Mr. RICKMAN. If you will notice in our statement there, we have been reduced from 89,000 acres and this year we are down to 70,000 Last year, we were reduced 12 percent.

acres.

Mr. POAGE. What has that done to production?

Mr. RICKMAN. Mr. Poage, our yield is more or less the same from year to year and our production is down.

The CHAIRMAN. With a lower price support, have you increased or decreased production?

Mr. RICKMAN. We think we could have increased the production had we been able to market our cotton, but 85 percent of our cotton is being brought in from outside of the United States.

Mr. POAGE. Will lowering the support price do you any good? Mr. RICKMAN. No-yes, Mr. Poage, it made us competitive at the time. But in the statement here, Egypt and the Sudan have increased their production-they have gone from 1.2 million bales to 1.8 million bales in the last 2 or 3 years-and they have been exporting that cotton. As you know, the price on their extra long staple cotton in Europe is competing with upland cotton, primarily due to the Egyptian Government subsidy of 35 percent.

Mr. POAGE. I do not want to get off to the other subject. I think all this proves is that trying to develop markets by lowering price supports never has worked and never will work or will never get any additional markets. You did not get any additional markets because somebody else lowered it. I don't care if you lowered your price to 14 cents a pound. Somebody will be selling at 12 cents a pound. The CHAIRMAN. Any further questions?

Mr. LATTA. On this long staple cotton, what is the quality of it? Mr. RICKMAN. In spinning tests, substitutable tests run by the Department of Agriculture, their finding is that the cotton grown in the United States is equal or superior to all foreign-grown cotton. It is substitutable for any foreign-grown cotton.

Mr. LATTA. How much cheaper can you buy this imported Egyptian cotton than your cotton?

Mr. RICKMAN. We understood on our cotton No. 3, 1 inch, the price was about 55 cents a pound. We understood that they were buying this in this country here at about 35 percent below our support price.

Mr. LATTA. You mean importers buy at that price?

Mr. RICKMAN. It is being bought for importation into this country at 35 percent less than our support price.

The CHAIRMAN. Any further questions? If not, we thank you very much, Mr. Rickman, for your statement.

Mr. RICKMAN. Thank you.

The CHAIRMAN. I now recognize Mr. Thompson of Texas.

Mr. THOMPSON. Mr. Chairman, I ask the privilege of saying a few words about Mr. Chambers who, I understand, is due to testify now. I do so wish for a number of reasons, some of them personal and others official, or semiofficial, he will tell what his present connection is. I do think that it is important for the committee to know something about his background, particularly his public service. I am not exactly sure how long he has been in the public service-must be close to 30 years.

Mr. CHAMBERS. Twenty-seven and one-half years.

Mr. THOMPSON. When you hear his words of wisdom, you will presume it has been longer than that.

When I was a member of the Committee on Merchant Marine, he was Assistant Commissioner of the Maritime Administration before the war.

I also dealt with him when he was Assistant Administrator of the Civil Defense Administration, and then he was counsel for the Senate Armed Services Committee.

I am certain that he would not give us for the record his record in the war. He served all through the war until at Iwo Jima, when he was retired because of wounds he received in action. He is entitled to wear three Purple Hearts for wounds in action. He wears the Silver Star. He wears the Congressional Medal of Honor.

We know he has been particularly interested in barter, and some regard him as "Mr. Barter."

I am, certainly, going to listen to what he has to say. I think, perhaps, other members of the committee, in view of the background, will be equally interested.

It is a very great pleasure to introduce Colonel Chambers, who is welcome to this committee. I present him to you.

The CHAIRMAN. We are very glad to have you with us, this morning Colonel. I will ask the members not to interrupt you until you have finished your prepared statement.

STATEMENT OF J. M. CHAMBERS, J. M. CHAMBERS & ASSOCIATES, WASHINGTON, D.C., ON BEHALF OF M. GOLODETZ & CO., NEW YORK, N.Y.

Mr. CHAMBERS. Before I start, may I say if my mother were here she could not have done better by me. I am not a modest man, but I am a little shocked at some of the things Clark-Congressman Thompson has said, and I hope they will never be held against him.

My name is J. M. Chambers, and I represent M. Golodetz & Co. of 120 Wall Street, New York, N.Y. I have always appreciated the opportunity to testify before this Committee on matters pertaining to the barter program, and welcome this further opportunity to appear before you.

I will not take the time of this committee in trying to persuade it that the barter program established to dispose of surplus commodities by exchanging them for strategic or other materials is sound and an excellent one for our country. This committee and the Congress have clearly made such a decision through the repeated enactment of laws and through plainly expressed policy statements. Certainly, last year, after careful study and over the objections of the Department of Agriculture, the Congress again enacted legislation designed to require the Department of Agriculture to carry on a proper barter program and to remove the restrictions which were killing the pro

gram.

Therefore, I propose to outline the problems that exist within the program as it is being administered and call the committee's attention to the policies and practices which have resulted in the law and the intent of the Congress not being carried out. That this condition does exist has already been conceded by the departmental witnesses,

but for the benefit of the record and to insure an understanding of these matters it is well that they be fully explained to the committee.

As you know, the program, prior to May 1957, was disposing of some $350 to $400 million worth of surplus agricultural commodities annually. By departmental regulations issued at that time, these disposals were reduced to a mere trickle until the Congress enacted the new legislation which was signed into law on September 6, 1958. It was not until November 14, 1958, that the Department of Agriculture issued new regulations designed to reactivate the program. These regulations included, among other things, the rules governing the disposals of the commodities and the list of materials approved by the President for acquisition through barter. Following this announcement and others that have modified it in varying degrees, there was quite a flurry of barter activity. It is estimated that during the fiscal year ending June 30, 1959, some $156 million worth of barter exchanges have been approved. On the other hand, during this same period, the Department rejected some $493 million worth of barter exchanges and still has pending some $205 million worth of offers.

The original flurry has now passed and it is estimated that the program, at best, cannot exceed $150 million worth per year. It is much more likely that it will level off at only $100 million per year if their present practices remain unchanged. This is evidenced by the following table showing the falling off of offers following the original activity in November and December of 1958.

This program is limited by the administrative policies and regulations governing it, and these in turn stem from the factually unsupported positions developed by the opponents to barter in the Department of Agriculture and in the Department of State.

The difficulties in the program divide into two main parts. First, the restrictions limiting the materials that can be taken in exchange for surplus commodities and second, the restrictions surrounding the disposal of the commodities given in exchange for the materials. To solve either by itself will not give the type of program contemplated by the Congress. To solve neither is the approach within the Department of Agriculture.

Prior to the enactment of the new legislation by the 85th Congress, the materials that could be taken through barter were administratively so restricted that virtually no business was being consummated even had it been possible under the regulations then in existence governing the disposal of the surplus commodities. However, under the impact of the new legislation, a new and broader list of materials was issued on November 14, 1958, which led to the flurry of business referred to above. This list has now been practically exhausted, and as a result the Department has announced that no new offers will be

considered for many of the items on the November list and only one new material has been added.

Now, Mr. Chairman, it should be noted that the materials appearing on the November list, and I submit herewith for the record a copy of the press release containing this list marked exhibit "A," are a limited number taken from the total list of strategic and critical materials developed by the Office of Civilian and Defense Mobilization to govern purchases for the strategic and critical stockpile. The use of such a limited list was never contemplated by the Congress.

The language in title I, Public Law 480, which authorizes the acquisition of strategic and critical materials through soft currencies engendered by the sale of surplus commodities, specifies "strategic and critical" materials under the definitions established to administer the Stockpiling Act, and for title I purpose such a limited list is appropriate. Incidentally, the study prepared by your staff shows this authority was never used.

This selected data staff study published by your committee shows this authority to buy strategic materials under title I has never been exercised.

However, in title III, Public Law 480, no such language was used. Title III, as amended, specifically refers to "strategic or other materials" which (1) were cheaper to store, (2) did not deteriorate, and as amended (3), were of such a nature as the United States did not domestically produce its requirements. Obviously, it was intended that the materials taken in exchange for surplus commodities not be limited to the restricted one established for Title I purposes. However, these broad directives of the Congress concerning materials to be taken under title III have never been followed.

It will be noted that on the list issued in November, there were only 26 items out of a total of 74 appearing on the list of strategic and critical materials. For the information of the committee, I submit for the record a copy of a typical list of "strategic and critical" materials marked exhibit "B".

I have marked a dagger on those materials which are available for barter.

The CHAIRMAN. Without objection, you may include that and the other exhibit.

(Exhibits A and B are as follows:)

Exhibit A

(U.S. Department of Agriculture, Washington, Nov. 14, 1958)

Changes in barter program announced

The U.S. Department of Agriculture today announced some changes in the barter program through which surplus Commodity Credit Corporation-owned farm products are exchanged for strategic and other materials produced abroad. The changes will be effective immediately with respect to new barter offers. Provisions of previous programs will continue to apply to existing barter commitments only.

Under the modified program, which implements new barter legislation enacted by the 85th Congress, barter contractors will no longer be required to obtain "certificates of additionality"-that is, written statements by responsible officials of importing countries that the commodities to be imported will be a net addition to U.S. exports to the recipient countries. The modified barter program does, however, include other measures to assure protection of the national interest of the United States, to safeguard U.S. usual marketings, and to

prevent undue disruption of world prices or replacement of cash sales for dollars.

To expedite barter transactions, three classifications of acceptable barter outlet for agricultural commodities have been set up. These classifications, which are based on an analysis of current economic and financial conditions and historical dollar marketings of U.S. agricultural commodities abroad, are designated “A," "B," and "C." Each designation involves a combination of an importing country and a specific agricultural commodity or group of commodities. An "A" designation indicates a higher potential as a dollar market than a “B” designation, and a “B” higher than a "C."

A country may be designated "A" for one commodity and "B" or "C" for another. For example, wheat, cotton, and tobacco transactions involving Portugal fall into the "A" category, whereas rice and feedgrain barter arrangements are in the "B" classification. Any country not specifically listed will be classified as "C" for all commodities.

A complete list of the commodity-country designations, which will be revised from time to time as necessary, may be obtained from the Barter and Stockpiling Division, Commodity Stabilization Service, room 3725, South Building, U.S. Department of Agriculture, Washington 25, D.C.

Barter contracts involving either an "A" or a "B" commodity-country designation may be either "bilateral" or "multilateral," but not "open end." A "bilateral" contract is one under which the agricultural commodity moves to the same country from which the material comes. Under a "multilateral" contract the material may come from a country other than the one to which the agricultural commodity moves but the importation of the material must be tied directly to the agricultural export through auxiliary transactions involving named third countries. The contractor will be required to specify in advance all countries which will be involved and the commodities which will move to or from each country.

Also, for any "multilateral" or "bilateral" contract involving an "A" designation, the Department will reasonably satisfy itself, on the basis of data which may be presented by the contractor or developed by the Department, that usual U.S. marketings will be safeguarded and that undue disruption of world market prices and replacement of cash sales for dollars will be prevented. In a "bilateral" or "multilateral" contract involving a "B" commodity-country designation, no data in addition to specifying the countries and commodities involved in the transaction will be required.

Barter contracts involving only "C" commodity-country designations may be "open end”—that is, the commodity to be exported and the country of destination need not be named in advance, and the material to be imported may be from any source country in the free world.

The following agricultural commodities are currently eligible for barter: cotton, tobacco, rice (limited quantities), wheat, corn, oats, barley, sorghum grain, butter, and nonfat dry milk. This list is subject to change from time to time.

A copy of a letter from the President to the Secretary of Agriculture designating the materials acceptable under barter contracts is attached. Reasonable limitations may be placed on the acquisition of any of these materials. It is anticipated that additions and changes will be made in this list from time to time.

CCC's ability to conclude barter arrangements depends at any one time upon such factors as U.S. national interest, existing commitments, requirements, and market conditions. Therefore, the fact that a material can be considered by CCC does not necessarily mean that it will be accepted. Likewise, "bilateral" and "multilateral" barter transactions, as outlined above, will be preferred to “open

end" transactions.

Foreign-produced materials acquired under barter may be processed in the United States under "bilateral" or "multilateral" type barter transactions when (1) in the case of a "bilateral" transaction, an exchange value of the agricultural commodity approximately equal to the exchange value of the processed materials being acquired will be exported to the source country of the raw material involved or (2) in the case of a "multilateral" transaction, an exchange value of the agricultural commodity approximately equal to the exchange value of the processed materials being acquired will be exported to an eligible country or countries specifically participating in the "multilateral" transaction. The same requirements will apply to processing in foreign countries, under "bilateral"