it would cut the value of property on Dock Street in half.

Mr. GRANGER. And that is one of the objections you have?

Mr. GOLDSTEIN. Naturally, sir.

Mr. GRANGER. Because, naturally, your building and property is set up for the purpose of distributing farm commodities.

Mr. GOLDSTEIN. That is what it is handled for.

Mr. GRANGER. And, of course, if that business was moved elsewhere, it would depreciate the value of your property for that purpose? Mr. GOLDSTEIN. That is correct.

Mr. GRANGER. But it might be valuable for some other thing, however?

Mr. GOLDSTEIN. The only answer I have to that is the fact that there is a market today at Callowhill and Vine Streets, that I mentioned before, that had 125 merchants, and I think it has gone down right now to 15 or 20. That would cover it. It is a ghost town. And there is the same sort of place about two blocks below Dock Street that is what I call Spruce and Pine-where we had merchants all the way from Spruce to South Streets, and I think on both sides of the street. I would say probably they took in 50 or 60 merchants or maybe more and that is very, very conservative, too-and right now, in that same location, I do not thing there are 15.

So I say why build more facilities when we already have too much. Mr. GRANGER. In your judgment, is the necessity for these big public markets more or less essential now than it was a few years ago? Mr. GOLDSTEIN. It is less essential now, Congressman, for the reason I brought out that our association, I think, handled in excess of 20,000 cars in the year 1948, and last year we were down to a little over 18,000, and at the rate we are going today we are going to handle less in 1950.

Mr. GRANGER. The chain stores in the last few years are handling the big percentage of the produce?

Mr. GOLDSTEIN. Oh, yes. They were our customers when they first started, but now they have access to the growers, and the growers are anxious to do business with them-and rightfully so-and they reach the ultimate consumer, and they are the buying power of the Nation today.

Mr. GRANGER. And then they go out in the country and buy canned milk and everything else in carload lots and ship it to their warehouses.

Mr. GOLDSTEIN. They can buy better than we can. If they are in any proper condition, the grower will naturally favor them and say "Don't buy this car," and they won't buy it, and we have to take it.

Mr. GRANGER. You do not happen to know the percentage of produce bought by chains; do you?

Mr. GOLDSTEIN. No, sir; I do not. But they are the factor not only in Philadelphia but all over the Nation.

The CHAIRMAN. Is it not a fact that the chain stores are taking business away from Dock Street because they are operating in a more efficient manner than Dock Street?

Mr. GOLDSTEIN. That is not right, but they are able to invest in these food markets that put in the department-store idea, and people love to go shopping with a little go-cart and buy everything under one head.

The CHAIRMAN. You are talking about the retail store; I am talking about the wholesale market like the Bronx and Washington Street market.

Mr. GOLDSTEIN. The chain stores would not favor the market there.

The CHAIRMAN. They do not go down there to buy, because there is such a deplorable situation in that market?

Mr. GOLDSTEIN. No, sir; they do not come to Dock Street for the reason that they buy merchandise f. o. b. on the same basis we do.

The CHAIRMAN. Why has the A. & P. built great storage warehouses and marketing distribution facilities outside of many of the cities, where they can run trucks and trains in there, with switches? Mr. GOLDSTEIN. In Philadelphia the American stores are still at the same place as they were before.

The CHAIRMAN. Is that a retail store?

Mr. GOLDSTEIN. It is a big wholesale warehouse market that was distributing to the retail stores through Jersey City.

The CHAIRMAN. That is not on Dock Street; is it?

Mr. GOLDSTEIN. No, sir. So they need no facilities on Dock Street.

The CHAIRMAN. Can trains be unloaded right into the warehouse there?

Mr. GOLDSTEIN. Yes, sir; trains can be placed right alongside of the warehouse.

The CHAIRMAN. But you cannot place them alongside yours? Mr. GOLDSTEIN. No, sir; but I have room for 30 cars and a hundred trucks or 60 cars of produce that we can handle very efficiently. The CHAIRMAN. How far away from your place of business? Mr. GOLDSTEIN. No. 18 track would not be over 50 yards. The CHAIRMAN. But it has to be hauled by truck?