Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-08-17
Resale
Costly 10 U. 5.
Held Improper
Commodity Credit
Deal at 81 Million
Loss Hit by Ruling
By J. A. OLEARY

lnIltAlGQlhbCAy w tAiC OWACAS Nv =
cost Of about 50 million to the
Government was unauthorized
and improper"
The decision was made public
by Representative Fountain.
| Democrat of North Carolina,
chairman of q House Govern
ment Operations subcommittee,
which held hearings on the
transactions.
Mr.. Fountain promptly wrote
Ito Secretary Of Agriculture Ben
son, asking what action he in
tends to take in view Of Mr..
lCampbeIl's ruling.
Sees Clear Violation
Regulations for this purchase
resale program were issued on
March 8, 1854. in an order
designated DA-ll2. In a state
lment issued today. Represent
Iative Fountain said:
1.-THE illegality Of the DA-l12
transactions does not result from
| q mere technical violation OF the
law, but from q clear and ui1-
mistakable failure to carry out
the intent Of Congress. As the
Controller General pointed out.
the price OF dairy products may
be supported only by means OF
purchases or loans.
although the Department OF
Agriculture contended the trans
actions were purchases testi-
|mony before the subcommittee
made it plain that the alleged
purchases Of cheese under DA-
ia gave the department no right
Ito move the cheese. no right to
transfer 1t TO another, no right
Ito retain the cheese. no right to.
change its form and no right
even TO look at Il without per-.
mission Of the purported seller
ne the same time. the alleged
sellers could sell cheese sup
|posedIy owned by the Govern
|ment to q third party.
Representatives OF the De-
partment Of Agriculture were
unable to tell the subcommittee
Ia single right which the depart
Iment obtained by its purported
purchases Of cheese which never
left possession Of the owner. It
lis obvious that these transac-
Itions did not and could not con-
stitute purchases and therefore
were not authorized BY law"
Hits 'tPoor Judgment"
Aside from the legal issue. Mr..
Fountain said the transactions
indicated very poor judgment
on the part Of those responsible. y
1.-THE price support program is
intended to benefit the farmer, >
IMr. Fountain continued, under
IDA-1l2 that program was mis-
used in such q way as to result
lin 'windfall' payments to such
business establishments as gro
Gerry stores, restaurants. bakeries
and spaghetti manufacturers.
The Controller General did not
Question the sincerity Of purpose
Iof Agriculture Department off,
Icials or infer that there was
intentional wrongdoing" on
their part. Mr.. Fountain made
this further comment:
while I have reservations
about the unusual manner in
Nv hich DA-1l2 was rus h d
through by the department,
neither would I at this time
charge any officials Of the de-
partment with 'insincerity Of
purpose or intentional wrong
doing. However. I think it Is
now up to the Secretary OF
Agriculture to prove his sim
cerity by taking immediate steps
to recover the 50 million in tax
payers money"
The Intergovernmenta Rela-
tions subcommittee, Of which
Mr.. Fountain is chairman. SUBJ
Imitted the problem to the Con-
Itroller General for an opinion
on July 20.
Campbell's Decision
In his decision the Controller
General said:
even If the purported agree
ment to purchase II held until
April was not simultaneously
Cancelled by the inconsistent
agreement to resell at that time
the composite net result obvious
lIy was that no actual change ir
1.-THE status of the property oc-
curred, and the purchase and
sale elements Of the transaction
constituted in effect simply an
agreement to pay difference
between the March Government
purchasing price and the April
Government selling price,"
The Controller General took
notice of a section in the Agri-
cultural Act of 1949 making de-
Examinations Of the Secretary
Anal and conclusive. But not
a determination as to whether
purchases or other operations
could be employed in disregard
of the methods Of price support
authorized -. :"
In conclusion his opinion said :
I'm the circumstances, it Is
our opinion that the DA-112
transactions were not promised
on bona fide purchases within
the meaning of the Agricultural
Act Of 1949 and, consequently.
that payments hereunder were
unauthorized and improper"
]