2672 On the other hand, the first syllabus of the opinion states the corresponding rule, as fol- lows: “If Congress pass an act granting public lands to a Territory to ald In making a rail- road, and if, by the true construction of the act, the Territory acquired any beneficial interest in the lands as contradistinguished irom a mere naked trust or power to dispose of them for certain specified uses and pur- poses, the act is irrepealable, and a subse- quent act attempting to repeal it 1s void.” Thus, if the grants in question were not for specified purposes or if the purpose of the grants were being complied with by the States, there would be no contention that Congress could or should revoke the grants. However, under the facts before the com- mittee there is no question of repealing the grant statutes but simply the question of whether Congress has the power to prevent an unauthorized use of grant money since the grant statutes clearly limited the use for which such granted funds could be expended. It is one thing to change the rules aiter the game has started but an entirely different thing to enforce rules during the game that were in effect when the game started. In conclusion, it might be appropriate to discuss briefly the possible moral issues tn- volved in the problem before the committee. We do not understand that the State or cor- poration representatives who have appeared before the committee or expressed an interest in H R 2392 and H R 38244 have contended at any time that the States have a moral right to use the funds in question for any purpose not authorized by the grant statutes. On the other hand, the department certainly does not wish to deny the States any rights they now have to use the funds. If we under- stand the position of the States and corpora- tions correctly it is that the funds will be used by them for rural rehabilitation pur- poses and that such use is authorized under the granting acts. The distinction between rural depression relief and 1934 drought re- lief and the broad concept of rural rehabil- itation is discussed in the Department’s re- port. The dilemma of the States and cor- porations today arises not from any threat- ened breach of good faith on the part of any branch of the Federal Government but rather from the fact that the grants were not made for use in social welfare programs in times of prosperity, but were made to re-~- lieve distress in emergencies induced by the depression and 1934 drought. The grant statutes were bused on emergencies found to exist by Congress and did not contain the words “rural rehabilitation”’—these are the facts which the department feels permit an objective consideration of the proposed legis- lation by the Congress free from any sup- posed legal or moral restraint other than to act for the public welfare. Mr. COOLEY. Mr. Chairman, I yield myself 1 minute. I would like to say to the gentleman who has just addressed the House that the States that will receive nothing have contributed nothing to this trust fund. This is not an appropriation of money. I am just a little surpriscd at the gentle- man, knowing his legal brilliance, that he would suggest that this money could be returned to the Treasury of the United States, because the basis for the trust no longer exists. Mr. HESELTON. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield. Mr. HESELTON. Is it not a fact that the Federal Government appropriated the great bulk of this money for a specific purpose? It came from the Federal CONGRESSIONAL RECORD—HOUSE Treasury for the purpose of setting up a trust fund. I ask what is to become of the money when the trust is carried out. Mr. COOLEY. The gentleman is con- fused because no trust was created when the money was granted to the corpora- tions. The CHAIRMAN. The time of the gentleman frcn North Carolina has again expired Mr. COOLEY. Mr. Chairman, I yield mysclf 2 additional minutes. I do not want to be left out on the legal limb and then have the gentleman run off and leave me. No trust was created in the original act. The trust is one which was created in my State 12 years ago, and it is not predicated upon the existence or non- existence of an emergency or upon & need of any particular kind; it is pred- icated upon a transfer of funds from the State corporation to the Federal Scc- retary of Agriculture. That is the trust I am trying to enforce. Mr. HESELTON. Does the gentleman disagree with the statement of the Sec- retary of Agriculture, Mr. Brannan? Mr. COOLEY. I disagree with every bit of it. Mr. HESELTON. That this comes out of the appropriation? Mr. KEEFE. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from Wisconsin. Mr. KEEFE. Is it not a fact that the original source of these funds was the emergency appropriations passed back in the early thirties during the depression? Mr. COOLEY. That is right. Mr. KEEFE. Those were grants made to the States for certain purposes? Mr. COOLEY. That is nght. Mr. KEEFE. When those grants were made the grant became the property of the States to which the grants were made? Mr. COOLEY. The gentleman is ex- actly right. Mr. KEEFE. There was no way of re- calling those grants, as we have under the continuous grant programs today, where you can withhold future grants for noncompliance or failure to utilize them as somebody might want. The money became the money of the States? Mr. COOLEY. That is right. - The CHAIRMAN. The time of the gentleman from North Carolina has ex- pired. Mr. COOLEY. Mr. Chairman, I yield myself three additional minutes. Mr, KEEFE. I understand that was the opinion of the Comptroller General at that time. Mr. COOLEY. That is right. Mr. KEEFE. That that money be- came the money of the States, vested in the States without any strings tied to it at all. Now, when the thing was trans- ferred back, it was transferred under a trust agreement? Mr. COOLEY, Exactly. Mr. KEEFE. An agreement entered into between the Secretary of Agricul- ture and the various State corporations or organizations operating in the States and utilizing this money? MarcH 2 Mr. COOLEY. The gentleman is cor- rect. Mr. KEEFE. That is the trust agree- ment that has been referred to by which these funds were vested in the Depart- ment of Agriculture subject to the con- dition of those trusts. As I understand the situation, the States are asking that those moneys be returned in accordance with the provisions of those trust agree- ments? Mr. COOLEY. The gentleman is cor- rect. Mr. KEEFE. I understand the Comp- troller has ruled that there is a legal liability resting upon the United States Government as a result of the provisions of those trust agreements to turn this money back to them. Is that not what this proposes to do? Mr. COOLEY. That is the situation and that is what we propose to do and, further, the funds are in a trust account marked “State Rural Rehabilitation Corporation Fund.” Mr. KEEFE. The corporation in my State is in existence and they are de- manding the return of this money pur- suant to the terms of the trust agree- ment entered into. Mr. POAGE. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from Texas. Mr. POAGE. Some gentlemen have indicated that certain of the States are not going to get back as much as others. Is it not a fact that this money was orig- inally appropriated on a formula, the details of which I am not familiar with, and some of the States spent or squan- dered or expended their money in some way or other and did not have any money to put in the trust fund? Mr. REES. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from Kansas, Mr. REES. I understand this $50,- 000,000 is the taxpayers’ money appro- priated from the Federal Treasury. Mr. COOLEY. The gentleman is woe- fully lacking in understanding if that is his understanding. Mr. REES. No. Was not this money appropriated once from the Federal Treasury? Mr. COOLEY. It was appropriated out of the Federal Treasury and has never been appropriated back into the Federal Treasury. It is not in the Fed- eral Treasury now. It is in a trust fund. Mr. REES. But it was appropriated out of the Federal Treasury in the first place? Mr. COOLEY. Yes. Mr. REES. It has been said over and over again that the purposes for which the money was appropriated or allocated in the first place has ceased to exist; is that correct? Mr. COOLEY. No; I do not think so, because I think we still have distressed rural areas in America and we still ap- propriate millions of dollars every year to carry on a rural rehabilitation pro- gram. Mr. FULTON. What States are get- ting no money?
1950 Mr. COOLEY. The States that put no money in. Mr. FULTON. Well, what are they? Mr. COOLEY. I do not know. See the report. The CHAIRMAN. The time of the gentleman from North Carolina has again expired. Mr. HOPE. myself 1 minute. Mr. Chairman, in the colloquy between the chairman of the committee and the gentleman from Wisconsin |Mr. KEEFE], the statement was made that the Comp- trcller General had made a ruling that these funds belonged to the States. Now, I co not recall that any ruling of that k.nd appeared anywhere in the hearings, and I would hke very much to have that ruling pointed out to me. Mr, KEEFE. Mr. Chairman, if the gentleman will yield, I referred to page 5 cf the report, in which it states: Ample evidence was presented to the com- mittee during its hearings on this matter that both the Federal Emergency Rellef Ad- ministrator and the Comptroller Gencral, at that time Mr. McCar!, regarded the grants to States for rural rehabilitation and relief purposes as outright giants and the asscts arising f1om those grants as the property of the States. It is in your report. Mr. Chairman, I yield Mr. HOPE. That is a conclusion on the part of the author of the committee report Mr KEEFE. I do not know, if you caanot believe what your committee re- ports. Mr HOPE. Iam inquiring as to what evidence there was in the hearings that there was any formal ruling on that point by the Comptroller General. The CHAIRMAN. The time of the gentleman from Kansas has expired, Mr. HOPE. Mr. Chairman, I yield 5 minutes to the gentleman from Iowa LMr. HoEvEN]. Mr. HOEVEN. Mr. Chairman, this matter certainly should be resolved one way or the other. I think the gentle- man from Wisconsin |Mr. Kerre] cor- rectly stated the proposition. This money was appropriated out of the Fed- eral Treasury, given to the States for a specific purpose, and the balance not used Js now held in a trust fund for the benefit of some 43 States who partici- pated. Trust agreements were entered into with these various States. They may have varied somewhat in their lan- guage, so I will address mysclf solely to the Iowa contract. It has this provision relating to termimation of the trust agreement: Art VIII In the event that the author- ity of the Administrator or his successor (as provided in article IX, section 1 hereof) shall cease, this agreement shall be forth- with terminated and the property remaining of that hereby transferred, together with the remaining proceeds, after the liquidation of any claims then existing against such a sets, shall be retransferred to the corpora- tion or to such other corporation, person or agency as shall be prescribed by the Legisla- ture of the State of Iowa. The Governor of the State of Iowa advised me by telegram on May 17, 1949, 1m response to my inquiry, that under CONGRESSIONAL RECORD—HOUSE section 1, chapter 86, Acts of the Forty- eighth General Assembly of Iowa, it is provided that the Iowa State Depart- ment of Social Welfare shall receive such funds if they are returned to the State of Iowa. So, the only question remaining here is whether or not we are going to uphold the sanctity of contracts, and whether or not we believe in State’s rights. The State of Iowa has the sum of $1,253,- 932.55 in the trust fund, with accrued interest of $74,891.77. During the hearings on this bill I in- terrogated Mr. Rooncy, Assistant Solici- tor cf the Department of Agriculture, regarding the Iowa trust agreement and the sanctity of contracts in general. On page 65 of the hearings you will find the following colloquy: Mr. Hotven Do you think that the Gov- ernment should carry out ils contractual oblirations? Mr Roonry I do not think it Js necessary or even wise to go through with a useless and expensive procedure Mr Hoeven. I am asking you this: Do you think the Government should carry out its contractual oblivations? Mr Roonry Oh. yes; I do. So really the only question involved here is whether or not we are going to carry out these contractual obligations with the respective States, Something has been said about resort- ing to the courts to determine the issue. This would unly mean a multiplicity of suits and would perhaps involve 43 States. Why have the Federal courts re- solved this question when it can be re- solved here? It is my understanding that a similar bill has already passed the Senate. There can be no doubt that the trust agreements transferring these assets to the Secretary of Agriculture for admin- {stration are Iegally binding instruments enforceable in the courts, and establish- ing an unconditional obligation on the part of the United States to return the trust assets to the States. I challenge any one to interpret the provisions of the Iowa agreement in any other way. Ours Js an unconditional proposition. So in the opimion of a majority of the committee, the United States is now estopped from questioning the title of the respective States to the trust assets and from making any disposition of said assets other than that directed by the States, if the State choose to exercise its right under the agreement. Mr. DONDERO. Mr. Chairman, will the gentleman yield? Mr. HOEVEN. I yield to the gentle- man from Michigan. Mr. DONDERO, If this bill is passed, do the funds go back to the States? Mr. HOEVEN. They will go back to the States if it is requested by the Gov- ernors or the proper agencies designated by the respective State legislatures. Mr. DONDERO. If the bill is not passed, the funds remain? Mr. HOEVEN. If the bill is not passed, the money will remain in status quo, until otherwise disposed of. We should determine what is going to be done with it. 2673 Mr. COOLEY. Mr. Chairman, will the gentleman yield? Mr. HOEVEN. I yield to the gentle- man from North Carolina. Mr. COOLEY. It will remain in status quo only so long as the States refrain from bringing suits, but it is true that there will be a lot of suits instituted. Mr. HOEVEN. The gentleman is absolutely correct. The suits can be in- stigated by each one of the 43 States, and the courts will then have to deter- mine what shall be done with the funds that are now held in trust. The passage of the bill will make that all unnecessary. Mr. EOPE. Mr. Chairman, I yield the remaining time to the gentleman from Iowa [Mr. Tau.eE]. Mr. TALLE. Mr. Chairman, I am op- posed to the enactment of H. R. 2392, be- cause I am convinced it is neither practical nor economical. Last year I introduced an alternate plan, H. R. 5832, which eliminates the wasteful duplica- tion of services by Federal and State agencies provided in H. R. 2392. A de- tailed analysis of my bill is included in the Appendix of the CONGRESSIONAL REC- orp, volume 95, part 15, page A5063. Briefly, my bill proposes to create in the United States Treasury a revolv- ing fund for each of tif 43 States which transferred assets to the Secretary of Agriculture, and to utilize these revolv- ing funds through the existing facilities of the Farmers Home Administration for extending operating credit to farmers. I have here a statistical summary showing the loans and collections of the Farmers Home Administration cumula- tive through June 30, 1949; and the fig- ures make me all the more certain that H. R. 5832 provides the logical answer to the present troublesome question of what to do with the unexpended balances of Federal Emergency Relief Act appro- priations. They indicate conclusively what we can expect if the approximately $50,000,000 is made available to the Farmers Home Administration for use in extending credit to deserving farm famihes, The summary covers the pro- duction and subsistence lending activi- ties of Farmers Home since October 31, 1946, when that agency was created, and represents—in my opinion—a true pic- ture of what this agency is now doing and will continue to do. In all, Congress has appropriated, and this agency has lent, to deserving farmers, a total of $196,286,458. Such funds are direct Gov- ernment loans repayable over a 5-year period, and repayments already matur- ing have amounted to $97,362,467, Of this sum, the agency has already col- lected $89,615,094 in principal—92 per- cent of the amount due. I believe this is comparable with other credit experi- ences, yet these loans are made to farm- ers who lack the necessary chattels or other security to make them eligible for private or cooperative credit. In addition, the agency has collected almost $5,000,000 in interest, so that com- bined interest and principal amounts to almost 96 percent of the matured debt. While there are some arrears, of course,
2674 the Farmers Home has found it necessary to write off only $34,656 as uncollectible, and has judgments for only $9,306 against persons obviously attempting to avert payments. Mr. Chairman, I have already been granted unanimous consent to include the table referred to as a part of my re- marks, and I urge my colleagues to ex- amine it carefully. I am sure Members will be proud of the borrowing record of cur American farmers. In my State, Iowa, for example, FHA borrowers have already repaid more than their matured indebtedness. Of the $3,291,695 which has been loaned since October 31, 1946, maturities have amounted to $1,113,960 and principal repayments to $1,120,209. Even if the $98,973 interest these families have paid is left out of account, the re- payment record stands at 100.6 percent of maturiticr. Other Midwestern States have equally impressive repayment records, as fol- lows: Wisconsin, 109.3 percent; Minne- sota, 104.5 percent; Illinois, 97.4 percent; North Dakota, 94.8 percent; Missouri and Nebraska, 93.3 percent—all above the na- tional average. The conclusion is in- escapable that the Farmers Home pro- gram, as operated,in the Middle West, js bringing good results both in repayment and in providing the means for better farming. The record shows beyond doubt that the Farmers Home Admin- istration is doing a first-rate job in rural rehabilitation. Moreover, the American taxpayer is receiving good returns on his investment in this agency’s programs, Under the circumstances, it is only pru- dent to utilize these existing facilities rathcr than to create or revive duplicate, competing agencies in 43 States. Fur- thermore, under my plan, the funds would be protected by FHA safeguards, and the borrowers would recelve sound farm-managcment guidance. As you know, Mr. Chairman, the total value of the asscts involved in the legis- lation under discussion is approximatcly $50,000,000. The funds were first han- dled by the State emergency relief admin- istrations; subsequently, they were turned over to the State rural rehabill- tation corporations; in 1935, when the Comptroller General of the United States ruled that these State corporations could no longer be financed by Federal funds, the corporations transferred these assets to the Federal Government for use in their respective States. The ultimate disposition of these funds has been hang- ing in the air for the past 4 years—since passage of the Farmers Home Admunis- tration Act of 1946. As a practical mat- ter, the corporate funds cannot be re- turned to the State corporations as pro- vided in H. R. 2392, for the simple reason that many of the State corporations have long since ceased to exist. My bill, unlike H. R. 2392, recognizes the changes that have taken place and proposes to make practical use of the re- maining money—within the respective States to which it was granted—for pur- poses which are already authorized in the Farmers Home Administration Act: CONGRESSIONAL RECORD—HOUSE that is, for the making of production and subsistence loans to farmers and stock- men who cannot secure the necessary financing elsewhere for livestock, seed, feed, fertilizer, farm equipment, supplies, and other farm needs. Under my bill the money would con- stitute a revolving fund for each of the 43 States which had a rural rehabilita- tion corporation, and would be added to the amount now available to the States through the annual appropriations for production and subsistence loans under title II of the Bankhead-Jones Farm Tenant Act as amended by the Farmers Home Administration Act. As the loans are repaid, the principal and interest would be applied to the appropriate re- volving funds; and, since title II loans have a maximum maturity period of 5 years, with annual payments thereon, the money would turn over frequently and be in relatively constant use. Today, Mr. Chairman, there are many farmers seeking operating credit whose needs, for want of adequate collateral, cannot be taken care of by local banks. Among them are thousands of war vet- erans who have not yet been able to achieve the most efficient agricultural production of which they are capable. Through the Farmers Home Adminis- tration some of these young farmer-vet- erans are being helped to build up their producticn and, thereby, to provide bet- ter homes, improved living conditions, and wider educational opportunities for their familles. This program has been working out well indeed; the loans are being paid back; soil conservation is be- ing promoted; rural communities are bencriting because of the increased in- comes. But the demand from farmers for this type of credit is far greater than can be met with the funds appropriated an- nually by the Congress for title II loans. In this connection, I should like to men- tion that the Congress has generously provided for on-the-farm training of veterans uncer the so-called GI bill of rights, a program which is being carried on extensively throughout the agricul- tural areas of the Nation. However, un- less we also provide adequate credit fa- cilities which will enable these young veterans to start farming, we will have larecly wasted the funds expended in training them. j My bill will help to rectify the situa- tion without requiring additional appro- priations. It simply provides that funds already appropriated, and funds from current liquidations, be used for extend- ing operating ciedit to a greater per- centage of farmers who need and who are eligible for this service. It does not set up any new organization but proposes to utilize the existing machinery of the Farmers Home Administration. It can be put into effect without any delay whatever. It can be administered in conjunction with the existing program with virtually no additional expense and without confusion to the farmers. It will bring an end to the uncertainty as to the disposition of Federal funds which obvicusly cannot now be used for their original purpose. Moreover, I want to MARCH 2 emphasize that my bill, H. R. 5832, is in line with grass-roots thinking on the sub- ject. A few months ago the Iowa FHA advisory committee, composed of sub- stantial farmers and other citizens, none of whom is on the Federal pay roll, unan- imously recommended that such legisla- tion be enacted. It is practical, econom- ical, and in the best interests of our farming population. If passed, it will remove the necessity of establishing State agencies parallel to the existing Federal agency—with the attendant ex- pense, delay, and duplication of work— as would be required if H. R. 2392 were enacted. Mr. Chairman, at the appropriate time I intend to offer an amendment to strike out everything after the enacting clause in H. R. 2892 and to substitute the general provisions of my bill H. R. 5832. I say “general” provisions because I pro- pose to revise my own Dill slightly. A new subsection will be included releas- ing in favor of the States any claim to the funds or property derived from the grants for rural or drought relef which are now in the possession of the States or the State rural rehabilitation corporations. My reason for including this provision is that two States—namely, North Carolina, the home of the dis- tinguished chairman of the Agriculture Committee, and North Dakota—did not. turn over to the Secretary of Agricul- ture all of the assets they derived trom the emergency relief acts. Several hun- dred thousand dollars of the $50,000,000 involved in this legislation are still re- tained by North Carolina and North Da- kota. Presumably, these two States have set up adequate organizations to adm.n- ister that part of the asscts they did not turn over to the Secretary of Asri- culture, and no good purpose would be served by disturbing the existing ar- rangements. Mr. Chairman, at this point I should like to analyze my proposed amendment, section by section. Section 1 contains a declaration hv the Congress that the emergency referred to no longer exists and that the funds granted thereunder for rural or droutht relicf can no lonrer be used for the pur- poses for which they were originally a2- propriated or made available by the Coneress. Section 2 (a) would terminate the grants made to the States or rural reha- bilitation corporations for rural or drought relief with respect to all funds, property, or other assets derived from such grants and actually transferred to the Secretary of Agriculture or Adminis- trator of the Resettlement Administra- tion pursuant to the transfer agree- ments, and full legal and equitable title to such funds and property would be vested in the United S.ates. In some States, notably Arkansas, the rural rehe-~ bilitation corporation for the State- financed subsidiary corporations which in turn have entered into liquidation agreements with the Secretary. Prop- erty covered by these liquidatron agree- ments would also be vested in the United Siates.
1950 Under section 2 (b) the United States would relinquish in favor of the States any claim to the funds or property de- rived from the grants for rural or drought relief which are now in the pos- session of the States or rural rehabili- tation corporations. With certain exceptions, section 3 (a) would create a revolving fund out of the property described in section 2 (a). The Secretary would administer the re- volving fund in accordance with the pro- visions of the proposed bill and the Bankhead-Jones Farm Tenant Act, as amended. All proceeds from the liqui- dation of real and personal property, including notes and mortgages, would be placed in the fund and would be avail- able, along with the proceeds of loans made from the fund, for the making of loans under title I or title II of the Bank- head-Jones Farm Tenant Act. A sep- arate account, however, for each State, the rural-rehabilitation corporation of which transferred property to the Sec- retary would be kept and maintained by the Secretary. With the exception of administrative expenses in Washington and in the area finance offices of the Farmers Home Administration, the funds so earmarked for each State could be used only in that State. Provision is also made in section 3 (a) for the equita- ble apportionment of joint investments. Section 3 (b) is designed to cover a number of special situations: First Property or investments from corporation funds used in labor-supply centers, labor camps, or labor homes would be disposed of under legislation dealing specifically with those projects. Second. Land that has been trans- ferred for administration to the Forest Service would be held by the Forest Serv- ice and have the status of Weeks law land. This would permit the pioperty to be made available for grazing. Third. With respect to property which is now a part of a water conservation and utilization or Wheeler-Case project, such property would be continued to be held or liquidated in accordance with the authority applicable to such projects. The same procedure would apply to a nursery now being used by the Soil Con- servation Service. Fourth. Administrative property, such as office equipment, could be transferred CONGRESSIONAL RECORD—HOUSE to the inventory of the Farmers Home Administration upon payment to the re- volving fund of the fair appraised value thereof, or could be used by the Secre- tary in connection with the administra- tion of the proposed bill, Fifth. With respect to property which has been transferred to other Federal agencies for liquidation or has been granted to other organizations, such as State agricultural colleges, the property would be continued to be held and used in conformity with the applicable trans- fer agreements. However, if any of the property in the foregoing special cate- gories should be liquidated, the proceeds would be placed in the revolving fund, or, in the case of grants, if under terms of the grants the property should revert to the Secretary it would be returned to the revolving fund. Section 4 would make the compromise powers presently available to the Farm- ers Home Administration for most of its programs applicable to the administra- tion of the revolving fund. Section 5 authorizes the Secretary of Agriculture to make such rules and regu- lations and such delegations of authority as he deems necessary to carry out the purposes of the act. Scction 6 saves the Secretary of Agri- culture harmless from any personal la- bility he may incur in cerrying out the provisions of the act. Scction 7 repeals section 2 (f) of the Farmers Home Administration Act of 1946, which directed the Secretary of Agriculture to liquidate, as expeditiously as possible, the trusts under the transfer agreements with the various State rural rehabilitation corporations, and author- ized and directed him to negotiate with responsible State officials to that end. Mr. Chairman, I realize this is a com- plicated problem and, in order to clarify it for any of my colleagues who may not have had an opportunity to study it thor- oughly, I have prepared a brief question- and-answer summary, as follows: First. How much money is involved? Fifty million dollars. Second. Whence were the funds de- rived? From the Federal emergency relief acts passed in the 1930's. Not 1 cent was contributed by the States. 2675 Third. What is the legislative status of the funds? The funds are held in the United States Treasury by the Secretary of Agri- culture pursuant to trust agreements with the several States. The act which created the Farmers Home Administra- tion in 1946 provided that disposition of the funds should be made as expedi- tiously as possible—but it did not specify how the liquidation was to be accom- plished. Fourth. What does my amendment propose? It sets up a revolving fund in the Treasury for each of the 43 States which transferred unexpended relief funds to the Secretary of Agriculture; such funds to be used for extending operating credit to farmers; and each revolving fund to be used only within the particular State for which it is created. Fifth. How does my amendment pro- pose to extend this credit? Through the existing facilities of the Farmers Home Administration. Sixth. Will my amendment aid vet- erans? It will provide additional credit to assist young veterans—many of whom are presently enrolled in on-the-farm training under the so-called GI bill of rights—to start farming. Seventh. Does my amendment have the support of farmers? Yes, my amendment represents grass- roots thinking on the subject. It was, in fact, inspired by and has been endorsed unanimously by the Iowa FHA Advisory Committee, which committee is made up for the most part of actual dirt farmers. Eighth. If enacted, what will my amendment accomplish? (a) It will bring an end to the uncer- tainty as to the disposition of Federal funds which obviously cannot now be used for their original purpose. (b) It will provide additional operat- ing credit to farmers, including young veterans, without requiring additional appropriations, without creating addi- tional agencies, and without delay. (c) It will utilize the existing facilities of the Farmers Home Administration— thereby removing the necessity for establishing parallel State agencies with the attendant expense, delay, and dupli- cation of work which will be required if H. R. 2392, as now proposed, is enacted. Production and subsistence loans, maturities and collections, cumulative through June 30, 1949 Collections Ratio of prin: ( umulative Matured. —— Principal Pringipal erpal repay- ns ANCES “pal ’ write-offs judgments ments to ma- State and ‘Verritory navances principe Principal Interest pay- . repayments ments Total tured principa) () (2) (3) (4) (6) (7) (8) T mitted States total... ee nee $106, 286, 458 $7, 362, 467 $50, 615, 004 $4, 033, 641 $04, 548, 77h $34, 656 $9, 306 920 Alabama... ee. 22 eee eee eee ee ee eee 7, 042, 217 4,342, 361 4, O86, 277 166, O41 4, 23, 218 5, 693 : O11 Atisvona.. 222222222222 ----- ee eee 608, 104 218, X68 Gh, 476 12, 164 178,040 |e fol. vim Arkansas. ...222222--2222--- -- 0), 144, 453 f, 545, 082 5, 278, 951 245, O41 5, 516, 002 1, 251 05 2 Catformir —. 3, O41, 141 1, 241, 726 1, 006, 698 KM, ONT 1, 184, 785 ah BH 3 Colorado 4, $69, 203 2, 341, 130 2,107, 210 126, 720 2, 233, 930 Ys && 5 Connecteut 08, 780 46, 660 34, 716 3, 621 38, 337 744 Delaw te 150, 407 10, 879 33,174 8, 662 36, 836 65 8 Florida oo. 2, 664, Col 1, 637, 824 1, 272, 700 4, O68 1, 32h, AG 777 Ceo) — ol. ta eee eee eee eee eee 9, 213, 872 5, X85, ORE 5, Buh, we 195, 704 5, 01, 675 vc W167 Idaho. woe 3, 780, 833. 1, 193, 619 1, 401, 92s 105, 524 1,507,402 [ool 03.0 YLoans made by Farmers Heme Administration subsequent to Oct 31, 1946
CONGRESSIONAL RECORD—HOUSE Production and subsistence loans, maturities and collections, cumulative through June 30, 1949—Continued 2676 MARCH 2 Collections Ratio of prin- Cumulative Matured Principsl Paes ins cipal repay. State and Territory advances principe Principal | Interest pay- write-offs judgmen| a ae repayments ments Total tured principal a) (2) (3) (4) (7) (8) WNinols -22 oe en een eee eee nen ne ee nee nee $3, 425, 055 $1, 180,320 $1, 149, 019 $105, 286 $1, 254, 405 97.4 Indiana... 2, 182, 2n2 745, 828 711, 030 62, 872 778, 902 o5 4 Iowa... 8, 201, 605 1, 113, 960 1, 120, 208 98, 973 1, 219, 182 100 6 KKansas_.- 8, 477, 374 +226, 355 1, 080, 138 ; 2, 096 83 1 Kentucky. 4, 061, 832 1, 918, 005 4. 5 Loulsiana.._ 7, 159, 411 4, 578, 753 98 5 Maine....-. 2, 442, 663 1, 692, 763 25.3 Maryland. ..... 1, 362, 868 430, 714 77 0 Massachusetts... 360, 675 177, 504 a 81.4 Michigan. 2... 4,142, 139 1, 081) 974 , 1,119, 956 92.7 Minnesota... -..-- 4, 503, 805 1, 372, 838 119, 749 1, 554, 404 104 5 Mississippi... 9, 275, 178 5, 750, 670 230, 642 5, 704, 257 95 2 Missour weeenene 6, 718, 075 2, 246, 527 160, 328 2, 260, 021 93. 5 Montana... wee eee eee ene eee eee n eee nee 4, 883, (4 1, 986, 320 108, Y8Y 1, 843, 407 47 3 Nebraska......-.-.------------------------ 2, 750, 743 975, 103 $1, 587 91, 286 93 3 Nevada. ......--...---------- 2-2 ee eee nee 334, 150 90, O51 98 3 New Hampshire. ......--.-----2-----.--- ee 406, 877 110, O51 87 0 New Jersev_...- 1, 327, 425 B72, SAL 64 6 2, 204, 494 074, 707 799 8, 420, 631 1, 052, 179 86 8 14, 825, 628 9, 565, 402 TE) 3, 643, 495 1, 673, 102 1s 2, 060, 950 67), 646 91.6 9, 765, 740 4, 180, 403 $9.9 Orevon. 2.2. , 939, 798, GRE 23 Pennsylvant 2,971, 178 947, 204 &9. 6 Rhode Island- 62, 360 24, 000 bv 0 South Carolin: 10, 136, 032 7, 161, 100 6, 600, 412 28 C12 42 3 South Dakota 3, 330, 214 1, 155, 321 1, US, 453 7H, 926 1, 194, 370 iB ‘Vennessee.. .. - 3, 4190, 750 1, 700, 317 1, 708, 395 92, 322 1, $00, 717 ’ 95 4 Toxas.. - 16, 351, 627 8, 970, 269 7, 079, 105 372, 85 6 Utah... 1, 581, 850 S24, 928 473, 36 #O 5 Vermont.. - 690, 720 131, 818 122, 642 93 0 Vorginia___- - 2, 078, 996 1, 219, 186 1,179,101 6 7 Washington. - 1, 942, 367 650, 874 GOK, 822 2 BL West Virginia : 973, 220 255, 657 277, 212 . 97 1 Wisconsin _. . 4, 570, 472 1, 301, 077 1, 487, 020 152, 764 1, 640, 697 lop 3 Wyoming... 3, 634, 139 1, 490, 290 1, 258, HOS 91, 466 1,250, 434 M45 Alaska. - 63, 632 18, 679 12, 855 1, 758 14, 613 69 2 Hiwali_.- - 277, 943 60, 666 51, 467 §, O01 7, 368 84 8 Puerto Rico - 4, 280, 860 2, 660, 869 2, 255, 617 114, 527 2, 369, 144 BS 8 Virgin Islands... - 44, 595 6, 132 6, 030 6, 518 v8 3 Mr. COOLEY. Mr. Chairman, I yield myself the balance of the time remain- ing. Mr. Chairman, in connection with a question raised by the gentleman from Kansas with regard to the opinion of the Comptroller General, in an opinion which he handed down concerning cer- tain funds in the Alaska corporation when they asked whether or not they could use the funds in the Alaska cor- poration to match other Federal funds, the question came up as to whether the funds belonged to the corporation or whether they were Federal funds. The Comptroller General, in his opinion, had this to say: According to this decision— Referring to some other decision— it appears the property and funds held by the corporation have lost their Federal iden- tity and may, in every sense of the word, be considered the property of the corporation. There is no question in my mind but that these are corporation funds. Mr. CHELF. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield. Mr. CHELF. Is it not a fact that there is in existence a clause in the contract between the Federal Government and these separate State corporations to the effect that upon the termination of the contract the residue of funds or prop- erty that is in the possession of the States will be returned to the States? Mr. COOLEY. Returned to the cor- porations. That is the specific provision in the contract I referred to. Mr. CHELF. Then if that be the case—this bill ought to be passed. The Federal Government would set a most dangerous precedent if it violated this or any other solemn contract bearing its signature and seal. The CHAIRMAN. The time of the gentleman from North Carolina has expired. All time has expired. The Clerk will read. The Clerk read as follows: Be it enacted, etc., That this act may be cited as the “Rural Rehabilitation Corpora- tion Trust Liquidation Act” Mr. HOPE. Mr. Chairman, I offer an amendment, which I send to the desk. The Clerk read as follows: Amendment offered by Mr. Hore: On page 1, ne 4, strike out all after the enacting clause, and insert the following: “That for the purposes of this act (a) it is hereby de- clared by the Congress that the emergency declared in the Federal Emergency Relief Act of 1933 (48 Stat. 55) and the emergency referred to in an appropriation of $525,000,- 000 in the Emergency Appropriation Act, fiscal year 1985 (48 Stat. 1021, 1056), under the item ‘Emergency Relief’ no longer exist and (b) that funds (including assets and proceeds derived therefrom) granted to the several States or the rural rehabilitation corporations thereof for rural or drought re- lief pursuant to the foregoing acts or the act of February 15, 1934 (48 Stat. 351) can no longer be used for the purposes for which they were originally appropriated or made available by the Congress. “Sec. 2. (a) The purposes for which said funds were originally appropriated or made availnble having been terminated, the grants to the ceveral States or rural rehabilitation corpcre tions thereof for rural or drought re- lief pursuant to the authorities described in section 1 are hereby terminated with respect to any funds, property, or other assets de- rived from such grants and heretofore actus ally transferred to the Secretary of Agricule ture (hereinafter referred to as the Sccre« tary) or the Administrator of the Resettle- ment Administration (hereinafter referred to as the Administrator) pursuant to trans- fer agreements entered into between the several rural rehabilitation corporations and the Secretary or Administrator, including the proceeds of such property and property under control of the Secretary pursuant to liquidation agreements with corporations which derived their property directly or indirectly from the aforesaid grants, and full legal and equitable title to such funds, prop- erty, and assets, and the proceeds thercof shall henceforth be vested in the United States for use in accordance with the provi- sions of this act “(b) With respect to any funds, property, or other assets, or the proceeds thereof de- rived from the afcresaid grants for rural or drought relief, which are now tn the posses- sion of any State or rural rehabilitation corporation thereof, the interest of the United States therein is hereby relinquished in favor of such State. “Src. 3. (a) There is hereby created a re- volving fund. Except as provided in subsec- tion (b) hereof, the funds, property, and other assets, and the proceeds thereof, de- scribed in section 2 (a) are hereby trans- ferred to such fund. Any of such property which at the present time represents a joint investment with other Government funds shall become a part of the revolving fund only in the proportion as determined by the Secretary that the assets acquired by the Sec- retary or Administrator pursuant to a trans- fer agreement with a rural rehabilitation cor- poration contributed to the total joint in- vestment. The Secretary shall administer the revolving fund in accordance with provisions
1950 of this act and the Bankhead-Jones Farm Tenant Act, as amended, not inconsistent herewith, Any assets consisting of notes, mortgages, and the other obligations trans- ferred to the fund shall be held and liquidated in accordance with the tenor of such obligations and the proceeds of such obligations, the proceeds from loans made from the fund, the proceeds from the liquida- tion of other property transferred to the fund, and the income from property transferred to the fund, shall be deposited in the fund. With respect to each State, the rural re- habilitation corporation of which transferred property to the Secretary or Administrator, the Secretary shall keep and maintain a separate record and account of all funds, property, or other assets, or the proceeds thereof, so transferred and e:.cept us provided herein funds and property in the revolving fund required to be reflected in the account for any State may be used only in such State. In addition to other funds available for such purposes, the cash in the revolving fund shall be available to the Secretary for the making of direct loans under title I or title II of the Bankhead-Jones Farm Tenant Act, as amended, for the servicing of outstanding obligations, collecting loans, and the Hqut- dating of property in the fund, and for ad- ministrative expenses in connection there- with, including printing and binding, per- sonal services and rentals, provided, however, that the Secretary may expend funds at the Beat of the Government and in the area finance offices of the Farmers Home Adminis- tration for administrative expenses, includ- ing personal services, equitably apportioning puch expenses among the respective accounts for the several States. Moneys in the fund shall be deposited in the Treasury of the United States to the credit of the fund. “(b) Any property acquired by the Secre- tary or Administrator under the transfer agreements with the rural-rehabilltation corporations which (1) has been transferred for use in connection with labor-supply cen- ters, labor camps, or labor homes shall con- tinue to be so used until such use termi- nates or the property is disposed ot or liqui- dated under other law; (2) has been trans- ferred for administration to the Forest Serv- jce for forest, forest nursery, grazing, flood control, or other purposes shall continue to be so used and shall be administered in ac- cordance with the laws, rules, and regula- tions applicable to lands acquired under the act of March 1, 1911, as amended (16 U S.C 513-519, 521); (3) has been trans- terred to the Soil Conservation Service as a part of a water conservation and utilization or Wheeler-Case project or for a nursery shall continue to be so used until liquida- tion in accordance with other authoiity; (4) has been used as administrative prop- erty for programs under the Farmers Home Administration Act of 1946 may be trans- ferred to the inventory of the administra- tive property of the Farmers Home Admin- istration upon payment to the revolving fund of the fair appraised value thereof as determined by the Secretary or may be used by the Secretary in connection with the administration of this act; or (5) has been transferred for use or liquidation to any other person, organization, State, or Fed- eral agency, shall be continued to be held or disposed of subject to the terms of the transter, but should any of the property covered by this subsection (b) be liquidated, or under the terms of the transfer revert to the Secretary, then the property, or the proceeds thereof, shall become a part of the revolving fund for use in the State in which such property is located. “Sec.4. The Secretary is nuthorized to compromise, adjust, or cancel obligations constituting a part of the revolving fund in accordance with the conditions and limita- tions of the act of December 20, 1944 (58 Stat. 836), and the indebtedness of farmers CONGRESSIONAL RECORD—HOUSE arising from loans or payments made or credits extended by the rural-rehabilitation corporations, the Administrator or the Sec- retary out of assets subject to the provisions of this act shall be added to the types of indebtedness and property subject to the provisions of the act of December 20, 1944, and title IV of the Bankhead-Jones Farm Tenant Act, as amended. “Sec. 5. The Secretary shall have the power to make such rules and regulations and such delegations of authority as he deems neces- sary to carry out the purposes of this act. “Sec. 6. The Secretary shall be saved harm- Jess against any personal Hability he may incur in carrying out the provisions of this act. “Sec. 7. Section 2 (f) of the Farmers Home Administration Act of 1946, approved August 14, 1946 (60 Stat, 1062) is hereby repealed.” The CHAIRMAN. The gentleman from Kansas is recognized in support of his amendment. Mr. HOPE. Mr. Chairman, this amendment is offered as a compromise between the conflicting viewpoints which exist on this question. As I stated a while ago, the bill which I originally in- troduced in the Eightieth Congress and reintroduced in the Eighty-first Con- gress would have turned all of this money Lack to the Treasury. The amendment which I am now offering wculd turn the principal part of this fund, all of it with the exceptions which I will mention, over to the Sccretary of Agriculture, to be used by the Farmers’ Home Administra- tion in making loans under title I or title II of the Bankhead-Jones Farm Tenant Act; that is, loans for tenant purchases and for rural rehabilitation, the same type of loans that are now being made by the Farmers Home Administration with the exception of the administrative expense in Wasnington and in areca fl- nancial offices, funds derived from the assets transferred by a particular State rural rehabilitation corporation would be earmarked to use in the State. That is, the funds that came from the rural rehabilitation corporation in the State of Minnesota would belong to Minnesota, and so on as to each State. With reference to the property and funds that have been retained by States and their corporations, those funds would remain in the hands of the States. There are a few instances where that has been done. For instance, the State of North Carolina has retained some funds, I believe about $360,000, tf my memory serves me. Those funds would remain in the hands of the States. The United States would relinquish any in- terest therein to the State. If enacted, the bill would in effect give legal approval for continuing the way the funds and property have been ad- ministered heretofore under the provi- sions of the appropriation act. There are two or three exceptions that I want to mention. One is that property or investments of corporation funds used in labor-supply centers, labor camps, or labor homes would be disposed of under legislation dealing specifically with those projects. Another is that land that has been trans- ferred for administration to the Forest Service would be held by the Forest Serv- ice and have the status of Weeks law land, This would permit the property to 2677 be made available for grazing. That sit- uation applies especially in New Mexico and possibly some other States. With respect to property which is now a@ part of a water conservation and uti- lization or Wheeler-Case project, such property would be continued to be held or liquidated in accordance with the au- thority applicable to such projects. The same procedure would apply to a nursery now being used by the Soil Conservation Service. Administrative property, such as office equipment, could be transferred to the inventory of the Farmers Home Admin- istration upon payment to the revolving fund of the fair appraised value thereof, or could be used by the Secretary in con- nection with the administration of the proposed bill. With respect to property which has been transferred to other Federal agen- cies for liquidation or has been granted to other organizations, such as State agricultural colleges, the property would be continued to be held and used in con- formity with the applicable transfer agreements. That in general covers the provisions of this bill. What it does in effect is to maintain in status quo the situation that now prevails under the temporary legis- lation by which these funds have been administered. Mr. HESELTON. Mr. Chairman, will the gentleman yield? Mr. HOPE. I yield to the gentleman from Massachusetts. Mr. HESELTON. Do I understand the amendment the gentleman has offered, or his substitute, whichever it is, excludes those States which are not listed in this compilation on page 6 of the committee report? Mr, HOPE. Yes; that is correct. The bill would simply provide that the funds shall be allocated to loans in the States based upon the amount that come from the States in the first place. The CHAIRMAN. The time of the gentleman from Kansas has expired. Mr. HOPE. Mr. Chairman, I ask unanimous consent to proceed for two additional minutes in order an answer questions. The CHAIRMAN. Is there objection to the request of the gentleman from Kansas? There was no objection. Mr. HESELTON. Those States, as I understand it, are Massachusetts, Con- necticut, Rhode Island, Delaware, and Maryland. I am wondering if the gen- tleman has any information as to why in 1933 and 1934 no Federal funds were granted to those States for the pur- poses of this act? Mr. HOPE. Well, I am unable to say whether there were any funds granted. It is possible funds were granted and were completely exhausted in those States. I do not know what the situa- tion is in that regard. I will be glad to try to get the information for the gen- tleman. Perhaps those in charge of the relief program in those States did not see fit to organize rehabilitation corpo- rations. Mr. FERNANDEZ. Mr. will the gentleman yield? Chairman,
2678 Mr. HOPE. I yield to the gentleman from New Mexico. Mr. FERNANDEZ The gentleman called attention to New Mexico where under th:s program close to 200,000 acres of land were repurchased for cer- tain communities on which they had based their economy in years past and finally lost. AS a result of that they were in great distress. What I want to ask the gentleman is this: Under his amendment those lands would not be required to be liquidated and put on the auction block? Mr. HOPE. That is correct, they would not be. They would not be: af- fected at all. Mr. FERNANDEZ. Under the gentle- man’s amendment, if it is desircd, ar- rangements could be made whereby those lands may be put under the Forest Service for permanent administration. Mr. HOPE. That is correct. The CHAIRMAN. The time of the gentleman from Kansas has expired. Mr. EDWIN ARTHUR HALL. Mr. Chairman, I offer an amendment. The Clerk read as follows: Amendment offered by Mr. EpwIn ArTHUR Hatu os a substitute for the amendment offered by Mr. Hope: “That this act may be cited as the ‘Rural Rehabilitation Corpora- tion Trust Liquidation Act’ “Cre 2 The Secretary of Agriculture (here- inafter referred to ns the ‘Secretary’) is here- by authorized and directed to take such ac- tion as may be appropriate and necessary to liquidate, as expeditiously as possible, and within 3 years from the effective date of this act, trusts under the transfer agreements with the several Etate rural rehabilitation corporations: Provided, That the Secretary shall be saved haimiess against any peisonal Hability he may incur in carrying out the provisions of this act. “Src. 3. To effectuate the provisions of sec- tion 2 hereof, the Secretary, during the period specified in section 2, shall— “(a) convert the assets and properties held by him in trust into cash and promptly tianemit such cush to the Treasury of the United States for deposit to miscellaneous receipts Provided, That obligations which do not mature within such pertod shall be liq- uidated at maturity or on default, whichever is the sooner: Provided further, That the Secretary may retain and use so much of said funds as he finds will be necessary in carry- ing out the provisions of this act, “(b) cause to be transfelred to miscella- neous receipts of the Treasury whatever cash may be in the trust accounts on the date of the approval of this act as he deems ts not needed for the purpose of subparagraph (a) of this section. “Src 4. The Secretary shall have the power to make such rules and regulations and such delegations of authoiity as he deems neces- Bary to curry out the purposes of this act. “Src 5 Section 2 ({) of the act of August 14, 1946 (60 Stat 1062), 1s hereby repealed ” Mr. COOLEY. Mr. Chairman, I re- serve a point of order against the amend- ment. Mr. EDWIN ARTHUR HALL. Mr. Chairman, upstate New York 1s the for- gotten part of the Nation. Ten years ago, in 1939, when I came down here, I appealed to Secretary of Agriculture Henry Wallace and attempted to get an interview with him for the greatest area of distress that the country has ever known, namely, our dairy areas of up- state New York, which were then unable CONGRESSIONAL RECORD—HOUSE to get hay. A year ago this House, in a friendly gesture to the West, passed a large emergency loan act and made it possible for several million cattle to be fed out West. In 1940, may I remind my good fricnd the chairman, who made the point, we were in a distressed area up there. In 1940 the dairy sections of upstate New York were in exactly the ame position as they were out West last year in that dairy herd after dairy herd had to be liquidated, and our farmers faced absolute bankruptcy. This substi- tute of mine will give an opportunity to the State of New York to come in for her just share instead of the $91,000, a paltry sum, which is offered to us. Mr. KEATING. Mr. Chairman, will the gentleman yield? Mr. EDWIN ARTHUR HALL. I yield to the gentleman from New York. Mr. KEATING. As I understand the gentleman’s amendment, 1t will provide that these funds will be held by the Fed- eral Treasury as general funds of the United States Government? ir FDWIN ARTHUR HALL §5o that the State of New York will have a fair share along with the rest of these fellows that are coming in for a tremendous amount of money. Unfortunately we have never been able to have the power down here that many of the other sec- tions have had because we are not a member of the farm bloc We do not command the power that some of these big organizations from the far West and the deep South do. For that reason we have been fighting a lost cause for a long time, for the past 10 years. Mr. KEATING. In other words. if the gentleman’s amendment is adoptcd, by that amendment and the action of the gentleman taken here today this $50,000,000 that is in qucstion here will be the property of the Federal Covern- ment instead of being parccled out to just a few favored States? Mr. EDWIN ARTHUR HALL. And it will be fairly distributed. New York State will come in for its fair share. I think it is an outrageous situation that year after year the 100,000 dairymen of upstate New York continue to gct a raw deal, continue to have their milk prices cut by an unfair outfit down here in Washington. Mr. HAYS of Ohio. Mr. Chairman, will the gentleman yield? Mr. EDWIN ARTHUR HALL. I yield. Mr. HAYS of Ohio. Does the gentle- man maintain that the dairymen of up- State New York are in desperate circum- stances now? Mr. EDWIN AR'SHUR HALL. We are in such awful circumstances that we are not even able to make cost of production. The gentleman is not familiar with the up-State New York dairying industry or he would not even ask that question. Mr. KEATING. The _ gentleman’s amendment will also have the effect, will it not, of benefiting all the taxpayers of New York State, not alone the dairymen for whom the gentleman is fighting so vigorously? Mr. EDWIN ARTHUR HALL. It will save the taxpayers of New York from a lot of ta:.cs. Marcu 2 Mr. RIVERS. Mr. Chairman, will the gentleman yield? Mr. EDWIN ARTHUR HALL. I yield to the gentleman from South Carolina. Mr. RIVERS. Does the gentleman mean to say the State of New York has taken the place of the South and is now economic problem No 1? Mr. EDWIN ARTHUR HALL. We are not in Une with the cotton kings or the tobacco barons of the South. We are operators of family-size dairies. We milk from 8 to 20 cows in 1 dairy. We do not have an opportunity to make a lot of money, but we are trying to get cost of production and make enough money so that we can keep our heads above water. We are the last vestige of the family-size farm in America, and we want to have an opportunity ‘~ be saved. Mr. KEEFE. Mr. Chairman, will the gentleman yield? Mr. EDWIN ARTHUR HALL. I yield to the gentleman from Wisconsin. Mr. KEEFE. Can the gentleman in- form the House how much money was turned over to the rehabilitation cor- poration in the State of New York out of the funds that were appropriated in 1933 and 1925 for that purpose? Mr. KFATING. I asked that question here today and I have not becn able to get an answer. Mr. EEEFE. I should think the diligent Representatives of the State of New York in making the argument that has been made here that the State of New York has been unfairly treated would be able to furnish us with informa- tion as to how much they reccived Mr. EDWIN ARTHUR HALL. We are fighting with our backs to the wall. The CHAIRMAN. Does the gentle- man from North Carolina [Mr. Coo.Ley] insist on his point of order? Mr. COOLEY. No, Mr. Chairman, I withdraw the point of order. Mr. FULTON. Mr. Chairman, I offer a substitute amendment. The CHAIRMAN. Is it an amendment to the amendment of the gentleman from Kansas? Mr. FULTON. It is an amendment to the amendment offered by the gentleman from New York. The CHAIRMAN. The Clerk will re- port the amendment. Mr. EDWIN ARTHUR HALL. Mr. Chairman, a parliamentary inquiry. The CHAIRMAN. The gentleman will state it. Mr. EDWIN ARTHUR HALL. Mr. Chairman, is it in order to offer an amendment to my substitute? The CHAIRMAN. The Clerk will first report the amendment and the Chair will then determine. The Clerk read as follows: Substitute amendment offered by Mr FuL- TON—— Mr. FULTON. Mr. Chairman, it is not & substitute amendment. It is an amend- ment to the substitute. The Clerk read as follows: Amendment offered by Mr. FULTON to the substitute: Strike out all after the enacting clause and insert—— Mr. FULTON (interrupting the read- ing of the amendment). Mr. Chairman,
1950 may I ask that before the amendment is read, a ruling be made as to the par- liamentary situation. Mr. CASE of South Dakota. Mr. Chairman, I make the point of order that it is a substitute amendment, an amend- ment in the third degree. Mr. McCORMACK. Mr. Chairman, the gentleman from Pennsylvania has asked that a ruling be made on his amendment. To accommodate the gen- tleman I make the point of order that the amendment offered by the gentleman from Pennsylvania is a_ substitute amendment and is not in order at this time. The CHAIRMAN. The point of order is sustained. Mr. FULTON. Mr. Chairman, I move the amendment as an amendment to the amendment offered by the gentleman from Kansas [Mr. HoPE]. The CHAIRMAN. The gentleman must submit his amendment in writing. Mr. FULTON. It is there in writing. The CHAIRMAN. The Clerk will re- port the amendment offered by the gen- tleman from New York. Mr. FULTON. Mr. Chairman, I offer the amendment as an amendment to the Hope substitute. The Clerk read as follows: Amendment offered by Mr. FuLToNn to the Hope substitute. Strike out all after the en- acting clause—— Mr CASE of South Dakota (interrupt- ing the reading of the amendment). Mr. Chairman, I make the point of order that on the face of it it strikes out all of the enacting clause and is a_ substitute amendment, The CHAIRMAN. The point of order is sustained. Mr. NICHOLSON. Mr. Chairman, I rise 1n opposition to the pro forma amendment. Mr. Chairman, I do not take the floor very often, but when I see Massachusetts getting robbed again, I Just want to stand up and let you know that we know what is going on, In 1933 we passed a bill here when the country was in pretty tough shape as a result of dust storms and everything else, and appropriated $950,000,000 of the money of the citizens of the United States. Massachusetts paid its full share, as well as Connecticut, Rhode Island, Delaware, and Maryland. Now, then, you did not use the money and you put it back into the Treasury of the United States Government, where it belongs. The thing to do is to leave it there, or distribute it pro rata to every State in the Union and not pick out 43 States, because we who have tried to get along without any help from anybody do not want to pay the bill twice. There is only $50,000,000 left of the $950,000,000, and you want Massachusetts to pay a part of that $50,000,000 and pass it back here again so that you can spend it. Mr. HAYS of Ohio. Mr. Chairman, will the gentleman yield? Mr NICHOLSON. I yield to the gen- tleman from Ohio. Mr. HAYS of Ohio. I would like to ask the gentleman if he was not here trying to get his share for Massachusetts of that $10,000,000 that we taxpavers in CONGRESSIONAL RECORD—HOUSE the rest of the States put into the Wal- tham Watch Co. Mr. NICHOLSON. I do not remember that bill coming before the House. Mr. CRAWFORD. When did the tax- payers put in money for the Waltham Watch Co.? Mr. NICHOLSON. I yield to the gen- tleman from New York. Mr, KEATING. I subscribe to what the gentleman is saying. I call his at- tention to the fact that in this schedule on page 6, Massachusetts does not get one dime out of this. Mr. NICHOLSON. I know it. Mr. KEATING. Whereas, under the amendment offered by the gentleman from New York [Mr. EpwIn ARTHUR Hau], Massachusetts, and every other State, will get their fair pro rata share of the $50,000,000. I hope the gentle- man will support the amendment offered by the gentleman from New York [Mr. EDWIN ARTHUR HALL). Mr. NICHOLSON. I followed with a great deal of attention the remarks of both of the brilliant gentlemen from New York who just spoke. Mr. AUGUST H. ANDRESEN. I think we should have an answer to the question as to when the United States paid money into the Waltham Watch Co. When did they? Mr. NICHOLSON. I will ask the gen- tleman from Ohio if he is interested. Mr.CRAWFORD. I think that is very important. The gentleman from Ohio |Mr. Hays] has left the impression that the State of Massachusetts received benefits through the Waltham Watch Co and got some money from the tax- payers. That casts a reflection on Mas- sachusetts. Mr. NICHOLSON. No. I will tell the gentleman that sometimes these ques- tions are asked facetiously and some- times they are not. But it does not make any difference to me what kind of questions are asked, except that I want to tell you that we in Massachusctts paid our fair share of that $950,000,000 when it was distributed, and now, when you have not been able to use it for 10 or 11 years because there is not any emergency and there is not anything that comes up you can spend it for, you want to take part of that $50,000,000 and use it. Mr. CANFIELD. How does the gen- tleman feel about the committee report stating that $50,000,000 is only a small amount of money? Mr. NICHOLSON. Well, it is, around here today. Mr. AUGUST H. ANDRESEN. Fifty million dollars put into the United States Treasury will be spent in 4 hours, at the rate they are spending money now. Mr. NICHOLSON, I thank the gen- tleman for his contribution. Mr. RIVERS. Is that on butter sub- stitutes? The CHAIRMAN. The time of the gentleman from Massachusetts [Mr. NICHOLSON] has expired. Mr. CHRISTOPHER. Mr. Chairman, I move to strike out the last word, and I ask unanimous consent to revise and extend my remarks, 2679 The CHAIRMAN. Is there objection to the request of the gentleman from Missouri? There was no objection. ' Mr. CHRISTOPHER. I ask unani- mous consent to speak for five additional minutes and to speak out of order. The CHAIRMAN. Is there objection to the request of the gentleman from Missouri? There was no objection. Mr. CHRISTOPHER. Well, one could almost langh at the things that have been said here this afternoon—not just recently, but a short time ago. The learned and distinguished gentleman from Ohio stood here at this microphone, and we boys on the right-hand side of the House sat real quiet, unusually quiet, It was a great entertainment. I enjoyed it. I liked it better than going to a comic opera, because it did have its comic side, Mr. McCORMACK. Mr. Chairman, will the gentleman yield? Mr. CHRISTOPHER. I yield. Mr. McCORMACK. Which gentle- man from Ohio is the gentleman re- ferring to? Mr. CHRISTOPHER. Oh, I am re- ferring to that great big gentleman from Ohio, a bigger man than I am physical- ly, and probably every other way also, (Mr. Brown). He seemed to be all hot and bothered about that hundred-dollar- a-plate Jefferson-Jackson Day dinner that was held here in Washington. He did not see why we did it. He did not like the way we did it. There were a lot of things about it that did not meet with his approval. I want to tell him, and everybody else—I am sorry he is not here—just why we did that. You know, that was a celebration, boys; that is what we were doling; we were cele- brating. I sought this 10 minutes to tell the Members of this House some of the things we were celebrating at that Jefferson-Jackson dinncr. The southern boys were celebrating the fact that they were not taking 6 cents a pound for their cotton, and that is really something to celebrate. Every southern man that was there had a per- fect right to be there, and plenty reason to celebrate. Now, we were celebrating the fact that the boys out in Iowa were not having to sell their corn for 12 cents a bushel. All of us fellows in the centre] region celebrating the fact that we were not taking 3 cents a pound for our hogs, and 6 cents a dozen for our eggs, and 35 cents a bushel for our wheat. Maybe it was a Belshazzar carnival, but when you consider the things we were celebrating, it was justified. Mr. McCORMACK. Mr. Chairman, will the gentleman yield? Mr, CHRISTOPHER. I yield to the gentleman from Massachusetts. Mr. McCORMACK. What about the saving of farms and homes, too? Mr. CHRISTOPHER. Certainly. We were celebrating the saving of farms and homes. We were celebrating the fact during the past 12 years 9,976 banks had not failed in the United States without any deposit insurance. That was some< thing else we were celebrating.
2680 Mr. DINGELL. And not losing our homes to the sheriff. Mr. CHRISTOPHER. Yes; we were not losing our farms at the front doors of courthouses. We were celebrating the fact that we did not have 12,000,000 unemployed in the United States today but that we did have over 55,000,000 people at work at the best wages they have ever been paid in the history of these United States. That is what we were celebrating over there. Our celebration was justified. There is not a soup kitchen in the United States. Mr. FULTON. Mr. Chairman, will the gentleman yield? Mr. CHRISTOPHER. Nobody asked the gentleman from Ohio [Mr. Brown] to yield. I refuse to yield; I decline to yield because we did not interrupt the gentleman from Ohio [Mr. Brown! for the whole 23 minutes that he spoke. Mr. FULTON. Would not the gentle- man yield for a question? The CHAIRMAN. The gentleman from Missouri declines to yield. Mr. CHRISTOPHER. We must re- member that we have not got a soup kitchen or bread line in the United States—not one. The old folks in the United States that have spent almost a lifetime in the fields, feed lot, office, fac- tory, or kitchen do not have to go to the poorhouse now to spend their declining days. We have old-age assistance and social security. We were celebrating that, among other things. We were celebrating the 75-cent mini- mum wage that I helped pass in this House last year, and I am proud of my ac- tion. That ended sweatshops. We were celebrating the fact that we have REA in this country that has taken electricity to the farms and let the farm woman throw away her coal oil lamp, and have electric Nght and refrigeration. Why, I venture to say that even up in northern New York, where the gentle- man from that State says they are so poor, they have electric lights. We were celebrating the fact that we have a soil conservation program in the United States, that is helping save the top soil of this land. What Republican administration since Abe Lincoln has helped an old farmer buy a truckload of lime to spread on his hardpan points so he would get a little more fertility into his soil? What Re- publican administration ever helped a farmer terrace a field? We were celebrating the fact that we have price supports in the United States that do not allow agricultural products to sink to the prices that we have just named. Another thing we were celebrating is the fact that our national income is $250,- 000,000,000 instead of the $40,000,000,000 to which it had sunk when the Republican party had had us for 12 long, weary, bit- ter, inactive years. That is another thing we were celebrating. We were also cele- brating the fact that ex-GI’s had never come to Washington, D. C., hungry, cold, Jobless, and in rags and been chased out of the Capital of the Nation that they had fought to defend by the orders of a Democratic Administration. CONGRESSIONAL RECORD—HOUSE We were also celebrating the fact that GI’s were no longcr standing on street corners all over the United States selling apples and pencils in a vain endeavor to keep body and soul together. The last fact that we were celebrating was the fact that every New Deal meas- ure that has been passed in the United States since Franklin Delano Roosevelt was elected President is in force, and there is not a Republican in this House who would introduce a bill to repeal one of them. That is another thing we were celebrating. Mr. CASE of South Dakota Mr. Chairman, I move to strike out the last word. Mr. Chairman, the gentleman from South Dakota is not a lawyer and he will yield to any good lawyer in the House when a legal question is involved But it is difficult for me to read the very direct language of some of the factual material that appears in the hearings in connection with this matter in 1948 without concluding that it would be im- possible for the Congress to adopt the amendment offered by the gentleman from New York and ever expect it to stand up in the courts. I have here the hearings in which one of the exhibits is a letter from the Comp- troller General of the United States writ- ten on July 31, 1935, and signed by J. R McCarl, Comptroller General, replying to an inquiry that was posed by the State of Georgia. I wish you would follow the language very closely, because if this is true it certainly bears upon what we can do here this afternoon. I think there is no question about Mr. McCarl’s ability to speak: With respect to the corporation funds and properties transferrcd to the Resettlement Administration as proposed, such funds and the proceeds of the properties will not be required to be covered into the Treasury as miscellaneous receipts but will be for de- positing and covering into the Treasury as a trust fund, available for expenditure by the Resettlement Administration for rural rehabilitation pursuant to the conditions of the transfer, and to be accounted for ac- cordingly. In other words, Mr. McCarl said if this money is transferred back to the United States, to the Resettlement Ad- ministration, it will not go into miscella- neous receipts but will be available only pursuant to the conditions of the trans- fer. What were the conditions of the trans- fer? I have here the testimony where the Chief Justice of the State of North Dakota—that is not my State—brought out that when McCarl made his ruling it required the State of North Dakota through its legislature to pass an act of the State legislature before the money could be retransferred back to the Re- settlement Administration. This was part of a law as passed in North Dakota: And provided further, That if at any time the Federal Government shall cease to carry on the rural rehabilitation program in the State of North Dakota, the remainder of any assets transferred by the corporation to the United States of America together with the proceeds of any assets or property so trans- ferred, shall be returned to the said corpora- tion if it be then in existence, or, in the event the corporation shall have been dissolved in March 2 accordance with law, then such assets or property shall be turned over to the State of North Dakota for such disposition as the members of the corporation may have di- rected prior to the dissolution of the corpo- ration. In other words, Mr. McCar1 first said that if this retransfer is made from the State to the Resettlement Administration it must be under the conditions govern- ing that transfer, in the case of North Dakota, and said that you cannot trans- fer it back without an act of the legisla- ture. The conditions of that act will govern. In that act they said if the Re- settlement Administration fails to func- tion the assets return to the corporation of North Dakota and if the corporation is dissolved, the assets must be turned over to the State of North Dakota. Further along the same line, in the agreement with the North Carolina Rural Rehabilitation Corporation, section 4, signed by the State of North Carolina Rural Rehabilitation Corporation and by the Secretary of Agriculture for the Fed- eral Government provided: Sec 4 Upon the termination of this agree- ment in any of the manners herein-above set forth, the property remaining of that trans- ferred, together with the remaining pro- ceeds, shall, after the liquidation of any claims then existing against such assets, be retransferred to the corporation if the same be in existence, or, if the corporation be not in existence, then to the general fund of the State treasury of North Carolina. In the face of that how would the Congress here today have any power to say that we could take this money and put it into the Treasury and make it available for general distribution? The Comptroller General said that if it goes to the Federal Government as &@ trust it must be handled under the terms of the trust and by the terms of the trust it is provided that when the trust expires it goes back to the State Treasury of North Carolina. Mr. MARSHALL. Mr. Chairman, I move to strike out the last word. Mr. Chairman, the gentleman from South Dakota who preceded me made a very g00d point, and it is a point that some of the Members, I think, who are thinking in terms of taking back this money and distributing it, ought to pay @ good deal of attention to. I am supporting the Hope amendment. I think the Hope amendment provides a solution to this problem and the one that we want. My State has the largest rural rehabilitation corporation trust fund in the United States. I know very well what went through the minds of the people when the people of that State entered into a trust agreement, and it was this: Before there was a trust agrec- ment, each of these 43 States, or these States that had these funds, had pro- grams which were not being administered in any sort of uniform fashion. The Federal Government set up an organiza- tion, the Farm Security Administration, which administered a program which was closely coordinated with the programs of these corporations. That meant that we had a duplicating agency; it meant that we were going through the ridiculous point of having some people in a State administer a program similar to a Fed-
1950 eral program which was being admin- istered, sitting down side by side, with a separate bookkeeping system, with sep- arate pay, if you please. And, we cre- ated at that time a lot of duplication and a@ duplication of agencies. That was the reason that the Secretary of Agriculture and the States entered into these trust agreements. The people in my State are heartily in favor of the work that is being done by the Farmers Home Administration. I doubt if there is any State where these funds exist, where there is any conflict in connection with the fact that the work that is being done by the Farmers Home Administration is not being done in ac- cordance with the wishes of the people of that State. I think that is true of the people of Wisconsin as well. Mr. COOLEY. Mr. Chairman, will the gentleman yield? Mr. MARSHALL. I yield to the gen- tleman from North Carolina. Mr. COOLEY. Why is it that the gentleman objects to the fund, which be- longs to the corporation in his State, being adininistered by the directors of that corporation in accordance with the provisions of this bill? Why does he dislike the idea of letting the local people in Minnesota administer this fund? Mr. MARSHALL. I do not object to local people in Minnesota administering this fund. Mr. COOLEY. The Hope amendment would have it administered from Wash- ington. Mr. MARSHALL. The Hope amend- ment proposes that the Farmers Home Administration will continue that fund as they are now administrating it with- out going through a lot of fuss and furor and detail. I would like to say to the gentleman from North Carolina, I am sure that he fully realizes that all of these corporation trust funds are not entered with the same language. There is considerable difference. The State of Iowa, for example, has a time limit. Mr. COOLEY. I know, but the point here involved is that under the com- mittee bill and under an amendment which will be offered by the gentleman from Mississipp1 [Mr. ABERNETHY], the Minnesota corporation can execute a trust agreement and turn this money back to the Farmers Home Administra- tion if it wants to. Mr. MARSHALL. The gentleman from North Carolina is making a good point, but it does mean that in the State of Minnesota, in order to do what the gentleman says, it would be necessary, very likely—and I am not an attorney; I do not know what the attorney general of the State of Minnesota would rule— but I believe that it would be necessary to reorganize a corporation for the pur- pose of doing this. I am trying to short cut that, Mr. Chairman, in making it possible for the program to continue just as it is, as provided by the Hope amendment, which would save all this fuss and furor and confusion. Mr. COOLEY. If the Legislature of Minnesota does not reactivate the old corporation, or create a new corporation, and that corporation fails to file an ap- plication for the return of that money, then it will go right back, under our bill, CONGRESSIONAL RECORD—HOUSE to the revolving fund to be administered by the Farmers Home Administration. Mr. MARSHALL. In the meantime, during the time this program is in a position of flux, is trying to determine what will be done with this reorganiza- tion, those funds, the assets of approxi- mately $4,000,000, three and _ three- fourths million, to be exact, will be frozen so that no use can be made of them. Mr. COOLEY. No, they are not frozen now. They are being used at the present time. The funds are now bcing used, are they not? Mr. MARSHALL, The funds are now being used. The provision of your bill as presented would mean that after this bill becomes law, until that determina- tion is made, the only ones that could use that would be the present, existing borrowers of the corporation, in order to protect the assets of the corporation, frankly. You could not go out and make a loan. Mr, COOLEY. They are not making long-term loans, they are trying to keep the fund liquid so that they can comply with such mandate as might be given to them by Congress. Mr. MARSHALL. I cannot see from my standpoint where the gentleman’s objection might be to the bill which was proposed by the gentleman from Kansas. Mr. COOLEY. I object to it because it is an outright, willful, deliberate breach of faith with the legal document executed in good faith by the people of my State. Mr. MARSHALL. I do not agree with hat, Mr. KEEFE. Mr. Chairman, I move to strike out the last five words. Mr. Chairman, I have heard the state- ment made that they are seeking an amendment to the committee bill in or- der to avoid confusion and hocus-pocus, and soon. It ismy humble opinion that unless legislation is passed that is com- patible with the legal requirements of the trust agreements that have been en- tered into between the States and the Department of Agriculture you will pre- cipitate a host of expensive lawsuits that will create more hocus-pocus than has been contemplated by the distinguished gentleman from Minnesota. Let us get certain basic facts clearly established. Everyone scems to agree now that the source of these funds was the original relief appropriations made in 1933 and following in 1935. They were appropriations made by this Congress. In the administration of those funds in most of these States corporations were set up to administer the funds granted by the Federal Government for rural re- habilitation. I make the statement without fear of contradiction as a matter of fact and as a matter of law that whenever the Fed- eral Government made those grants to the States and that money found itself in the State treasury, at that moment those funds became State funds and lost their identity as Federal funds. Why doI say that? I happen to serve on the Committee on Appropriations that for years has had charge of making ap- propriations for a vast number of Fed- eral grants-in-aid, unemployment com- pensation administration running up to 2681 $150,000,000 or $160,000,000 a year, voca- tional rehabilitation, vocational educa- tion, and a host of other aids. Once those grants are made and the money is allotted and placed into the State treas- ury it becomes the money of that State. The only check we have, despite the fact that we audit their accounts, is to say to the State, if we find they are not disbursing the funds properly, ‘‘We will not give you any more money.” They do not attempt to collect back the money already granted because they know they cannot. They only have the club to say, “We will not give you any more money under this program, unless you conform to such-and-such standards.” That is in recognition of the basic fun- damental fact that those funds as these funds, once they passed from the Fed- eral Treasury, lost their Federal identity and became State money. That was recognized by the Government when these trust-fund agreements were en- tered into, The Federal Government, acting through the Department of Agri- culture head, entered into these trust agreements. That money has been ad- ministered during the past 12 years pur- suant to the terms of the trust agree- ments. If you propose to sa; to my State, which has such a trust agreement, “We are going to violate that agrecment and it no longer means anything. We are going to take that money and do with it as we please, and turn it over to the State of New York, or some other State,” you will find yourselves faced immediately with a lawsuit. In my humble opinion you will be licked to a frazzle, because no one in good conscience, or in law, can say that the Congress can violate the terms of such a trust agreement. With respect to the contention made by my friend, the gentleman from New York, I do not know what the facts are; the gentlemen have talked a great deal on this bill and I suggest that the talk would be more effective if they were able to answer the simple question: In the allocation of these original funds of the $950,000,000 and the $500,000,000, how much did the State of New York get? The CHAIRMAN. The time of the gentleman from Wisconsin has expired, Mr. KEEFE. Mr. Chairman, I ask unanimous consent to proceed for five additional minutes. The CHAIRMAN. Is there objection to the request of the gentleman from Wisconsin? There was no objection. Mr. KEEFE. How much money did the Etate of New York get at that time, and what did the State of New York do with its money? Did they use it for agricultural relief and rehabilitation, or did they spend the money for rehabili- tation and relief in their cities? We are not favored with the facts with respect to that, but I assume when those funds were allocated to the various States, the State of New York received its money in the proper proportion under the formula which was used for the distribution of the funds, and they spent their money, They spent their money as they saw fit. They disbursed it as they saw fit. The gentlemen from New York are now here asking that my State and your State,
2682 whick conservatively managed these grants for the purposes for which they were made for rural rchabilitation shall now be penalized and that the money shall be taken away from them and turn part of it ever to the State of New York because the State of New York, as I un- derstand, has spent this money and does not have any money in this trust fund, or at least only a small amount is avail- able for turning back to the State of New York. Mr. KEATING Mr. Chairman, will the gentleman yield? Mr. KEEFE I yield. Mr. KEATING. I can well understand the gentleman’s fervor in arguing for the State of Wisconsin when Wisconsin ects $1,500,000 out of this fund, instead of $90,000, which New York State gets. Mr. KEEFE Mr. Chairman, I do not yield further, because that argument is absolutely unconvincing, and it is be- neath the dignity of the distinguished gentleman from New York to make such a statement. Mr. KEATING. Mr. Chairman, will the gentleman yield further so that I may finish my statement? Mr. KEEFE. The State of Wisconsin is not getting that money out of the Federal Treasury. The State of Wis- consin is merely receiving back from the Federal Government the money and property which it turned over to the Fedcral Government pursuant to the trust agreement entered into between the Rural Rehabilitation Corporation and the State of Wisconsin and the Sec- retary of Agriculture, representing the Federal Government. Mr. KEATING Mr. Chairman, will the gentleman yield? Mr. KEEFE. I yield. Mr KEATING. Has the gentleman considered, in making the statement that these sums belong to the State of Wis- consin and the other States, rather than to the Federal Treasury, the argument made by the Solicitor of the Department of Agriculture to the effect that the grant statute which was passed was bascd on an emergency condition found to exist by the Congress, which no longer exists? Mr. KEEFE. Yes; I understand that. I am thoroughly familar with that sit- uation. I may say that, although I found myself in disagreement with the distinguished gentleman from New York, who is a great lawyer, I find myself in complete and absolute disagreement as a lawyer with the Solicitor of the De- partment of Agriculture. Does that answer the gentleman? I do not be- lieve the Solicitor knows what the law is when he wrote that opinion. I have seen the opinion. I am in complete dis- agreement with it as a Member of Con- gress, and I am in complete disagree- ment with it as a lawyer. It seems to me that any lawyer who holds a diploma from any school, without any experience in the law, would find difficulty in reach- ing the conclusion that has been reached by the Solicitor for the Department of Agriculture in this matter. Mr. YATES. Mr. Chairman, will the gentleman yield? Mr. KEEFE. I yield. CONGRESSIONAL RECORD—HOUSE Mr. YATES. I recognize the cogency of the gentleman’s argument. What need is there for this legislation if, as the gentleman says, the trust agree- ments are in existence and we are bound, both in fact and in law, by them? Why consider this bill? Mr. KEEFE. Because it expedites the situation in which there are varying de- grees of responsibility arising out of these various and sundry trust funds in the 43 States that have them. Mr. ABERNETHY. Mr. will the gentleman yield? Mr. KEEFE. I yield. Mr. ABERNETHY. And further be- cause Federal officials have the money and will not turn it loose. Mr. KEEFE. I imagine perhaps that is the situation, and they will force the States to go into court and precipitate expensive and long-time litigation to force the Federal Government to do a thing which is provided in the very trust agreements by which the Department of Agriculture got held of these funds. Mr. EDWIN ARTHUR HALL. Mr. Chairman, will the gentleman yield? Mr. KEEFE. I yield. Mr. EDWIN ARTHUR HALL. Does the gentleman feel that according to the amounts listed in this report, $91,090, is fair to the State of New York? Mr. KEEFE Well, I cannot answer the gentleman. If he does not have the capacity to understand the argument I have just made, any further explanation would be impovsible Mr.SUTTON. Mr. Chiarman, will the gentleman yield? Mr. KEEFE. I yield. Mr. SUTTON. If the gentleman from New York will go back to the history of this legislation in 1932, 1933, 1934, and 1935, when this relief moncy came about, he will find that the State of New York received more than 13 Southern States combined. Mr. EDWIN ARTHUR HALL. The gentleman is not well informed on that, because we never received a dime. The CHAIRMAN. The time of the gentleman from Wisconsin (Mr. Krerer| has expired. Mr. POAGE. Mr. Chairman, I move to strike out the last six words. Mr. Chairman, should we adopt the amendments proposed to this bill this afternoon we might just as well bid good-by to our social-security program, to our Railroad Retirement Act, and to all these programs of government which are dependent upon the faith of the United States Government to keep its solemn promises, and to return trust funds in keeping with the terms of the trust agreements. The United States Government now has hundreds of mil- lions of dollars in trust funds for various purposes. Should we break faith in this case, there is no reason why we should not break faith in every other trust fund. No trust fund that I know of now in the United States Treasury is more clearly defined than are these 43 trust funds set up by agreements with the respective States. We cannot be guilty of ignoring the obligation of our Government in this case and then claim that we cannot ignore the trust agreement under which Chairman, MARCH 2 trust funds have been established to pay social-security benefits, to pay railroad- retirement benefits, and to pay all of these other obligations in which the Government has taken money either directly from the taxpayers or from other groups. In this case the United States Govern- ment took the money from 43 States, and the United States Government did not say, ‘We will keep control of these funds and property so long as the Con- gress or the Federal Government thinks that it is for the best interest of the States.” It said, “In the case of North Carolina we will administer this matter for 12 years. At the end of that time we will return these funds to you and we will let you, the owners of this fund, meke decision as to how they shall be used.” In the case of the other States the agreement said, “In the event the authority of the Secretary of Agriculture or his successor shall cease, this agree- ment shall be forthwith terminated and the property” shall be “retransfecrred to the corporation” or such other agency as the State may designate. Mr. NICHOLSON. Mr. Chairman, will the gentleman yield? Mr. FOAGE. I am sorry. I have only a shore tame. I want to point out that the authority of the Secretary men- tioned has ceased It ceased by act of this Congress The contracts of all of the States have terminated. If we are to keep faith we have got to return this money, whether it 1s a good thing or a bad thing. The question of whether the United States Govern- ment made a good trade 1s not involved. The question of whether the United States should have given this money to the States on the terms that it did is not involved; that has been done; the deci- sion has been made. The United States Government pledged its word and the United States Government signed a con- tract and said, “We will return this money.” Now, are we simply Indian givers? Are we simply speaking with forked tongucs? Out of one side of our mouth are we saying, “Yes; we will re- turn the money,” and out of the other side are we saying, “Well, we know better than you do and we are going to decide for the States as to just how is the best way of running this affair’? I am not taking issue with the gentleman from Minnesota as to whether it is best for the Federal Government or for the States to run it, but I am saying that every State that has got money here has a solemn contract with the United States that it and it alone shall have the right to make this decision. If the State does not want to make any but wants the Federal Government to continue to run it, all it has to do is to do nothing and the Federal Government will continue to run it. This bill is actually a statute of limi- tations. It provides that the right of the States to get the money back, as pro- vided in the contracts between the Fed- eral Government and the States shall end in 3 years. The courts have held that we have a right to establish limita- tion provisions in enforcing contractual obligations. I believe that on that basis
1950 and that alone we can sustain even the Cooley bill, because the Cooley bill limits the rights of the States. The States have greater rights under their contracts than they have under the Cooley bill. The Cooley bill provides that they must apply within 3 years, the contracts leave it wide open. All we are asking you to do here this afternoon is to put a statute of limita- tions upon the right of the States to come in and reclaim their property; that is all we are asking you to do, to give the Fedcral Government the advantage of this thing, to say that after 3 years the States cannot be heard to come in; whereas today they can come 1n for an unlimited period. We hope you will not pass something like the Hope bill that repudiates the obligations of our Government and says that the solemn signature of the United States is worth nothing more than a scrap of paper. The CHAIRMAN. The time of the gentleman from Texas has expired. Mr. TALLE. Mr. Chairman, I rise in opposition to the pro forma amendment in order to ask a question of the ranking Repubhcan member of the committee. I may say that I listened to the read- ing of the amendment which was offered as a substitute by the gentleman from Kansas, and I listened to his comments on it. Earlier today I spoke on what I proposed to offer as a substitute for the committee bill; and I have come to the conclusion that there is no material dif- ference between the Hope amendment and the Talle amendment. Am I right? Mr. HOPE. I think there is no ma- terial difference. I think the gentleman is correct. I want to qualify that by say- ing that I have not read his amendment recently and that my attention was di- verted during part of the time that we were discussing it, so I do not know as to all the details; but substantially I think the purpose and in general the language of the two provisions is quite similar. Mr. TALLE. That being the situation I wish to state that I shall not offer my amendment, but will support whole- heartedly the amendment offered by the gentleman from Kansas. Mr. COOLEY. Mr. Chairman, I rise in opposition to the amendments. Mr. Chairman, two amendments, one offered by the gentleman from Kansas |Mr. Hope] and another offered by the gentleman from New York [Mr. Epwin ARTHUR HALL] are now before the com- mittee. I certainly do not want to be unkind, neither do I want to be critical, but it does seem to me that the gentleman from New York |Mr. HALL], a member of the Eouse Committee on Agriculture, would have evidenced his interest in the matter now under consideration in the com- mittee room where he is always accorded every right and privilege. Why did he not present his proposition to the com- mittee? As a member of that commit- tee, he has rights which are always re- spected, but instead of presenting his views to the committee, he waits until the committee has reported the bill and has presented it to the House for consid- eration. It does appear that in fairness CONGRESSIONAL RECORD—HOUSE to his colleagues on the committee he would have given us the benefit of his views in committee rather than to wait until we reached the floor of the House. The gentleman from New York [Mr. HALL] complains that the farmers of his district, of up-State New York, are woe- fully neglected and are in great distress. I am certainly not aware of the fact that the farmers of the gentleman’s district are neglected; neither am I aware of the fact that they are in distress. The gen- tleman from New York [Mr. HALL] says that he is fighting with his “back to the wall.” The place for him to fight for the farmers of his district is first in the com- mittee room, 1310 in the New House Office Building. Unfortunately, the gentleman was not present during the consideration of the bill; neither was he present when final action was taken. Mr.SUTTON. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the distin- guished gentleman from Tennessee. Mr. SUTTON. The gentleman stated that the gentleman from New York was not at our committee mectings. He was there at one time on the oleo bill. Mr. COOLEY. Iam quite certain that the gentleman is correct. Had the gen- tleman from New York been present he would have had an opportunity to vote on the Hope amendment which was offered by the able and distinguished gentleman from Kansas. The gentle- man from Kansas [Mr. Hore] former chairman of the House Committee on Agriculture, in good faith, offered his amendment. The amendment was care- fully considered but it was not adopted. Mr. EDWIN ARTHUR HALL. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from New York. Mr. EDWIN ARTHUR HALL. I know that the gentleman wants to be fair and kind about this. Mr. COOLEY. Icertainly do. I shall be fair and I shall try to be very kind. Mr. EDWIN ARTHUR HALL. I de- liberated some time over this particular amendment through the hours of the session here today. Mr. COOLEY. If it just occurred to the gentleman today, of course, that puts an entirely different light upon it. Mr. EDWIN ARTHUR HALL. I con- ferred with several of my colleagues from New York. I am sure that the gentle- man does not want to inject a personal vein into this debate because, after all, there is a skeleton in every closet. Mr. COOLEY. If the people of the gentleman’s district have been suffering for so long, it does seem to me that his interest might have been aroused earlier. But, after all, this is not a bill for the relief of the people of the gentleman’s district. The question has been asked, “How much is New York going to get out of this?” The answer is, “New York is going to get out of this just what New York put into this trust fund.” The gentleman from Wisconsin has just tried to make that perfectly clear and plain to the gentleman from New York, but apparently there is still a lack of under- standing. Mr. Chairman, I want to get back to the Hope amendment. The amendment does 2683 not keep faith with these legal docu- ments. It is Just as much a breach of faith as the original Hope amendment was. It takes away the rights of the corporation. It puts the money in the Treasury, in a revolving fund, and turns it over to an administrator downtown to administer. It says in effect, and this is just a little sop that was put in there in an effort to appeal, I think to me, and to one or two other Members of the House, that North Carolina retained $300,000 and North Carolina gave up $800,000. The Hope proposal says, “We are going to be kind to the North Caro- lina corporation and let them keep $300,- 000 if they will in turn let us Keep the $800,000.” That is an insult to our intelligence. We know that we have the $300,000. We know that the Federal Government can- not take it away from us by act of Con- gress or otherwise. The CHAIRMAN. The time of the gentleman from North Carolina has ex- pired. Mr. COOLEY. Mr. Chairman, I ask unanimous consent to proceed for two additional minutes. The CHAIRMAN. Is there objection to the request of the gentleman from North Carolina? The was no objection. Mr. COOLEY. Mr. Chairman, coming back to the Hope amendment, let us set- tle this issue right. Our position is ei- ther morally right, or it is evil, wicked, and morally wrong. It is either legally right or legally unsound. Frankly, it is difficult for me to understand how either a layman or a lawyer could read one of these contracts and still be willing to repudiate them and embrace and approve the very weak and absurd opinion of the lawyer in the Solicitor’s office who has made such a desperate and feeble effort to support the views which he has ex- pressed. Mr. FERNANDEZ. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from New Mexico. Mr. FERNANDEZ, I want to ask this question for the record. I asked it in the committee and got a satisfactory an- swer, but I want to ask it for the record today. The gentleman is familiar with the situation in New Mexico where, by the use of these funds certain lands, ag- gregating close to 200,000 acres, were re- purchased for certain local communities which once owned them and had during the years lost these lands, which they used to use in common, and they were re- purchased because that was their base for their economy, and would help put them on their feet, because of their plight at that time. Under the gentle- man’s bill, those lands would not be forced to be placed on the auction block. Mr. COOLEY. The gentleman is ask- ing the same question he asked the gentleman from Kansas (Mr. Hope] I take it. Mr. FERNANDEZ. That is correct. Mr. COOLEY. Under the committee bill those lands and properties and moneys belonging to that corporation will be given back to the corporation, and you can opcrate it locally and direct it with people in New Mexico in charge of
2684 {t. The only requirement ts—and I think this is being superimposed on the written terms of these agreements and the law itself—that the Secretary of Agriculture has supervision and has to agree to the program which will be operated by the corporation. I think that the gentleman, if he wants to take care of his people, should stand by the committee bill and give the property back to the corporation. I ask for the defeat, Mr. Chairman, of both of these amendments. Mr. HCPE. Mr. Chairman, I move to strike out the last word. Mr. Chairman, there has been a con- siderable amount of discussion of some of the legal issues that are involved in this litigation. I do not pretend to be an authority on those questions. It has been a long time since I practiced law. But, I do think that we can well rely upon the opinion of the able Associate Solici- tor of the Department of Agriculture who has given a great deal of study to this question, who has thoroughly briefed the matter, and who has reached the conclu- sion, which I think is justified after read- ing the authorities which he has cited, that there is no legal question involved here which would preclude either legally or morally the action which is contem- plated by my amendment or the amend- ment offered by the gentleman from New York? I want to read from a part of an opin- fon given the committee by the Associate Solicitor, Mr. Rooney, and I quote: On the basis of the foregoing facts it is our position that the fundamental legal ques- tion to be determined by the committee is the extent of the authority of the Congress over the residue of funds granted to a state for a particular purpose when that purpose can no longer be effectuated. I think that is a fair statement of the situation, because it must be admitted by everyone, I think, that the conditions which existed when these grants were made and which were expected to be alle- viated by the use of the funds, do not now exist. In fact they have long since ceascd to exist. In support of that posi- tion these cases are cited by Mr. Rooney: Our answer to the question {s that in such @ case the authorities clearly uphold the right of Congress to revest the funds in the Federal Government and to order any dis- position thereof consonant with the plenary power of Congress over the property of the United States. Thus in Ashburner v. Cali- fornia (103 U. 8. 575), in construing the act of June 380, 1864 (13 Stat. 8325), in which the United States granted the Yosemite Valley to the State of California to be held for public use, resort, and recreation (but without a reverter clause) the Court said: “It [the land] must be kept for the use to which it was by the terms of the grant ap- propriated. If it should be in any respect diverted from this use, the United States may be called on to determine whether proceed- ings may be instituted in some appropriate form to enforce the performance of the con- ditions contained in the act of Congress to vacate the grant. So long as the State keeps the property it must abide by the stipulation upon which the transfer of title was made.” And directly in point is the later case of United States v. Michigan (190 U. 8S. 879). In that case Congress had granted to the Btate of Michigan 760,000 acres of public land CONGRESSIONAL RECORD—HOUSE for the purpose of aiding the State in con- structing and maintaining the 8t. Mary's River Canal, The act contained no reverter clause except with respect to failure to begin or complete the canal within the specified time, a condition which was complied with by the State and not involved in the case. The act provided for rendering an account- ing to the Government of the proceeds of the sale of the land and the cost of building and operating the canal. There was no express provision, however, requiring any surplus to be paid over to the United States. The ac- tion was institutcd on behalf of the United States by Attorney General Knox to recover & surplus of about 668,000. The case was de- cided in the favor of the United States, and in the opinion at page 400 the Court said: “If there were funds arising from the sale of the lands over and above the cost of con- struction and other expenses of the canal, it could not within reason (after a perusal of these two statutes, with the provisions for ac- counting for sales and net proceeds of lands, and the other provisions of the statutes al- ready mentioned) be supposed the parties understood that Michigan was to have for its own treasury the balance arising beyond such cost, maintenance, etc., of the canal.” I could go on and read a large number of other cases bearing out the contention of the Department’s Solicitor on this point. Iam not going to do it now but Iam putting them in the Recorp. Iam sure anyone who wants to justify his sup- port of either of the two pending amend- ments can do so from the brief that will be found in the Recorp tomorrow. Mr. GRANGER. Mr. Chairman, I rise in opposition to the pro forma amend- ment and ask unanimous consent to revise and extcnd my remarks. The CHAIRMAN. Is there objection to the request of the gentleman from Utah? There was no objection. Mr. GRANGER. Mr. Chairman, I rise in support of the amendment offered by the gentleman from Kansas [Mr. Hope]. We have heard a lot of discussion by the lawyers as to the legal status of this trust fund. Apparently both sides seem to be convinced of their own position. Not being a lawyer, I incline usually to listen to people who should be interested in the welfare of the Government, and I am inclined to listen to the Assistant Solicitor of the Department of Agricul- ture. I am not in a position to argue the legal point here. The gentleman from North Carolina may be entirely right. But it seems to me the sensible position is the position taken by the gentleman from Kansas. We had an example just a moment ago of what would happen under the Cooley bill from the statement made by the distinguished gentleman from Iowa [Mr. HoEvEN]. He said, and I assume they have no corporation in the State of Iowa, that if this money were allowed to remain in the State, they would administer it through an agency of public welfare. Certainly that is not @ purpose for which this money was al- located, in the first place. It was allo- cated for farm rehabilitation. It seems to me the Hope amendment is a fair compromise. It is not going to take anything away from anyone. It would treat all the States fairly in that the Farmers Home Administration would MARCH 2 administer it for the very purposes it {s administering itt today. That would be the logical way to administer this fund. It is true there was great pressure from the State of North Carolina to have these funds recovered to the State. As a mat- ter of fact, I do not know of any other State in the Union which asked to have this money returned to them except the gentleman’s State. Mr. COOLEY. Mr. Chairman, will the gentleman yield? Mr. GRANGER. I yield. Mr. COOLEY. The gentleman from Utah has certainly not looked at the rec- ord. He is entirely wrong. We have memorials from the general assemblies of several States, according to my recol- lection, and did we not have the attorney general of North Carolina, who came to Washington to testify? Mr. GRANGER. I will take the gen- tleman’s word for it, but the only testi- mony I remember before the committee was the testimony of the attorney gen- eral of the State of North Carolina as the gentleman has just stated. Mr. COOLEY. Mr. Chairman, will the gentleman yield further, for a question? Mr. GRANGER. I yield. Mr. COOLEY. Docs the gentleman think the directors of his Utah Corp. would have turned this money over to Mr. Wallace in trust if they had known then that they would never get it back without going through all this trouble? Mr. GRANGER. I think when this money was allocated, it was allocated for a specific purpose, namely, for reha- bilitation. I am convinced that that time has passed, and that is not an issue now. Mr. COOLEY. Allright. Then if the gentleman’s State does not need the money, they do not have to ask for the return of the money. If you do not have a distressing situation in your State, let it go back to the Treasury, but do riot let it go back under the Hope amendment. Mr. GRANGER. I would sooner have it go back that way as far as I am con- cerned. Mr. MARSHALL. Mr. Chairman, will the gentleman yield? Mr. GRANGER. I yield. Mr. MARSHALL. I wish to call the attention of the gentleman to the fact that these funds now are being adminis- tered by the Farmers Home Adminis- tration in accordance with the trust agreement which the local people en- tered into. Mr. GRANGER. That is true, and one of these organizations is now in ex- istence in every State in the Union. If it is not done, it will mean setting up a duplicate corporation to administer the funds. Mr. HOEVEN. Mr. Chairman, will the gentleman yield? Mr. GRANGER. I yield. Mr. HOEVEN. I understood the gen- tleman from Utah to quote me as saying that if this money went back to the State of Iowa, it would be used for pub- lic welfare. I said no such thing. I said that money, if returned to the State of Iowa, would go to the State department of social welfare, which is a legally con-
1950 stituted agency of the State of Iowa, which is designated by an act of the leg- islature to handle these funds. Mr. GRANGER. If I misquoted the gentleman, I will accept his correction. The CHAIRMAN. The time of the gentleman has expired. Mr. SUTTON. Mr. Chairman, I rise in opposition to the pro forma amend- ment. Mr. Chairman, I am taking this time to explain what happened in the com- mittee. The distinguished chairman of our committee, the gentleman from North Carolina {Mr. Cootey] introduced his bill. It was brought to the attention of the Committee on Agriculture. After hearings had been held we went into ex- ecutive session, and the Hope amendment was offered as a substitute. Consider- able debate was carried on in the com- mittee over the two bills. The Hope amendment was defeated in the Com- mittce on Agriculture by a vote of 17 to 3. Mr. GRANGER. Mr. Chairman, will the gentleman yield. Mr. SUTTON. I yield. Mr. GRANGER. That is not the fact. Mr. SUTTON. According to the min- utes of the Committee on Agriculture, it is a fact. June 16, 1949. I do not yield any further. I am quoting from the minutes of the committee. Mr. GRANGER. The Hope amend- ment was not this amendment at all. Mr. SUTTON. Then it was asked by the Chairman of the committee if they wanted a roll call on the Cooley bill. There was no request for a roll call, so it was voted out by a voice vote. Mr. HOPE. Mr. Chairman, will the gentleman yield? Mr. SUTTON. I yield. Mr. HOPE. The gentleman referred to the Hope amendment. Iam not sure whether he identified that or not, but the Hope amendment offered today is not the Hope amendment that was of- fered in the committee. Mr. SUTTON. It is substantially the same. Mr. HOPE. No. The Hope amend- ment offered in the committee is sub- stantially covered by the amendment offcred by Mr. Hatt of New York. The amendment which I offered today was never considered by the committee. Mr. COOLEY. Mr. Chairman, will the gentleman yield? Mr. SUTTON. I yield. Mr. COOLEY. I think the gentleman from Kansas is correct. His first amend- ment would put the money into the Treasury of the United States. This amendment places it in a revolving fund to be utilized by the FHA. Mr. HOPE. That is true. Mr. SUTTON. Much has been said about whether this is State funds. I would like to clarify that by testimony found on page 31 of the hearings, when the gentleman from Georgia (Mr. Pace] asked the question: You say the Comptroller General has ruled that these are State funds? Mr. WEATHERS. Yes. Ruling 56786. xCVI——169 CONGRESSIONAL RECORD—HOUSE If the Comptroller General has held that they are State funds, then it is a breach of contract and an annulment of the agreement with those States if we take it away from them now. Since someone in the Solicitor's office in the Department of Agriculture has tried to overrule the Comptroller General, it is necessary that legislation be passed to clarify the matter. Not long ago there was a bill before this House dealing with an agreement with Switzerland. We passed that bill, giving them not only what was in the agreement, but interest thereon. Every time we consider appropriations for for- eign countries, as a matter of fact, we always give them the full amount, plus interest, but when we have an agree- ment between the States and ourselves, we want to cast the States aside. It is time we think about our own people here at home and give back to the States what rightfully belongs to them. It is true that New York has used up most of their allocation, with due deference to our good friend, but just because New York has used theirs is no reason why Massachusetts or Rhode Is- land or some of the other States that have not used their share should turn it back to the Treasury to be reallocated to other States on an equal basis, be-~ cause they have already used their allo- cation on an equitable basis. I hope that the Hope amendment and the Hall amendment are both defeated, and that the Cooley bill is passed. The CHAIRMAN. The time of the gentleman from Tennessee {Mr. Sur- ron] has expired. Mr. DOUGHTON. Mr. Chairman, I ask unanimous consent to speak for 1 minute, and to speak out of order The CHAIRMAN. Is there objection to the request of the gentleman from North Carolina? There was no objection. Mr. DOUGHTON. Mr. Chairman, to- morrow has been set aside by the Com- mittee on Ways and Means to afford the Members of the House an opportunity to appear before the committee and express their views on the subject of taxation, a subject on which our committee has been holding public hearings for some time. We will perhaps close the public hearings tomorrow, and it will be the last oppor- tunity that Members of the House will have. I suggest any Member desiring to appear before the committee should com- municate with the clerk of the commit- tee either this afternoon or tomorrow morning s0 that their names can be placed on the calendar. The CHAIRMAN. The time of the gentleman from North Carolina [Mr. DovcuHTon]) has expired. Mr. COOLEY. Mr. Chairman, I ask unanimous consent that all debate on the two pending amendments close in 15 minutes. Mr. AUGUST H. ANDRESEN. Mr. Chairman, I have an amendment to offer after the pending amendments are dis- posed of. Mr. COOLEY. I should think we could dispose of it together with the rest 2685 of the debate on the bill in an hour's time. The CHAIRMAN. The _ gentleman from North Carolina asks unanimous consent that debate on the pending amendments close in 15 minutcs. Is there objection? Mr. FERNANDEZ. Mr. Chairman, I object. Mr. COOLEY. Mr. Chairman, I amend my request and ask unanimous consent that all debate on these two amendments close in 20 minutes. Mr. HALLECK. Mr. Chairman, ree serving the right to object, I may say to the gentleman from North Carolina that a matter was spoken of earlier in the day in respect to which I should like to clarify the Recorp and which would require that I speak out of order. It is not a political matter. Mr. COOLEY. Icertainly should have no objection. Mr. HALLECK. And I should like to get my time now if I could. Mr. COOLEY. Isee no reason why the gentleman could not. The CHAIRMAN. ‘The. gentleman from North Carolina asks unanimous consent that all debate on the two pend- ing amendments close in 20 minutes. Is there objection? There was no objection. Mr. HALLECK Mr. Chairman,I move to strike out the last word and ask unanti- mous consent to speak out of order. The CHAIRMAN. Is there objection to the request of the gentleman from Indiana? There was no objection. The CHAIRMAN. The_ gentleman from Indiana is recognized. Mr. HALLECK. Mr. Chairman, earlier in the day the gentleman from California made reference to the Na- tional Association of Small Businessmen which is presently meeting in Washing- ton. That organization does not need me to plead their cause or their defense. I know many of the individuals who belong to the organization; undoubtedly, many of you have had some of those men calling on you at your offices. There were a couple of statements, how- ever, that I think should be clarified. In the first place, the gentleman from California [Mr. Houirre.p] said: The organization Is chiefly financed by mil- Non- and billion-dollar corporations, as proven by the report of the House Committee on Small Business. I am the ranking Republican member of the House Committee on Small Busi- ness. Areport was issued entitled “Small Business Organizations,” to which the minority did not subscribe. That report, however, which I assume is the report referred to by the gentleman from Cali- fornia, specifically stated: We do not propose to show that the big business money contributed to the founda- tion flows to the association. In other words, the report clearly recognized that there was no evidence to establish that any of the money that
2686 might have been contributed by corpora- tions large or small, to the Small Busi- ness Foundation had flowed into the cof- fers of the National Small Businessmen’s Association. AsI say, the minority mem- bers did not concur in that report for reasons which were stated, and some of them we did not go into. But, of course, there is this innuendo in the report in these words: It 1s quite possible, of course, that many of the large corporations which contribute to the foundation also contribute to the association. Clearly it is recognized, however, that no proof of that was established. It therefore seems clear to me that we owe it to these people to have that under- stood by the membership. Also in his remarks the gentleman re- ferred to this organization as being anti- labor, If his deduction from the ma- jority report in that matter be correct, then the report, if you ever care to look it up, at page 42 and other pages, would clearly and unequivocally imply as against the National Smal] Businessmen’s organization that there is something im- proper in an organization’s pointing out the dangers of communism, or calling for a@ reduction in Federal taxes and spend- ing, or for approving the work of the Committee on Un-American Activities, or being in favor of free enterprise, or advocating changes in the Wagner Labor Relations Act, or approving the Taft- Hartley Act, or praising business for aid extended by it in the Texas City disaster or being opposed to class legislation or even being in favor of keeping America out of war. Now, whether the association wants to stand for things like that or not, that 1s their right. I think I owe it to the as. sociation and to my integrity as a mem. ber of the Small Business Committee to point out that that is the situation which exists and if the report can be made the basis for condemning the association as being antilabor then it likewise would be the basis for condemning the associ- ation for advocating in its programs those things to which I have referred. Possibly that is the reason why some people do not like the association. In any event we should let the facts as es- tablished speak for themselves. Mr. ABERNETHY. Mr. Chairman, I move that all debate on the two pending amendments close in 15 minutes. The motion was agreed to. Mr. ABERNETHY. Mr. Chairman, I ask unanimous consent that 3 minutes of that time be reserved for the com- mittee. The CHAIRMAN §Is there objection to the request of the gentleman from Mississippi? There was no objection, Mr. PATMAN. Mr. Chairman, I ask unanimous consent to proceed for 5 minutes out of order in order to answer the gentleman from Indiana [Mr. Hat- LEcCK], not to be taken out of the 15 minutes. The CHAIRMAN. Is there objection to the request of the gcntlcman from Texas? There was no objecdion. CONGRESSIONAL RECORD—HOUSE BIG-BUSINESS FRONTS CLAIMING TO BE SMALL= BUSINESS ORGANIZATIONS Mr. PATMAN. Mr. Chairman, the Committee on Small Business in the early part of last year recognized that there were a lot of front organizations of big-business concerns claiming to repre- sent small business. We asked the staff to look into these organizations and to make a report. The staff spent several months investigating these organiza- tions. We had one public hearing. On December 17, 1949, a report of 69 pages was made to the whole committee which was immediately dispatched to each member of the Small Business Com- mittee, 9 in all—5 Democrats and 4 Republicans. I personally asked the members to be ready to vote on it early in January, if possible. Early in January the members said they had not had time to thoroughly examine the report. The Christmas hol- idays had intervened. So we postponed the meeting until 2 weeks before Febru- ary 1. I do not recall the exact date of that meeting. Then we had a meeting of the committee. At that committee meeting the com- mittee endorsed this report on these so- called small-business organizations. We allowed a week for minority view" They wanted more time. We allowed them another week. There were 3 weeks in all; plenty of time. The minority mem- bers did file their minority views. Then I filled additional views of the chairman in answer thereto. We gave this matter serious consid- eration. I shall not attempt to go into the full report, but all I ask any Member is to get that report, read it, and you will be convinced that these four or- ganizations, including the one mentioned by the gentleman from Indiana [Mr. HALLEcK J, are front organizations for big business. What I mean is concerns with billions of dollars are contributing to them. Mr. HALLECK. Mr. Chairman, will the gentleman yield? Mr. PATMAN. I yield to the gentle- man from Indiana. Mr. HALLECK. Would the gentleman agree with the statement made by the gentleman from California [Mr. Hox1- FIzLD]? JI called him and told him that I was going to raise this question, and he said that whatever was done, as far as he was concerned, to go ahead. He said this: “The organization”—referring to this association that is meeting here today; not the foundation to which the gentleman refers—‘‘The organization is chiefly financed by million- and billion- dollar corporations, as proven by the re- port of the House Committee on Small Business.” I ask the gentleman if that statement is correct or incorrect. Mr. PATMAN. I think it is correct; and I have additional information I will cite to the gentleman from Indiana. I will go back to Business Week of Sep- tember 17, 1938, when they had a ‘“‘little man’s parley” of this group at Pitts- burgh. The headline is “Two hundred and fifty small-business men at conven- tion. Big business pays the bill.” That MarcH 2 was 12 years ago; that is when they were starting off. And here are the names of some of them: Atlantic Refining Co., National Steel, Remington Rand, Sun Oil Co., the Grundys, and the Pews. They are for this group. Do you think that they would honestly represent small business? Of course they would not. Mr. HALLECK. Mr. Chairman, will the gentleman yield further? Mr. PATMAN. I yield. Mr. HALLECK. I am amazed at the gentleman’s answer with respect to my inquiry as to the correctness or incor- rectness of the statement of the gentle- man from California because, as I said, the report definitely and unequivocally says: “We do not propose to show that the big business money contributed to the foundation moves to the associa- tion.” If that does not say in plain English that there is no proof of it—— Mr. PATMAN. Just a moment. Let me do a little talking. The gentleman did a lot of talking a little while ago; my time is limited. They have the same offices, organized by the same pcople, the same president, the same counsel, the same board of directors, exactly all the same. There is not one difference in them, and they are organized for the same purpose. I want to put in the Recorp at the proper time the report from Pittsburgh, when they first met, the report from Business Week that it was a big-business outfit, and a statement from the New York Times. There is no way on earth to get around it. They are just a front for big business. They are paid by b'g business, they represent big business, and I have never known the time when they took the side of little business in op- position to big business when there was a conflict. Let me ask the gentleman if he knows of the time when they have ever taken the side of little business when there was a conflict between little busi- ness and big bus:ness? Mr. HALLECK. The gentleman knows that in the report you cite several of those occasions, and as a matter of fact, I insist that it is as much in the interest of small business to cut the cost of gov- ernment and reduce taxes as it is any- body's business. Mr, PATMAN. The gentleman from Indiana could not cite one instance. SMALL-BUSINESS FRONTS—PARTIAL TEXT OF REPORT ON SMALL-BUSINESS ORGANIZATIONS BY SELECT COMMITZEE ON SMALL BUSINESS Mr. Chairman, I am including in my remarks the full text of part I and part II of House Report No. 1675, entitled “Small Business Organizations,” men- tioned by the gentleman from Indiana [Mr. Ha.iEck], filed on February 21 by the Select Committee on Small Business, of which I have the honor to be chair- man and the gentleman from Indiana the ranking minority member. The other two parts, part III and part IV, containing detailed evidence on the issue of interconnection, are omitted. I have included, however, the preface, the con- clusion, the minority views submitted by Republican members, and the additional remarks of tne chairman.
1950 Four organizations purporting to rep- resent small business were selected as case studies for this report. All four organizations, I regret to say, were found to be fronts for big business. The detailed facts as to the money con- tributions from big business are given. Mr. DeWitt Emery, head of two of these organizations—the National Small-Busi- ness Men's Association and the Small Business Economic Foundation—solicits and receives, in the name of small busi- ness, contributions from some of the largest corporations in America. The third organization, National Tax Equal- ity Association, receives regular contri- butions from various public-utility com- panies, and in turn divides up a substan- tial part of its budget with the various secretaries of the State affiliates of the fourth organization, National Associated Businessmen. Thus we have the outrageous spectacle of purported trustees for small business who do not hesitate to take their money where they may. Let the record speak for itself: BMALL BusINEsS ORrGANIZATIONS—Four CASE Srupvies or ORGANIZATIONS PURPORTING TO REPRESENT SMALL BUSINESS PREFACE This study has been made because of the large number of organizations springing up which claim to represent small business, but which may often merely use small business as a front for other purposes. It is altogether healthy in our democracy that small-business men should do what comparable groups, such as labor and the farmers, have already done; namely, exercise their American right to organize themselves. But it is far from healthy if organizations purporting to represent small business do not represent small business, if they are financed by big-business money, for instance, or if they represent only professional promoters trading on the name of small business. At its preliminary stage, the present study contemplated a general survey and examina- tion of all organizations purporting to repre- sent small business, or at least the more important organizations in this group. Questionnaires were sent to a selected lst of 15 national organizations and also to over 80 State organizations. Despite follow-ups by registered letter and other methods, re- sults in obtaining significant information or even consistent cooperation were dis- appointing. This presented two alternatives. One was to conduct committee hearings on all of these organizations, a project which would not only be time consuming for the committee but also burdensome to many of these organ- izations, particularly if they should be asked to send representatives to testify in Wash- ington. The second was to concentrate on a few organizations on a case-study basis in order to be able to present, through the medium of the study, instructive samples and examples of organizations purporting to represent small business. The second alter- native was chosen, or practically chose itself, particularly by reason of the special advan- tage of obteining a much more detailed and realistic picture, on a case-study basis, than through an over-all study of many organ- izations. This decision necessarily brought on the problem of including, in the case study, organizations which would be sufficiently representative and typical, or at least illus- trative. Some of the organizations are quite important and reasonably powerful, while others are relatively much less important CONGRESSIONAL RECORD—HOUSE or powerful. Some of the organizations are exclusively national in operation; others are also broken down into State or regional organizations or are exclusively local in operation. Some of these organizations pur- porting to represent small business carry “Small Business” as part of their name; some do not. Some purport to represent not only small business in particular but all business in general. Some concentrate on one par- ticular issue, such as taxation; others are less confined. Some operate as a pair or in & group; others operate individually. Fortunately, the four case studies pre- sented here—although it is hoped more cases may be added later—are fairly representative of the many varieties of organizations sug- gested by these differentiations. The four organizations which are the sub- ject of this case study are the following: t 1. National Small Business Men's Associa- jon. 2. Small Business Economic Foundation. 8. National Associated Businessmen. 4. National Tax Equality Association. Although all four of these organizations are fairly important and substantial, as well as national in character, No. 3 has about 35 State affiliates, some of which, at least, are of @ modest, as well as local, character. The first two of these organizations, it will be noted, carry the name “Small Business”; the latter two do not. One of these organiza- tions at least, No. 4, despite the free use of the small-business slogan in its literature, claims that it does not purport to represent small business exclusively. The first two organizations have a somewhat general pro- gram, despite an anti-labor-union emphasis, while the second two organizations concen- trate on the issue of tax equality, which is a slogan directed against cooperatives. The first two organizations seem to act as a pair, and the second two seem to do 80 also. Thus, it is true, there is no case in this study involving a “lone wolf” organi- zation. However, each pair, if the two or- ganizations do act as one, is a lone wolf, 680 to speak. Moreover, by including two such pairs in the case study, it is possible to compare one pair with the other for the Purpose of determining whether or not there is a common organizational pattern. The study made here shows that in each pair one 1s more the grass roots, active, and direct- lobbying organization, backed by honest-to- goodness small-business men, and operating with no direct big-business financial sup- port; while the other acts more as the al- leged research organization, accepting and gladly accepting substantial big-business contributions in addition to regular dues from small-business men. The present study also shows a pattern of intorlocking officers between the organizations in each pair, as well as other indicia of joint operation. It 1s hoped that the readers of the cases presented in this study will read them not only as interesting narratives but also as they would read case studies in a law or medical book. Although certain conclusions or opinions are interspersed throughout these four cases, the most significant con- tribution is the factual material presented, all of which is relevant on the issue of the good fnith of these organizations in pur- porting to represent small business. The reader may draw his own conclusions and form his own opinions, which need not agree with those stated. The important thing is to obtain a picture from actual cases of how these organizations purporting to represent small business operate. Needless to say, this study is disconnected in purpose from the merits and demerits of the specific causes or platforms favored by any of the four organizations. The pur- pose of this study, and of the whole inquiry from which it derives, has been to examine into the question as to whether organiza- tions purporting to represent small business 2687 actually do represent small business. It fs only as to this question that opinions and conclusions are expressed in each of the four cases made part of this study, which the reader may accept or reject, But the pres- ent study in no way takes a position on the anti-labor-union platform or other plat- forms of one or the other of the first two organizations. And this study in no way takes a position on the anticooperatives tax equality platform of one or the other of the latter two organizations. It may be that small business has a great deal to fear from labor unions unless they are subjected to severe restrictions. It may be that small business has a great deal to fear from co- ops, with their alleged exemption from cer- tain taxes. On the other hand, it may be that it is big business which is most afraid of labor unions and of the competition of cooperatives. Finally, it may be that the truth lies somewhere between these two po- sitions. With all of this, the present study is not concerned. However, the study is much concerned with the conclusions stated therein that none of these four organizations truly rep- resent small business, and that big-business money contributions—from United States Steel, Standard Oil, and various public utilt- ties, to cite only examples—encircle these organizations. PART I National Small Business Men’s Association and Small Business Economic Foundation The organizations covered by this part of the study are the following: National Small Business Men’s Associa- tion, Inc., with executive offices at 39 South La Salle Street, Chicago, Ill.; national head- quarters at Akron, Ohio; and also an office in Washington, D. C. Small Business Economic Foundation, Inc., with headquarters at 122 West Monroe Street, Chicago, IIl. These organizations have been studied to- gether because their operations and activi- ties appear to be closely connected and bee cause both organizations originated with and are headed by the same person or persons. In addition, this part of the report covers ineidentally the leading person in these two organizations: DeWitt Emery, president of both organizations, and also principal of the Monroe Letterhead Corp., Akron, Ohio. The National Smal] Business Men's Asso- elation, or the association, as we shall now call 1t, was founded in 1937 by DeWitt Emery. He became its first president and is still its president. J Raymond Tiffany, who has law offices in New York City, was designated @3 general counse] and still serves in that capacity; the association claims a New York Office at his offices. A large part, if not the larger part, of the association's program has related to the demand for restrictions on la- bor unions. Very little of the association's program has related to distinctively small- business matters. The association’s annual statement of objectives ordinarily does not even use the words “small business,” but covers a variety of subjects of general busi- ness interest and sometimes of a highly po- Htical nature. Of course, the description “small business” is prominently displayed in the association's name. The association states that it was formed “to give small-busi- ness men a Voice in national affairs and to preserve freedom of enterprise’; and, when the association speaks, it purports to be the voice of small business. It has been filing reports under the Lobbying Act. It reports receipts of over $150,000 a year; in 1948 the exact amount was 6159,291.95. It pays Mr. Emery a salary of 818,000 a year. The Small Business Economic Foundation was not formed until November 1946. The foundation, as we shall now call it, was formed, the evidence seems clear, by the
2688 same DeWitt Emery who organized the asso- ciation. As with the association, Mr. Emery also became its first president, and J. Ray- mond Tiffany, its general counsel. Both still serve as president and general counsel, re- spectively, as in the association. In fact, all of the officers and directors of the foun- dation are officers or directors of the assocla- tion, including Dr. Alfred P. Haake, econo- mist. The foundation, like the association, claims a New York office at the offices of Mr. Tiffany. The purpose for which the founda- tion was organized is stated to be “the col- lection, compilation, interpretation, and dis- semination of information, data, and educa- tional material relative to freedom for Amer- ica and Americans.” Like the association, the foundation does not, in its formal pro- gram, stress small business as such, although the slogan is prominently carried in its name and the literature carrying its name. The foundation does stay in the background somewhat, unlike the association, which is more the grass-roots organization of the two. The foundation files no reports under the Lobbying Act. However, its receipts, we are advised by it, amount to some $60,000 a year or more—#69,158.24 in 1948 and 862,772.74 in 1947. The amount of these receipts seems small in view of the wealth of its corporate contributors, the names of which came to us from another source. However, it may be, although we do not know, that these corpo- rations also contribute to the association. The foundation, according to its statement, pays no salary to any of its officers, including Mr. Emery. Mr. DeWitt Emery is apparently in the printing and letter-addressing business, his firm being the Monroe Letterhead Corp., Akron, Ohio. As we have seen, the associa- tion has its national headquarters in Akron, Ohio. The association apparently rents space from Mr. Emery’s firm and also gives it a sub- stantial amount of business. In addition to the $18,000 salary Mr. Emery receives from the association, his firm receive sizable sums for office rent, letterheads, and membership service; these items have amounted to al- most 810,000 in 1949, for the first three quarters. The above sketch of the two organizations, and the president of both, has, of necessity, been in part a summary of some of the parts developed by the investigation, which will be set forth in detail in this study. In making this study and report on the association and the foundation, the answers to the following questions have been sought: 1 Do these organizations claim to repre- sent small business? 2. If so, is the claim false or misleading? There is a third, although subsidiary, question: 8. Are the association and the foundation in reality under one direction? In order to obtain information and evi- dence, the following was done: 1. The reports filed by the association un- der the Lobbying Act have been studied and digested, including the brief reports filed by Lyle W. Jones, the association’s Washington representative. Mr. DeWitt Emery, president of both the association and the foundation, files no reports, and the foundation files no reports. 2. Both the association and the foundation have been requested to furnish specified in- formation and material to the committee. They have responded by giving to the com- mittee two fairly elaborate brochures, ap- parently especially prepared for the com- mittee. Each of the brochures 1s in the same type of binding, and each is entitled “Narrative History and Exhibits.” Each con- tains a brief narrative history, together with a series of exhibits, consisting mostly of literature issued by the organization coy- ered. However, these brochures do not con- tain the detailed financial information which was particularly desired by the committee. CONGRESSIONAL RECORD—HOUSE There are some brief and summary financial statements given for the foundation, but we have had to go to other sources to obtain such further information as could be procured. 3. No hearings have been held in connec- tion with these two organizations. A public hearing was definitely set for the fifth day of October 1949, but at the request of Mr. Emery and to satisfy the convenience of his general counsel, was put off to a Saturday on the 8th day of October 1949. It became im- possible to assemble the subcommittee mem- bers for that day, and no new date has been set. Mr. Emery was invited to submit a written statement, which he did under gen- eral counsel's signature (see pt. IV). 4. No investigators as such were used in making this study. However, the staff was able to obtain a limited amount of addil- tional information from various sources. The Foundation’s Big Business Support The Small Business Economic Foundation was incorporated as we have seen, in No- vember 1946. Apparently, Mr. Dewitt Emery, J. Raymond Tiffany, and other associates brought over from the association lost no time at all in lining up, as contributors for this new small businuess venture, not merely big business, but the very top big businesses of the country: United States Steel, Standard Oil, Socony-Vacuum, Texas Co., and others. For on September 156, 1947—according to a photostat we have in our possession— DeWitt Emery, as president of the founda- tion, was sending out a letter soliciting con- tributions for the foundation, and this letter enclosed a long list of existing big-business contributors. Emery stated in this letter that he was sending the list so that contributors might know the company we are keeping. In other words, the president of the small business foundation, as well as of the small business association, was bragging about the big- business company they were keeping. Moreover, although Mr. Emery did not mention the association by name, as dis- tinguished from the foundation, he did make, in this letter, a pointed reference to the representative small-business group, which seems obviously to mean the association; and to the grass-roots approach originated by it; as explained, he further stated, in his enclosure entitled “Ignorance May Kill Free Enterprise.” Mr. Emery'’s letter reads as follows: SmaLL Business Economic FouNDATION, INC., Chicago, Ill., September 15, 1947, Dear MR. : Just about the first thing most executives ask when I discuss the pro- gram of this Foundation is, “Who are some of the contributors?” Of course, all of us like to “know the company we are keeping,” so I thought it would be helpful in your case to attach a cross-section list of the better-known com- panies who have currently subscribed up to the acceptable $2,500 maximum. All of the many leaders in industry who have been asked their opinion as to the effec- tiveness of our grass-roots approach to the problem of explaining to workers the ad- vantages of our free competitive system of business, quickly concede that this pro- gram, originating with the representative small-business group, is most likely to ac- complish the desired result, i. e., public understanding. It will pay you real dividends to spend the few minutes necessary to understand the approach as expleined in the enclosure, Ignorance May Kill Free Enterprise. I feel abre you will then want your company to go ong with the meny others su supporting the wor! This {ts a tremendously important Job and the time remaining in which to do it ts stantially MARCH 2 rapidly running out. All business, big, me- dium, small, must join forces to fight effec- tively, and do it now. Send us your company check, for what- ever amount you decide upon; mail it as soon as you can, and we will put it to work in the most effective way immediately. Subscriptions are chargeable to business expense or to public relations. I am count- ing on your support. Sincerely, DeWrrtr Emery, President. “Eternal vigilance is the price of liberty.” The attached lst is as follows: Among prominent corporation contribu- tors: American Rolling Mill Co.; American Screw Co.; Auto Engine Works; Barber-Col- man Co.; Bear Mill Manufacturing Co., Inc.; Bibb Manufacturing Co.; Blue Bell, Inc.; Borg-Warner Corp.; Botany Worsted Mills; Brown & Sharpe Manufacturing Co.; The Buckeye Steel Castings Co.; Campbell-Ewald Co., Inc.; Celanese Corp. of America; the Cleveland Graphite Bronze Co.; Chrysler Corp.; De Soto Motor Corp.; Dexter Folder Co.; Dodge Bros. Corp.; Donaldson Baking Co: The Duff-Norton Manufacturing Co.; Electric Boat Co.; Federal Malleable Co.,; Federal-Mogul Corp.; Marshall Field & Co.; Firestone Tire & Rubber Co.; First National Stores, Inc.; Fort Pitt Brewing Co.; Furnas Electric Co.; The B. F. Goodrich Co.; The Goodyear Tire & Rubber Co.; Greenlee Bros. & Co; Gunite Foundries Corp.; The M. A. Hanna Co.; Harnischfeger Corp.,; E. F. Houghton & Co.; Inland Steel Co.; The In- terstate Co.; Spencer Kellogg & Sons, Inc.; Libbey-Owens-Ford Glass Co.; the Lindsey Wire Weaving Co.; Lone Star Cement Corp.; Marshall-Wells Co.; Mathieson Alkali Works, Inc.; The Miller Shoe Co.; Mine Safety Ap- pliances Co.; Mississippi River Fuel Corp.; National Brass Co.; National Machinery Co.; National Oil Products Co.; The Okonite Co.; Peter Paul, Inc.; Pittsburgh Reflector Co.; Plymouth Motor Corp.; Proctor & Schwartz, Inc.; The Pure Oil Co.; Republic Steel Corp.; Sawyer Stores, Inc.; Sears, Roebuck & Co.} Shapleigh Hardware Co.; W. A. Sheaffer Pen Co.; Socony-Vacuum Oil Co.; Standard Oil Co. of Indiana; Standard Oil Co. of New Jersey; Stanley Woolen Co.; The Syming- ton-Gould Corp.; The Texas Co.; United States Steel Corp.; Vick Chemical Co.; Hiram Walker-Gooderham & Worts, Ltd.; Western Insulated Wire Co.; Wheeling Steel Corp.; Edwin L. Wiegand Co.; Williamson Candy Co.; Wyandotte Worsted Co.; Wm. H. Ziegler Co., Inc.; and many others. The letter, together with the list, is iden- tifled here as exhibit 1. Who are these corporations—“the com- pany we are keeping’? Let us discuss these corporations in terms of their total assets. In all, there are 70 of them, and every one 1s at least a million-dollar concern in total assets—except about 10. Five of these corporations are billion-dol- lar concerns, in total assets: Standard Oil of New Jersey, $3,000,000,000; United States Steel, $2,000,000,000; Standard Oil of Indi- ana, $1,000,000,000; Socony-Vacuum 61,000,- 000,000; The Texas Co., 1,000,000,000. Twelve of these corporations are $100,000,- 000 concerns, excluding the billion-dollar concerns just listed: Sears, Roebuck, $712,- 000,000; Chrysler Corp., 641,000,000; Repub- lic Steel, $489,000,000; Goodyear Tire & Rub- ber, $424,000,000; Firestone Tire & Rubber, $344,000,000; American Rolling Mill, $316. 000,000; Inland Steel, $292,000,000; B. F. Goodrich, 266,000,000; Celanese Corp., $256,- 000,000; Hiram Walker, $154,000,000; Borg- Warner, $151,000,000; Marshall Field, $108,- 000,000. This is “the company we are keeping,” says DeWitt Emery, president of the ell Business Foundation as well as the Small Business Association, who subscribes the foundation letter, as he also subscribes his
1950 association letters: “DeWitt Emery, Presi- dent, ‘Eternal vigilance is the price of lib- erty.’ Mr. Emery might well be asked: If eter- nal vigilance is the price of lMberty, what is the price of small business, or for small business? Can small business be bought for what big business will pay to use the name of small business as a front? Tables showing the total assets of the 70 firms referred to by Mr. Emery in his letter, and containing other pertinent information, are identified here as exhibit 2. The association's connection with big-bust- ness support of the foundation We do not propose to show that the big- business money contributed to the foun- dation flows to the association, in order to show the association’s connection with this big-business support. After all, the foun- dation is the newer organization and was or- ganized in 1946, while the association was organized in 1937. The foundation collects only some $60,000 to $70,000 a year, accord- ing to the figures it gave us, as against over $150,000 collected by the association. It is quite possible, of course, that many of the large corporations which contribute to the foundation also contribute to the associa- tion. Their names would not turn up in the reports filed by the association under the Lobbying Act, unless contributions of any corporation exceeded @500 a quarter; that is, at the rate of $2,000 a year; and the association reports there have been no con- tributions of this size. Be this as it may, we do not regard it as necessary to show an actual payment of money by the foundation to the association to prove a connection between the associa- tion and the big-business contributors to the foundation. As we have seen, every single officer and director of the foundation 1s an officer or director of the association; this is shown by the letterhead of Mr. Emery’s letter quoted above and current letterheads of the assooi- ation. The association and the foundation were both founded by the same man, DeWitt Emery, who is president of both. They both have the same general counsel. DeWitt Emery’s powers, as president of the association, are not left to chance; the gen- eral counsel, presumably, has seen to that. The association's constitution provides, in article IV, section 2, as follows: “The president shall be the chief executive and managing officer of the association and shall preside at all meetings of the members, the trustees and executive committee, and shall have general control, management, and supervision of the business of the association and shall perform such other duties as may, from time to time, be delegated to him by the trustees.” To make doubly sure of the powers of the president, the association’s constitution pro- vides, in article V, section 1, that the members of the executive committee shall be appointed by the president, although with the approval of the trustees. It is impossible reasonably to believe that Emery would run the association along lines that would displease the big-business con- tributors of the foundation. And it is im- possible to believe that the men sitting as officers and directors of the foundation would, even when sitting for the association, forget the foundation's big-business con- tributors. And it is tmpossible to believe that J. Raymond Tiffany, when acting as general counsel for the association, would disassociate himself from J. Raymond Tiff- any, acting as general counsel for the foun- Gation, with its big-business contributors. We may assume that DeWitt Emery, J. Ray- mond Tiffany, and their associates would run both organizations in what we may term the closest harmony. Certainly the association, by continuing under the lead- ership >of Emery, impliedly represents to CONGRESSIONAL RECORD—HOUSE the foundation's big-business contributors that the association, too, is all for them. And, if these contributors are also making separate contributions to the association, should that be the cage, the association would be tied to them even more closely. As a matter of fact, our views are fortified by the way the two organizations seem to work. Both use the slogan “Small Business” in their names. Both avoid specifically small-business issues. They both espouse things big business wants, and which small business may or may not want. They both concentrate nrost of their guns on the labor unions. The one purpose stated in an as- sociation money-raising letter dated Febru- ary 21, 1949, is as follows: “If the labor bosses and their radical and communistic cohorts can be stopped or slow- ed down to 8 walk on labor legislation, then there is a good chance of stopping most if not all of the administration's program of national socialism.” This letter of the association is signed “DeWitt Emery, president. ‘Eternal vigi- lance is the price of liberty.’” Finally, we also have the letter by Emery as president of the foundation, quoted above, which seems to be directly referring to the asso- ciation as ‘the representative small-business group.” The association, therefore, in our opinion, cannot claim to be a simon-pure small-busi- ness organization merely because no contri- butions received by it, as reported under the Lobbying Act, exceed @600 for any quarter, from any one contributor. As we Nave al- ready indicated, @500 a quarter is a good- sized contribution in any event, being at the rate of $2,000 a year, and even big con- cerns could be contributing substantial amounts without having their names di- vulged. But, secondly and more important, 1s the close interconnection between the foundation and the association, through DeWitt Emery and his associates and through the similar operations of the foundation and the association. In our opinion, neither association can be disassociated from DeWitt Emery, and he cannot be fish in one and fowl in the other. Both Organisations Purport To Represent 8mall Business Both the foundation and the association carry the small-business slogan right in their names. That they both purport to repre- sent small business is therefore proved be- yond any reasonable doubt—fust as clearly as if they so stated in so many words. The voluminous literature circulated by both or- ganizations capitalizes or. this name “Small Business.” The association holds in Wash- ington, D. C., what it calls small-business days. Ite Washington representative actu- ally represents small business on the Task Force Committee of the National Security Resources Board, together with representa- tives of other small-business organizations. Summary of Above We therefore believe that we can give fully responsive answers to the two main ques- tions stated at the beginning of this report: 1. Do these organizations claim to repre- sent small business? The answer is ‘‘Yes.” 2. If eo, is the claim false or misleading? The answer Is “Yes.” As to the foundation, the evidence is con- clusive. For an organization to pretend to be a “small business” research foundation and to live upon, or to even hope to live upon, the dole of the biggest businesses in the country, may well be called an absolute fraud. As to the association, the answer must be much the same. There is the qualification that no evidence has been adduced directly tracing to the association any foundation moneys received from big business. Never- theless, the association must stand or fall with DeWitt Emery, and he is in the position of a small-business fiduciary and trustee 2689 who is willing to take money from big bust- ness. It is no defense for him to say that thie is an arbitrary line which is being drawn between big business and small business. He himself has drawn the line by forming hot one but two small-business organisations bearing the name. More important, the protection of small business as such has been ® special objective of the Congress over & period of years, particularly since the be- ginning of World War IJ, and has received bipartisan support, resulting in the creation of special small-business agencies and divi- sions in the Government set-up, and of small-business committees in both Houses of the Congress. Although we regard the interconnection of the association and the foundation as amply demonstrated, particularly by Mr. Emery’s common position with each, we shall address ourselves in detail to the evidence as to common purposes and common pro-=- grams demonstrating the closeness of the interrelation between the association and the foundation, and thus connecting the association, at least indirectly, with the foundation's big-business contributors. Before doing 80, however, we shall present the part of our report on two other organi- gations, the National Tax Equality Associa- tion and the National Associated Business Men, which present a duality of small-busl- ness organizations with many similarities to the association and the foundation. In that complex, NAB appears to be the grass roots organization for NTEA, which has the big- business contributors, just as the association may be regarded as the grass roots organt- gation working with the foundation. Two gentlemen, Mr. Vernon Scott and Mr. Lor- ing A. Schuler, appear to be the connecting link between NAB and NTEA, a role compare able to that ot Mr. Emery in the associa- tion and the foundation, Both NTEA and NAB, as will be seen by the facts stated in this study, purport to represent small business. After completing the NTEA-NAB part of our report—in full, including the intercon« nection of these two organizations—we shall return to the association and the foundation. in order to show the detailed evidence of their interconnections. PART I National Taz Equality Assoctation, and Nae tional Associated Businessmen, Inc. The organizations covered by this part are the following: National Tax Equality Association, with headquarters at Chicago, Ill. National Associated Businessmen, Ina., with offices in Washington, D. C., and afMfilia- ted State units in about 35 States. These organizations have been studied to- gether because their operations and activi- ties appear to be closely connected, and be- cause of allegations that these organizations have had the same leadership and direction. In addition, this report incidentally covers the following private concern: Scott & Schu- ler, organizers and counselors, with offices in the Chichgo headquarters of NTEA and in the Washington headquarters of NAB. They also list themselves as organization and industry counselors. The National Tax Equality Association, or NTEA as we shall now call it, was organ- ized in 1943. Mr. Vernon Scott (Scott & Schuler, organization and industry coun- selors) had a substantial part in organizing it. He became manager and vice president, and bis firm of Scott & Schuler was retained by NTEA. Mr. Scott now has the title of executive vice president, and his firm is still in NTEA’s employ under 4 very substantial retainer. NTEA’s activities have related al- most exclusively to a tax-equality program directed against cooperatives. It streases the argument that co-ops under present law are @ menace to small business. Its program includes no small-business matters apart
2690 from tax equality. Its articles of incorpora- tion state ‘tax equality” as its objective. NTEA claims to be a sort of research or- ganization and ostensibly remains in the background. It claims that it is not sub- ject to the terms of the Lobbying Act. How- ever, it commenced filing returns under the Lobbying Act in 1949. The returns showed that it has receipts of $500,000 a year. It pays Scott & Schuler $48,000 a year plus substantial expenses, and supplies them with free office space in its own Chicago offices, where Mr. Scott has his headquarters. These returns also showed that most of NTEA’s large contributors are public-utility com- panies. The National Associated Businessmen, Inc., or NAB as we shall call it, was organized in 1946, first using the name United States Business Organizations, Inc. It has 35 State units or affiliates; the original State units were created prior to NAB, and most of them bore the name “Tax Equality.” The Na- tional Tux Equality Association (NTEA) and Scott & Schuler had a substantial part in the formation of the State units and of NAB. Mr. Loring A. Schuler, of Scott & Schuler, became exccutive director of NAB and holds that office today. The stated cor- porate purposes of NAB are more general than those of NTEA, but tax equality, in reapect to co-ops, is the one stressed, NAB likes to emphasize its small-business back- ground and composition. It is direct in its activities. It has been filing regularly under the Lobbying Act. NAB’s receipts amount to about 850,000 a year (1948). It pays Scott & Schuler a $10,000-a-year rotainer and sup- plies them with free office space in its Wash- ington office, where Mr. Schuler makes his headquarters. As we shall show, it also de- velops that officers of NAB State affiliates receive substantial sums of money from NTEA. Scott & Schuler, although established as a partnership, devote, in Scott’s own words, 99 percent of their time to these two organiza- tions, NTEA and NAB, including the State affiliates They have no offices except those furnished by these organizations, the one in Chicago with NTEA, from which Mr. Scott operates, and the other in Washington with NAB, from which Mr. Schuler operates. They receive free telephone service as well as of- fice space. They receive the fees of 848,000 from NTEA and $10,000 from NAB, not in their individual capacities, but as a firm. The above sketch of NTEA, NAB, and Scott & Schuler has, of necessity, been in part a summary of some of the facts developed by the investigation, which will be set forth in detail in this study. In making the present study and report, answers to the following questions have been sought, as with the two organizations studied under part 1: 1. Do these organizations claim to repre- sent small business? 2. If so, is the claim false or misleading? There is the third, although subsidiary, question: 3. Are NTEA and NAB in reality under one direction? In order to obtain information and evi- dence, the following was done: 1. Various reports filed under the Lobbying Act were studied and digested. NTEA filed such a report, showing income and expendi- tures, for the first time this year; the report indicated substantial contributions from wealthy corporations. NAB has been filing reports since 1947, and a large number of the State affiliates have been filing reports. 2. Repeated attempts were made to obtain information from NTEA and NAB by letter and questionnaire. These attempts met with no success, and encountered only evasive tactics. 3. One public hearing was held—on August 22, 1949 The witnesses were Vernon Scott, of the firm of Scott & Schuler, and, for some CONGRESSIONAL RECORD—HOUSE limited questions, Loring A. Schuler, of the firm. Mr. Scott admitted that NTEA ac- cepted big-business contributions, but de- fended its right to accept contributions from big business and small business indiscrimi- nately. He denied that NTEA 1s specifically & small-business organization, but admitted that it claims to represent small business. He denied that NAB was a front for NTEA, but admitted facts showing an intimate con- nection between NTEA and NAB or its State affiliates. The hearing was adjourned in or- der to enable Mr. Scott to catch a boat, on which he was leaving for Europe, and no further hearing has been held. 4. No investigators as such were used in making this study. However, the staff was able to obtain a ]imited amount of additional information from reliable sources. The testimony of Mr. Vernon Scott, limited in time and in scope as it was, deserves care- ful scrutiny. He admitted what he could not deny—namely the receipt of big business contributions—in view of NTEA's lobbying reports which it finally filed in 1949. He tried to deny the full closeness of the con- nections between NTEA and NAB, and to ob- scure the efforts of these two organizations to pose as simon-pure small-business organ- izations NTEA's Financial Support by Big Business The fact which could not be denied is NTEA's acceptance of contributions from big- business concerns. The acceptance of con- tributions from big business js, of course, not unlawful, but, on elementary fiduciary principles, it impairs the usefulness of an organization purporting to represent small business. In its lobbying report for the first quarter of 1949, NTEA showed 43 contributors of over 8500 each for the quarter; of these, 16 were public-utility companies. For the third quarter, 14 out of a total of 31, were public- utility companies, as follows: Public Service Co. of Colorado, Denver, Colo. Florida Power & Light Co., Miami, Fla. Public Service Co. of Indiana, Inc., Indlan- apolis, Ind. Kentucky Utilities Co , Inc., Lexington, Ky. Southwestern Gas & Electric Co., Shreve- port, La The Detroit Edison Co., Detroit, Mich. Montana Power Co., Butte, Mont, Public Service Electric & Gas Co., Newark, N J Consolidated Edison Co. of New York, Inc., New York, N. Y. Carolina Power & Light Co., Raleigh, N. C. Columbus & Southern Ohio Electric Co., Columbus, Ohio. Duquesne Light Co., Pittsburgh, Pa. Texas Electric Service Co., Fort Worth, Tex. Utah Power & Light Co., Salt Lake City, Utah. A complete list of contributors of 8500 or more, for the third quarter of 1949, is identi- fled here as exhibit 3. Under the Lobbying Act it 1s not required that the actual amount of the contribution be stated in the filed report. It is enough if the name and address of the contributor is given. The first quarter is representative of all three quarters. The filed figures show that public utility companies, at least in number, were the main source of large contributions. No other type of business was represented by more than four contributors, The classi- fied list for the first quarter is as follows: Public utility companies_....-......- - i Public utility information service __ -- Grain company ---.------ eoe--- eee -- Dairy industry..- -- _ Fertilizer.....---------.--- -- Lumber........ enanen-mcen= -- Metal products manufacturing.-----..- Household appliances manufacturing... = 9 208008 C9 CO OOH MARCH 2 Cord products......-------~----~------ 1 Livestock exchange-... - il Measuring devices....----------------- 1 Unclassified -..--. wnenanan eee ee nnn eee 1 NTEA has failed to give the uctual amount contributed by each contributor of 8500 or more, in answer to a committee question- naire sent after the public hearing referred to above. The lobbying reports filed by NTEA for the second quarter of 1949 and for the third quarter present substantially the same pic- ture as for the first quarter. In the lobbying reports for each of the three quarters of 1949, filed by NTEA, there is a fatlure to disclose the total of the contributions amounting to $500 or more. The Lobbying Act requires a total of all contributions undcr $500, with- out specifying names of contributors. I[t also requires the names of all contributors of over 8500, but without expressly requiring the total. However, the Lobbying Act re- quires a grand total of all vontributions, in- cluding those under $500 and those over 8500. NTEA in all of its three reports does state a total of contributions under $500 but repeats the very same total as the grand total. Thus the whole is no greater than one of its two parts. By this new kind of arithmetic NTEA avoids telling us the total of its contributions over 8500. We do not even know whether the total of large contri- butions is greater than the total of small contributions. Moreover, NTEA so far has studiously avoided giving the committee this information in response to the committee’s questionnaire. It is true that Mr. Vernon Scott did state at the committee's public hearing that the total contributions of public utility compa- nies is less than 10 percent of the whole (hearing, p. 261). He also stated that two- thirds of the contributions come from small business (hearing, p. 17), which he defined as firms employing less than 500 people, a definition which can include some very large businesses. Only complete frankness on the part of NTEA can clear up this picture. NAB a Beneficiary of NTEA Big Business Financial Support The committee staff has also collected evi- dence indicating that NTEA funds flow into NAB or its State affiliates. Periodical month- ly payments of approximately $200 are made to individuals whose names happen to be those of secretaries of NAB State affiliates. These payments alone totaled about $28,000 for 9 months. NTEA also pays $48,000 of the $58,000 Scott & Schuler receive from both NTEA and NAB for their joint and individual services to the organizations. The contribu- tions from public-utility companies can therefore be regarded as offering some finan- cial support to NAB and its affiliates, in spite of Mr. Scott's testimony which tindi- cated, by implication at least, no such inti- mate connection with NTEA or its contribu- tors. There can be and there is no denial of these substantial contributions by big busi- ness. Far from denying these contributions, Mr. Scott at the public hearing made a virtue out of necessity. Never, so far as we know, had the public been aware of these big busi- ness contributions to NTEA until NTEA finally decided to file lobbying reports, com- mencing January 1949. However, on the stand Mr. Scott testified that he welcomed contributions from big business, and from public utilities in particular (hearing, p. 25). He also stated: ‘We offer no apology for the public utilities” (hearing, p. 26). It thus seems sufficiently clear that if these organizations do claim to represent small business, there is at least a prima facie basis 1Refers in each c:se to page number in printed record of hearings.
1950 for regarding the claims as false or at the very least grossly misleading. We have failed to find any evidence, and we doubt that there is any evidence, that these organiza- tions have made any frank disclosure to small business generally or to thelr own small-business members of the big-business financtal support to which we referred above. Let us examine, therefore, the question of whether or not NTEA and NAB do purport to represent small business. NTEA as a Purported Representative of Small Business That NTEA Goes hold itself out as a repre- sentative of small business is shown by the following: 1. In a letter to the Honorable WricuT Pat- MAN, chairman of this committee, dated April 18, 1949, Mr. Garner M. Lester, president of NTEA, states, in asking for a personal inter- view, that the “committee and the National Tax Equality Association have the same pur- pose—serving the interest of small-business men,” This letter was written before the present study was commenced. A copy thereo? ts identified here as exhibit 4. 2. NTEA's literature, and propaganda gen- erally, is so worded and sa devised as to play up and feature its purported representation of small business. An example of this is an impressive red and white circular issued by NTEA, entitled “Sudden Death on Main Street.” The circular recites the alleged fate of one John Moore and his family, “just small-business people,” who allegedly were put out of business because a cooperative moved into their town. The circular then contains a petition, reading as follows: “Dear CONGRESSMAN: This can happen to me or any small-business man because of tax favoritism. Please do something about it.” Copy of this circular reciting the alleged story of these small-business people and containing the small-business man petition is identified here as exhibit 5. 8. Vernon Scott himself made important admissions under oath showing that NTEA does purport to represent small business. We give brief excerpts from his testimony: “That is our big job, to explain that to small-business men (hearing, p. 22). “Of course we do, because 95 percent of our members numerically are small-business men (hearing, p. 29, in anewer to question as to whether ‘you hold yourself out at any time as representing small business’). “JT would say it perhaps did and quite prop- erly so (hearing, p. 82, in answer to question: ‘Does the NTEA in any way in its publicity or propaganda hold itself out as being a representative of small business particu- larly?’). “We do. We think and know we are serv- ing the interests of small-business men over this country (hearing, p. 32, in answer to question as to whether you, NTEA, ‘hold yourself out as serving the interests of small business’) .” Mr. Scott once stated as an explanation: “We don't try, we never intimated that we were solely a small-business man’s organiza- tion that I know of (hearing, p. 29).” 4. NTEA's close connection with the NAB organization, which is avowedly “grass roots” (hearing, p. 35), and avowedly small busi- ness, is further evidence of NTEA’s assump- tion of the role of shaping the ideas of small business and evidence that NAB, together with its State affiliates, is a special small- business “front” through which NTEA has operated. This is a subject whjch will be developed in detail under part III. NAB as the Purported Representative of Small Business The description “Small Business” does not appear in the name National Associated Businessmen, Inc., any more than in the name National Tax Equality Association. However, even though the committee hear- CONGRESSIONAL RECORD—HOUSE ings did not advance to the potnt of ques- tioning NAB officials about this, there ts little doubt that NAB purports to operate exclu- sively, at least for all practical purposes, as 8 small-business organization. 1. In the letter to Hon. Wrichr PaTMan, chairman of this committee, dated April 18, 1949, Mr. Loring A. Schuler, executive direc- tor, stated as follows: “National Associated Businessmen, Inc., is the coordinator and Washington representa- tive of 35 States and original organizations of Associated Businessmen covering most of the United States. Members of the State asso- ciations are politically minded, small-busi- ness men.” A copy of this letter is identified here as exhibit 6. The president of NAB, Mr. Elton Kile, under date of January 22, 1948, wrote to tho President of the United States and to others, stating as follows: “I am president of the National Associated Businessmen, Inc. (formerly United States Business Organivations), which is the na- tional representative of autonomous asso- ciations of small-business men in 35 States. Tam writing to you on behalf of the millions of small-business-men voters of this Nation with regard to a matter which is of the ut- most urgency to them and to every other taxpayer.” A copy of this letter is identified here as exhibit 7. ° 2. Mr. Vernon Scott, in his sworn testi- mony at the committee’s one hearing, re- ferred to the State units as groups which had spontaneously grown up from the ranks of small-business men (hearing, pp. 35 and 36). The committee sent a simple letter to each one of NAB’s State units or affillates asking about the small-business compositon of its membership. The answer to these letters, as given, are categorical to the effect that prac- tically the entire membership is small busi- ness and exclusively small business. The an- swers from these State units, which also in most instances contain in the letterhead a list of their officers, is tdentified here as exhibit 8. Summary of Above We believe that, from the above, we can give fully responsive answers to the main two questions set forth at the beginning of this study of these organizations. 1. Do these two organizations, NTEA and NAB, including the latter’s State affiliates, purport to represent small business? The answer is “Yes.” NTEA cannot seriously qualify this answer claiming to represent mostly small business, but not only small pusiness. NAB apparently claims to repre- sent small business exclusively, at least for all practical purposes. 2. Is this claim false or misleading? The answer is “Yes.” As to NTEA, the evidence seems to be quite conclusive as to this, inas- much as it purports to represent small busi- ness, and conspicuously holds itself out as representing small business, whereas at the same time it has been receiving large con- tributions from a group of public utilities in various States. As to NAB and its State units, the answer is the same, except that the evidence has not as yet been fully pre- sented in this study showing the close con- nection between NTEA and NAB. We have, however, already adverted to the fact that about $28,000 of NTEA money went to secre- taries of NAB State units in a pertod of 9 months during 1949. Moreover, NTEA pays $48,000 of the $58,000 paid to Scott and Schuler jointly by the two organizations, This shows a rather cogent connection be- tween contributions by public-utility com- panies to NTEA and activities by NAB. This particularly so when it {s borne in mind at NITEA and NAB devote most of their efforts to one subject; namely, taxation of co- operatives. 2691 We shall now address ourselves tn much grenter detail to the evidence showing that NTEA and NAB are tn reality very intimately connected, and that NAB operates as the grass-roots “front” for NTEA. PART III Detailed evidence of interconnection between National Taz Equality Association and National Associated Businessmen (See full report, pp. 17-38.) PART IV Detailed evidence of the interconnection bee tween Nattornal Small Business Men's Association and Small Business Economie Foundation (See full report, pp 89-68.) Conclusion The pamphlets and other material re- viewed above comprise all the material sup- plied to us by the foundation upon our re- quest for copies of pamphlets and other ma- terial issued by it. It is not intimated here that there is any- thing essentially wrong about the contents of these pamphlets and other material, any more than we have intimated that there is anything essentially wrong about the con- tents of the association's Mterature. The purpose of the present study was in no way to pass on the merits of opinions or causes espoused by the organizations studied The purpose was to determine whether these or- ganizations were representing small business or more truly representing something else. In studying two organizations together, such as the foundation and the association, a supplementary purpose, in examining their literature has been to determine whether or not the two organizations were in reality functioning substantially as one organiza- tion, We foel that it is fair to state that the examination of the literature and published programs of both the foundation and the association fails to indicate that these two organizations are devoting themselves to specifically small-business matters, as would normally be expected of organizations pur- porting to represent smail business. We also feel that it is fair to state that the examination of the contents of the foun- dation’s pamphlets and other literature chows how clearly they harmonize, despite their more general nature, with the literature issued by the association. The latter is ‘imply the more active organization and the one registered under the Lobbying Act. This ic strong evidence of the close interconnec- uc.1 between the association and the founda- tion, which, added to the other evidence aidveed, including the admissions of the association, makes a very clear case. The kn» .1 big-business contributors to the foun- daiion are connected to the association itself by the total evidence. It may be felt that we have burdened our argument too much. But the ways of propa- ganda ond the influencing of public opinion are involved and devious, although never al- togethcr new. In showing the interconnec- tion between the other two organizations, NTEA and NAB, we also were compelled to burden our argument. In retrospect, it may well seem that the conclusions in this study could have been reached with a much shorter presentation of the evidence. However, fortified with all this evidence, even though some of it may have been un- necessary, We state with confidence our cone sidered opinion that none of the four or- ganizations considered in this study are bona fide small-business organizations, and we re- affirm all conclusions reached elsewhere in this study in regard to these four organiza- tions. The four organizations are National Tax Equality Association, Inc., and National Associated Business Men, Inc., in one group,
2692 and National Small Business Men’s Assocla- tion, Inc., and Small Business Economic Foundation, Inc., in the other. MINORITY VIEWS The Republican members of the Select Committee on Small Business have refused to concur in the issuance of the report en- titled “Report on Small Business Organi- zgations."’ They have refused for the follow- ing reasons: (1) The committee as such has never con- sidered or weighed any of the evidence pur- porting to support the statements and charges made in the report, and no meet- ing of the committee was ever held at which any such evidence was discussed or the terms of the report considered. Hence we are at a loss to understand how the report can be considered as that of the committee. (2) The Select Committee on Small Busi- ness was created by the House for the pur- pose of helping small business by the de- velopment of facts and presenting such facts, together with any fair, accurate, and con- sidered conclusions deemed proper by the committee. We do not believe that the preparation and issuance of this report as proposed by majority members of the com- mittee and in the manner adopted by them is the way to help small business, or a proper way for the committee to meet its responsi- bilities to the House of Representatives, CuarLes A. HALLECK, WituiaM S. HILL, R. WaLtTer RIEHLMAN, FRANKLIN H. LICHTENWALTER. Fepruary 21, 1950. ADDITIONAL REMARKS OF CHAIRMAN OF COMMITTEE I have read the minority views presented herein. In regard to the first point which js raised, it is pertinent to note that a full commit- tee print of the report was sent to each and every member of the committee on Decem- ber 17, 1949, in the hope that it would be released with the opening of the second ses- sion of the Congress in January. On Janu- ary 18, 1950, the committee held an executive meeting for the purpose of considering this report, and the committee’s progress report, whereupon the ranking Republican member, on the ground of lack of time to study the same, requested an adjournment, which was allowed until February 1, as a final date. On February 1 the committee held an execu- tive meeting, attended by members of both parties, and approved the report by @ ma- jority vote, with leave to the minority to file views within 1 week; the progress report was also approved. As to the second point raised by the minor- ity views, I do not understand the point un- less 1’ is a generalized variation of a minority claim that the four organizations involved are criticized in the report by reason of the particular doctrines espoused by them—1. e., that they or any of them, are “against” labor unions and “against” cooperatives; or that they, like most Americans, are “for'’ free enterprise and “for” the curbing of un-Amer- ican activities, for instance. This minority claim cannot be sustained. The report clearly states tn its conclusion, page 68: “The purpose of the present study was in no way to pass on the merits of opinions or causes espoused by the organizations studied. The purpose was to determine whether these organizations were representing small busi- ness or more truly representing -omething else.” In the preface, page vi, the report states: “But the present study in no way takes the position on the anti-labor-union plat- form or other platforms of one or the other of the first two organizations. And this study in no way takes the position on the CONGRESSIONAL RECORD—HOUSE anticooperatives ‘“‘tax equality” platform of one or the other of the latter two organiza- tions, It may be that small business has a great deal to fear from labor unions unless they are subjected to severe restrictions. It may be that small business has a great deal to fear from co-ops, with their alleged exemp- tion from certain taxes. On the other hand, it may be that it is big business which 1s most afraid of labor unions and of the com- petition of cooperatives. “* ¢ * With all of this, the present study is not concerned.” In citing examples of the views of the four organizations in this study, the purpose was to show the lack of concern of these organi- zations for distinctively small business prob- lems (see p 69) and to show that their views, good or bad, are not different from those of avowedly big business organizations. These examples were'cited in conjunction with the evidence presented as to big business finan- cial contributions. In citing such examples, it was not intended to imply that committee members, least of all, either approve or dis- approve the causes espoused or the opinions expressed by these organizations. On these matters members of the committee will speak for themselves. WRIGHT PATMAN. Freeruary 21, 1950. The CHAIRMAN. The time of the gentleman from Texas has expired Mr. FERNANDEZ. Mr. Chairman, I offer a preferential motion. The Clerk read as follows: Mr. FERNANDEZ moves that the Commit- tee do now rise and report the bill out with the recommendation that the enacting clause be stricken. Mr. FERNANDEZ. Mr. Chairman, I hate to do this, but I have to because I cannot say what I have to say in 214 minutes, and this is very, very vital to me. I think, in order that the House Members may better understand the situation, a little history should be given. Mr. REES. Mr. Chairman, a parlia- mentary inquiry. The CHAIRMAN. The will state it Mr. REES. Does the gentleman have 5 minutes on a preferential motion? The CHAIRMAN. The gentleman is so recognized. Mr. FERNANDEZ. Mr. Chairman, when the Spanish Government ruled in New Mexico, the people of New Mexico were given grants, sometimes to a com- munity and sometimes to an individual to be settled as a community. As the years rolled by, some of them were so settled. When the American Govern- ment took over New Mexico it was re- quired that these grants should be con- firmed by the Congress. In getting these grants confirmed and in protecting their title, they had to hire lawyers. It was not unusual to find that the lawyers would charge as a fee an undivided half interest in the grants in order to get them confirmed. We did not know either the laws or the language, and that is how we lost them. So when 1933 rolled around there were in northern New Mexico communities which were in much greater distress than in any other part of the State. These funds were used to recover and repurchase some of those community land grants so + the peo- ple could use them as a base for raising their little herds of sheep, goats, and cattle. That gave them a measure of gentleman MARCH 2 rehabilitation. The money so expended was much better utilized than had it been expended on relief. We have some 200,000 acres in such Jand grants used by several such com- munities, for which they pay grazing fees, or make other arrangements. If the Hall amendment is adopted and this land is put on the auction block in order to be hquidated and the money returned to the Federal Government, then we will just undo what we did back in the thir- ties. That is our situation, So I am opposed to any bill that will force the selling of these lands and the wiping out of the base upon which the small com- munities are dependent for their econ- omy. Mr. AUGUST H. ANDRESEN. Mr. Chairman, will the gentleman yield? Mr. FERNANDEZ. I yield to the gentleman from Minnesota. Mr. AUGUST H. ANDRESEN. How does the Cooley bill take care of that? Mr. FERNANDEZ. I have not reached that point yet, if'the gentleman will be patiens a little bit. Under the Cooley bill the State r-habilitation will, I think, con- tinue that arrangement, though one cannot be sure. If, under the Hall amendment, lands are sold, the money goes back to the Government, and we will then have marched up the hill and marched back down again. Those people will be in distress again through lack of land on which to exist. Some of these land grants which were purchased by the Government have been turned over to the Forest Service for administration under a temporary ar- rangement. The Pueblo community in San Miguel County are quite happy about it. That is what I personally would like to see done, ultimately and permanently, because then the people who are grazing them will continue to graze them, under reasonable regulations, and in a busi- nesslike manner. If the Cooley bill is passed, the same arrangement can be made, but it would require further legis- lation, I am afraid. The Hope amendment seems to me in- sofar as this problem in my State is con- cerned, to fit the pattern much better. As a matter of fact, the two bills are not very different now, for under either, they would not be liquidated by sale. I am glad to see that the gentleman from Kansas [Mr. Hope] has come around to almost the same views entertained by our distinguished committee chairman, that no liquidation by sale need be forced. If the Hope amendment is adopted, then, as I understand the parliamentary situation, the bill will go to conference, and in conference they can come to an agreement on a bill that will satisfy everybody and that will take care of this situation. I therefore recommend, al- though I have been for the Cooley bill, that the Hope amendment be adopted and that the bill be sent to conference. Mr. COOLEY. Mr. Chairman, will the gentleman yield? Mr. FERNANDEZ. I yield to the gentleman from North Carolina. Mr. COOLEY. Does the gentleman realize that the Hope amendment is in-