aging requirements at 37 cents per pound and sold the same at a price 2 cents higher than the support price, or 39 cents per pound, during this period. In February 1954, the Department of Agriculture announced that with the beginning of the 1954-55 marketing year, on April 1, dairy price supports would be reduced to 75 percent of parity and that thereafter the Corporation would buy Cheddar cheese at 324 cents per pound and offer it for resale at 344 cents per pound. Announcement Da-112, issued March 9, 1954, offered to purchase cheese during the remainder of March, at the March purchase price of 37 cents per pound, provided the offerers contract simultaneously to repurchase the cheese during April, at the April sales price (344 cents per pound). The cheese was to remain in the custody of the seller and delivery and transfer of title was to take place at the time of grading or when the offer was accepted, whichever was later. It was to revert to the seller on April 1, if graded prior to that time, or as soon as it was graded, if the grading took place after April 1. On April 1 or as soon afterward as the cheese had been graded, the seller could submit vouchers or invoices together with USDA grading and inspection certificates, and receive payment of the net difference between purchase and sale prices. Difference payments exceeding $2 million were made for some 86.6 million pounds of cheese. Authority for the dairy products support program is contained in the Agricultural Act of 1949 (63 Stat. 1052, 1053, 7 U. S. C. 1446 (c)), section 201 (c) of which provides as follows: "The price of whole milk, butterfat, and the products of such commodities, respectively, shall be supported at such level not in excess of 90 percent nor less than 75 percent of the parity price therefor as the Secretary determines necessary in order to assure an adequate supply. Such price support shall be provided through loans on, or purchases of, the products of milk and butterfat." Previous legislation (sec. 1 of the Agricultural Act of 1948, 62 Stat. 1246) had permitted price support through "loans, purchases, or other operations." That omission from the 1949 act of authority to engage in "other operations" clearly left only the methods of loans or purchases available, seems to be undisputed. (See Opinion of the Solicitor, Department of Agriculture, No. 5587, dated May 7, 1954; Opinion of the Attorney General of the United States, dated June 9, 1954, vol. 41, No. 28.) While the purchase method of supporting prices for dairy products with which we are concerned involves many complicated considerations, it is clear that "purchase" means an acquisition, if not of full ownership, of a property interest in the commodity which, at the very least, would permit its complete removal from the market. Also, it is clear that the purchase method is to be distinguished from a direct payment without acquisition of any interest in the commodity— the employment of which method the Department of Agriculture has recognized would require additional legislation. (Study of Alternative Methods for Controlling Farm Milk Production and Supporting Prices to Farmers for Milk and Butterfat, H. Doc. No. 57, 84th Cong. (January 5, 1955).) As stated in the legal brief, "Commodity Credit Corporation intended and believed that it was making a true purchase and a true sale." Apparently, therefore, the purchase function of the DA-112 transactions was to remove the commodity from normal markets and to keep it from reentering them until after April 1. While it is recognized that the price-support program necessarily involved problems of disposal, it thus is pertinent and necessary to consider whether the transactions involved bona fide purchases. The conditions of DA-112 required the commodity to meet inspection standards (sec. 5) and to be held until April 1 (sec. 9) to be eligible. Section 10 required agreement to repurchase, and section 11 provided, in pertinent part, that "delivery of the commodity to CCC *** shall effect redelivery by CCC to the offerer on April 1 or on the date CCC takes delivery, whichever is later." These conditions fail to disclose any element of property interest passing to the Government that normally would be indicative of or prerequisite to a bona fide purchase. That the Government not only did not acquire any dominion whatsoever over the cheese purported to be purchased but firmly committed itself to resell to the offerer the identical cheese purchased appears to have been established beyond reasonable question by testimony at the hearings, beginning at page 369. However, in the brief it is contended in part as follows: "It is submitted that the word 'purchase' does not require that the purchaser acquire full and unfettered title in, dominion over, or right to, the commodity purchased and that nothing in the Agricultural Act of 1949 requires the Secretary of Agriculture to effect any type of purchase or control over a commodity to any extent greater than that which he has determined desirable in order to provide price support." Also, it is stated that **** The Corporation under the contract effected all of the domination over the commodity that it found necessary, to wit: Each pound of the products [butter as well as cheese was covered by the DA-112 program] so purchased was removed from the normal markets in March and did not reenter the channels of trade and commerce until April and then at prices above the support level. * * *" While it doubtless was intended that the Government would acquire an interest in the cheese sufficient to constitute compliance with the purchase requirements of section 201 (c), a realistic analysis of the so-called purchase-resale arrangements indicates that the purported "sellers" never parted or obligated themselves to part with their property and that the purported "buyer" never bought or obligated itself to buy such property. Since it was stipulated in section 9 that "failure of the offerer to hold the commodity for CCC until its redelivery to the offerer shall render the contract void," not only was acquisition of a sufficient property interest to ensure withdrawal from the market made impossible but expressly provided against. We are unable to see how, as a practical matter, the arrangement constituted anything more than an offer by the Government, continuing until April 1, which might be accepted only by meeting the condition of having the commodities on hand at that date, and which was so indefinite and vague as to property rights obligated that it did not remove them from the market or constitute an agreement to sell any particular interest in them. No useful purpose would be served by considering whether any different result would be reached in respect to the legal effect of the arrangements if the Government had reserved a right to retain the cheese offered or to return other than the identical cheese, or if provision had been made for liability in the event it was not held until April 1. But in any event a comparison of such arrangements with those actually employed illustrates the deficiencies of the purported purchase function. It is significant that under the actual transactions specially selected or aged cheese valued at in excess of the Government purchase price could and may have been offered and collected for entirely without risk of loss on the part of its owners. Even if the purported agreement to purchase if held until April 1 was not simultaneously canceled by the inconsistent agreement to resell at that time, the composite net result obviously was that no actual change in the status of the property occurred, and the purchase and sale elements of the transaction constituted in effect simply an agreement to pay a difference between the March Government purchasing price and the April Government selling price. There has been noted the provision in section 412 of the Agricultural Act of 1949 (7 U. S. C. 1429) that "Determinations made by the Secretary under this act shall be final and conclusive ***. Clearly, the determinations referred to are those involving exercise of the discretion delegated with respect to matters left to his judgment, such as choice between a loan or purchase method, but certainly not a determination as to whether "purchases" or "other operations” could be employed in disregard of the methods of price support authorized under the langauge of section 201 (c). In the circumstances, it is our opinion that the Da 112 transactions were not premised upon bona fide "purchases" within the meaning of the Agricultural Act of 1949 and, consequently, that payments thereunder were unauthorized and improper. However, we do not in any way question the sincerity of purpose, or infer that there was intentional wrongdoing, on the part of any officer concerned. Sincerely yours, JOSEPH CAMPBELL, Comptroller General of the United States. UNITED STATES DEPARTMENT OF AGRICULTURE, Secretary of Agriculture Ezra Taft Benson today issued the following state ment: "The Department has been informed that the Attorney General-in view of the differences of opinion between the legal staffs of the Comptroller General and the Department of Agriculture-will initiate one or more suits in order to obtain a judicial determination of the validity of transactions in March 1954 (Announce ment DA 112) under the dairy price support program. This action involved the purchase and resale of cheese to manufacturers and handlers who withheld the product from the market during that month. In all the circumstances incident to this matter, submissions of the questions to the courts can serve as the best means of resolving them. "We shall be glad to assist in any way possible to help reach an early solution." EFFECT OF REDUCTION OF PRICE SUPPORTS ON DAIRY PRODUCTS Mr. MARSHALL. I received from the National Milk Producers Federation their publication of April 27, 1956. Mr. Norton, Secretary of the National Milk Producers Federation, told the April 27 meeting of the State Brand Creameries Association, Mason City, Iowa: Dairymen suffered a $600 million a year setback when price supports were dropped to 75 percent of parity in April, 1954. Since then they have been battling a serious price-cost squeeze. The increases in support levels announced last week in connection with a presidential veto of the farm bill gives some relief to the producer of manufacturing milk and butter fat. Is that what it has cost the dairymen? Secretary BENSON. Mr. Chairman, I think the action we took in the case of dairy products 2 years ago last April was in the very best interest of the dairy farmers. They were losing their markets. Butter consumption in this country had been going down for a number of years, on a per capita basis. Fluid milk consumption had been going down. The production had been moving into Government warehouses; our butter stocks reached a peak of 466 million pounds. Following the adjustment in supports, that downward trend in consumption was changed. Consumption of butter increased. Consumption of fluid milk increased. Our stocks went down. True, we gave some of them away, but we sold some, too. And our acquisitions were greatly decreased. I think it has been in the best interest of the dairy industry. As a matter of fact, they have started a promotion program, and we are joining with them in that. The market has stabilized and consumption has increased. The market has expanded. I think it has been a very healthy thing for the dairy industry. Had we continued in the way we were going the markets for many dairy products would have been further reduced. I do not know as to the income figure you mentioned. I have not seen the figure. The immediate effect was to decrease prices, but the long-time effect has been to increase consumption and increase the total return, I am sure, to dairy farmers. We can put some figures in the record, if you would like to have them. Mr. MARSHALL. Do you know how much the dairy industry spends annually in promotion? Secretary BENSON. The American Dairy Association has a budget, I understand, of a little over $6 million for this calendar year. Mr. MARSHALL. Does that include all of the contributions the dairy groups have made for promotional work? Secretary BENSON. It is an important part of the total. Some of the trade associations, like the Cheese Institute and the Butter Institute, have spent some funds of their own. The individual companies have spent some. The overall program of advertising and promoting is carried on by the American Dairy Association, which gets funds from producers as well as processors. Mr. MARSHALL. Do you feel that that is having any effect? Secretary BENSON. I do. And I think the records indicate it is having a good effect. Mr. MARSHALL. We were talking about figures a moment ago. Since we have decreased the support price, how much has production increased, annually? Secretary BENSON. I think there has been some increase in production, though I think it is much less than there would have been otherwise. Of course, the increase has not come from an increase in the number of dairy cows, but rather in the production per cow. There has been some culling of dairy cows, which means the dairy operation is more efficient than it was formerly. And of course with an abundance of feed at relatively low prices, that has been a stimulus to further production. Mr. MARSHALL. During the time the price support decreased on manufactured milk and butter and cheese, however, the price of fluid milk rose in most centers, did it not? Secretary BENSON. I think there were some increases, but I think not very much. It was spotted, I think, Mr. Marshall. PRICE CHANGES FOR MILK IN NEW YORK, BOSTON, MINNEAPOLIS, AND Mr. MARSHALL. Could you place in the record the change that has taken place in the Washington milkshed and the New York milkshed and the Boston milkshed, for example, and Minneapolis? Secretary BENSON. Yes; we have those figures. (The information requested is as follows:) Class I and blend prices for milk in New York, Boston, Minneapolis-St. Paul, and Washington, D. C., for the month of January 1953–56 and February 1956 New York 1 Boston 1 Minneapolis- Washington D. C. Month and year Class I Blend Class I Blend Class I Blend Class I Blend per 1 Minimum class I, blend and prices at 3.5 percent butterfat, test f. o. b. the 201- to 210-mile zone in Boston and New York and f. o. b. city in Minneapolis-St. Paul. Net blend price and dealers class I buying price at 3.5 percent butterfat test for members of the Maryland. Virginia Milk Producers Association. Source: Agricultural Marketing Service. NOTE.-Prices for each city are comparable for different periods. Prices for different cities are not necessarily comparable with one another. PURCHASES OF DAIRY PRODUCTS Mr. MARSHALL. I am interested in the purchases made by the Government. I note that in this report-again this report is of April 27-it states that you purchased 8,003,879 pounds of butter for the week ending April 25. I would like to have you place in the record the comparable figure to that in 1953 for a comparable week, either the last of April or the first of May. (The information requested is as follows:) CCC purchases of butter, weeks ending Apr. 25, 1953 through 1956 Mr. MARSHALL. You have some figures to show how much you spent in support of dairy products by year? Secretary BENSON. Yes, we have those figures. I do not have them. right here, but we can get them and place them in the record. Mr. MARSHALL. Would you place those in the record, please? (The information requested is as follows:) Quantity and cost of dairy products acquired under price-support program, Jan. 1, 1949, to date Mr. MARSHALL. In your statement you mentioned the shipment of corn. Were you in accord with that practice, Mr. Secretary, of moving corn from the Midwest to the west coast? Do you think that was the right policy? Secretary BENSON. Well, I presume those administering the program did the thing they thought was best at the time. They did not foresee accurately what was going to happen; the weather conditions and so on. Probably if they were doing it again, in the light of the known facts today, it would have been a little different. Mr. Hughes or Mr. McLain could comment on that. Mr. McLain was head of the Grain Division at that time. Mr. MCLAIN. Mr. Marshall, at the time I think it was a wise decision. Of course, we did not know that the crop was going to be cut back two or three hundred million bushels. At the time the decision was made, July 22 last, the decision was made to do this for a couple of reasons. The primary one was that we had been advised by the steel companies that steel would not be available to get the number of bins that our States had indicated to us they needed. We had this meeting in Minneapolis, with our State committees, our commod |