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able of that; probably the entire $15,000 will be used to meet that expense.
The CHAIRMAX. Well, I guess that is all to be said about this.
BANK LOANS ON LICENSED WAREHOUSE RECEIPTS.
Mr. Yone. There is another thing I probably ought to say to this committee, and that is this: These licensed receipts, as I said a while ago, have given the deposition something on which to get his loan. As was stated the other day to Mr. Anderson's committee, a letter was received from one warehouseman who some time ago took several hundred warehouse receipts to a bank in New Orleans for the purpose of getting a loan. He left those receipts with the bank and went on another errand; when he came back he found the bank had thrown out about a dozen receipts, and on which they told him thay could not make a loan; he looked at his receipts and found that the dozen thrown out were receipts that had been issued prior to his entering into the license system. The CHAIRMAN. Do
find that the Federal reserve banks require them to have receipts from licensed warehouses?
Mr. YOHE. No, sir; that is not a universal requirement. Mr. ANDERSON. That is the rule in Atlanta, is it not! Mr. YOHE. No; the Federal Reserve Bank at Atlanta has a corps of its own inspectors, but in the case of our warehouses their inspectors do not inspect warehouses which we have licensed; they only inspect those which are not licensed and they recommend to the warehousemen in their district that they operate under the Federal system.
COST OF LICENSE AND INSPECTION.
Mr. Sisson. Does this license cost anything?
Mr. YOHE. It costs $2 for the license itself and the warehouseman must pay a certain fee for inspection; then he must pay for the bond he files, and that is the most costly part of the whole business.
The CHAIRMAX. Is there an annual charge to the licensed warehouseman?
Mr. YOHE. No, sir; there is an original inspection charge, then
license fee of $2, and thereafter there is only a charge of $1 for each renewal of the license.
Mr. Sisson. Generally speaking, what is the inspection cost ?
Mr. Yone. The inspection cost will range all the way from $5 to $50, depending on the capacity of the warehouse.
The CHAIRMAN. The inspection involves the taking of an inventory, does it not?
Mr. YohE. Yes, sir; and a thorough examination of the physical features of the particular warehouse, an analysis of the business methods of the warehouseman, his financial standing, integrity, etc.
The CHAIRMAN. Do you think the Government should make these inspections without cost?
Mr. YOHE. As the law stands now it is merely permissive, and unless the law is made mandatory I do not think there is any chance of making the system what it might be made to protect the average person who deposits with a warehouseman because of the fact that if they are asked to pay a large fee they will probably stay out of the system.
The CHAIRMAX. And you think there is sufficient advantage in keeping them within the system to justify the Government in paying the cost of the inspection?
Mr. YOHE. I should say that if we can measure in doilars and cents the stabilizing influence which these licensed warehouses and these licensed receipts have had upon agriculture, then the cost is more than compensated to the Government.
The CHAIRMAN. We will take up the item on page 44, which we passed over until Mr. Anderson could be present. I will ask Mr. Anderson to conduct the examination as to that item.
COMPLETION OF WOOL WORK.
The CHAIRMAN. Please just briefly tell us about this wool situation.
Mr. SHERMAN. The completion of the wool work depends largely upon the speed with which the Department of Justice can bring to a conclusion the cases that we have turned over to them. The War Industries Board required the 1918 wool clip to be handled under the regulations which it prescribed, because the entire domestic clip and a good deal more was needed for the military purposes of the United States. Under the regulations two classes of dealers were permitted to operate. They were called country dealers and central dealers. There were only 178 central dealers; and, eventually, all of the domestic-wool clip was required to pass through their hands. The Quartermaster's Department determined, through its valuation committee, the value of each lot and allotted the wool taken over by the Government to the various mills which held contracts. · In addition to the value, as determined by the Quartermaster's committee. the distributing central dealer was paid 4 per cent out of the United States Treasury for his overhead, the use of his facilities, etc. That was all the profit which he was supposed to make.
The regulations provided that if on the season's business either the country dealers or the central dealers made more profit than permitted under the regulations, the excess should be disposed of as the Government might require. Before the end of the season it was found that certain dealers had made a great deal of excess. The War Industries Board made a promise, as they construed it, a public statement, that the excess would be collected from the dealers and returned to the growers.
The CHAIRMAN. Have you the names of the growers?
Mr. SHERMAN. We have not all of the names; but we have a great many--tens of thousands. We inherited that promise. That is to say, the uncompleted work of the wool section of the War Industries Board was transferred to the Bureau of Markets by presidential order December 31, 1918.
The CHAIRMAN. How much is involved in it?
Mr. SHERMAN. We have located excess profits totaling over $1,300,000.
The CHAIRMAN. That would not be much to each one of the wool growers?
Mr. SHERMAN. No, sir; the amount of the refunds varies considerably, because some dealers made considerable excess; in some cases the excess profits amounts to several cents a pound.
The CHAIRMAN. Is the work about completed?
Mr. SHERMAN. The work is at that stage where, as I have said. its completion depends on the speed with which we can get action in the courts.
The CHAIRMAN. You have ascertained all the facts?
Mr. SHERMAN. That part is done, except for the winding up of a few cases, which we have in the office.
The CHAIRMAN. You have to put experts on the witness stand?
Mr. SHERMAN. That is the purpose for which we are asking this increase.
The CHAIRMAN. How many cases are there to be tried ?
Mr. SHERMAN. We do not know. The solicitor has 45 cases in hand and will have the remainder of them, 10 or 15 more, in the next 30 or 60 days. The Department of Justice has had a number of these cases in hand for more than a year.
The CHAIRMAN. You are not required to keep the witnesses on the
Mr. SHERMAN. No, sir; we are not required to keep the witnesses on the pay roll, but we will be required whenever these cases come to trial to have an auditor available and on the ground to go into the merits of any claims for offsets which the defendants may raise.
The CHAIRMAN. You have to keep them?
Mr. SHERMAN. We are fortunate in that two of our auditors were men trained for the purpose, taken from our regular technical staff, who have now been returned to their work in the fruit and vegetable division, who can be taken off and used for auditors in these cases if it becomes necessary.
The CHAIRMAN. They are being paid now out of this fund?
Mr. SHERMAN. There are two auditors being paid from this fund. One of them has outside employment waiting for him. We have asked him to defer his resignation 30 days until he can wind up one more of the important cases which he has.
The CHAIRMAN. You need this money for that work?
Mr. SHERMAN. In traveling and expenses which would be incident to the trial of these cases, in case more than five should come to trial during the present year. We have an unencumbered balance still of about $1,000, after providing for all the salaries, but if more than five cases should come to trial before the 1st of July we would need the money. We can not well ask for continuances when we have been urging the Department of Justice to action.
AMOUNT COLLECTED-INDISTRIBUTED BALANCE.
Mr. ANDERSOX. How much money have you collected?
Mr. SHERMAN. Nearly half of that. We have disbursed $287614.18, and we have a fund of $91,542.12 which can not be distributed, that amounts to more than all the appropriations that have ever been made for winding up this work. That represents checks returned undelivered, or that proportion of the excess profit which was represented by purchase from unknown parties.
Mr. ANDERSON. The amount to go to those people that you can not find more than covers the cost?
Mr. SHERMAN. Yes, sir.
The CHAIRMAN. $75,500, if you get the $2,500, is what the cost has been so far?
Mr. SHERMAN. Yes, sir. I have in mind more than that. The figure I had in mind covered the estimate of $15,000 for next year.
The CHAIRMAN. That is what it has been up to the present time!
Mr. SHERMAN. Yes, sir. We have on hand $309,000 undistributed, and assuming that the same percentage will remain-in fact, I think it will be more, because these are the most difficult cases, if we collect the full amount there will be considerably over $300,000 left undistributed in the Treasury.
FEDERAL HORTICULTURAL BOARD.
STATEMENT OF DR. C. L. MARLATT, CHAIRMAN FEDERAL
ERADICATION OF PINK BOLLWORM.
The CHAIRMAN. You have an estimate of $50,000 for eradication of the pink bollworm. How are you getting along with that work?
Dr. MARLATT. This deficiency estimate is for border control to prevent new entry from Mexico of the pink bollworm. Eradication is provided for in a separate item in which there is no deficiency. This map indicates the present whereabouts of the pink bollworm in the United States. This matter of the eradication of the pink bollworm has been before the Agricultural Committee and the Appropriations Committee for four or five years.
The CHAIRMAN. For time out of mind.
Dr. MARLATT. No, sir; it has been since 1917, as I recall it. It was then that the insect was first discovered in Texas.
The CHAIRMAN. Perhaps I was thinking of the boll weevil.
Dr. MARLATT. We have had the boll weevil for probably 30 years. The pink bollworm was reported in Mexico in November 1916, and at that time we asked authority from Congress to establish a border control, along the Mexican and Texas border particularly, to prevent the spread of the insect from Mexico into the United States. Such authority, with an appropriation of $50,000, immediately arailable, was included in the appropriations for the department for the fiscal year 1918. Later, in 1917, the pink bollworm was found in two areas in Texas-Hearne and the Trinity bay section (indicating]. Since then Congress has been giving us funds that we have been using with the idea of eradicating this pest.
The C'HAIRMAN. What effect has it had upon the cotton crop!
Dr. MARLATT. None at all in the United States. In Laguna, Mexico, it has had a considerable effect, but in the United States it has had no effect at all on the cotton crop. This has been one of the best pieces of insurance work that the department has ever done. In other words, the control work has absolutely eliminated all damage to the American cotton crop, even where the insect had gained limited foothold, and in that way the work has been worth many times
Dr. MARLATT. Cotton was grown over most of that section last year
the money actually expended upon it. Without this work, the insect would undoubtedly have spread all over the Southern States.
PROSPECT OF SUCCESSFUL ERADICATION, The CHAIRMAN. Do you think there is any prospect of eliminating it altogether?
Dr. MARLATT. I am very hopeful of that. The work under way has been very successful in Louisiana, for example, and over considerable areas in Texas.
Mr. BYRNs. Is it spreading in Mexico!
Dr. MARLATT. Not very much; because cotton is there a localized crop.
Mr. Byrns. How effective has the border control been?
Dr. MARLATT. It has been very effective, and that phase of the work is what we have under consideration to-day.
Mr. Byrns. I thought this deficiency was for the purpose of eradicating the pink bollworm in this country!
Dr. MARLATT. No. There is a separate item for eradication and control work. This item is for the border control, to prevent further entry from Mexico.
In further answer to the chairman's question, the work in Louisiana has been very effective-so much so that not a single pink bollworm was found in that State in connection with the crop of 1921.
Mr. Sisson. There were several points of infestation in Louisiana. Has it become less there?
Dr. MARLATT. Yes, sir; it has been cleaned up, and not a single insect was found in the State last year. We have reason to believe that the insect has been exterminated in that State. Even the most careful and minute examination fails to show a single insect there.
The ChairMAX. It has been exterminated in this section (indicating the three originally invaded parishes in southwestern Louisiana] ?
Dr. MARLATT. Not a single bollworm was found in that large section last year.
The ('HAIRMAN. Was any cotton grown in that section! [Indicating the general Trinity Bay region in Texas.] (1921). The central portion of that section (indicating, that within the blue line, was maintained as a noncotton section, and the surrounding section within the red line was maintained as a regulated section. The balance of the area was without any regulation or control. Only one insect was found in 1921 in this area, which is the largest area yet invaded by the pest.
Mr. Sisson. It is a great pity that they did not understand at first the ravages of the boll weevil, so that they might have agreed upon a noncotton-growing zone.
Dr. MARLATT. Yes, sir; it is a pity. That proposition was made, but it was turned down.
The CHAIRMAX. How successful are you in combating the boll weevil now?
Dr. MARLATT. The boll weevil has passed into a state of permanency in this country.
Mr. Sisson. It is in North Carolina and South Carolina now.