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| recollection is not good enough to give it to you on each of these lividual cases. Mr. McDonougH. And in addition to loans do you also certify for tificates of necessity? Mr. TAYLOR. We do not issue certificates of necessity; no. Mr. McDonough. Do you certify? You do not have anything to with a certificate of essentiality or anything of that sort? Mr. TAYLOR. Well, we do endeavor to persuade DPA to adopt licies which we think will be helpful to small business, but the basic ponsibility there is that of NPA and DPA and not ours. Mr. McDonough. So that the emphasis of your aid to small busiss is for the defense production, rather than for civilian production? Mr. TAYLOR. The emphasis is certainly that. Mr. McDonough. And the majority of your loans are along those es? Mr. TAYLOR. That is correct. Mr. NichoLSON. Why could your functions not be transferred to - Department of Commerce? Mr. TAYLOR. They could be. Mr. NICHOLSON. You mentioned that the NAM man was 100 rcent wrong. Mr. Taylor. Well, they are a hundred percent wrong because at they said was that if you terminate DPA, these things will tomatically go to the Department of Commerce. They will not all. It would take new legislation by Congress to get them over ere. Congress has vested these responsibilities in us, for reasons at I think are good. But whether good or not that is where Coness has put them and unless they are left there or unless you adopt new law to transfer them, they will lapse. Mr. NICHOLSON. As I understand it, it was in the Department of immerce before? Mr. TAYLOR. These functions were never in the Department of ommerce. They never had authority to make loans. Mr. NICHOLSON. Well, of course not all of them. Something has en added to it. Mr. TAYLOR. None of the major ones were. The Department of mmerce never had authority to issue certificates, never had author
to make loans all those major things. Mr. Nicholson. Well, you have not any authority. All the thority you have got is to recommend it to the RFC. Mr. TAYLOR. But they cannot be made unless we do recommend it, d the Commerce has never had that authority. Mr. NICHOLSON. That is what I cannot understand, why the Dertment of Commerce could not do it as well as you. Mr. Taylor. Because you never authorized them, sir. Mr. Nicholson. Well, we took it away from the Department of ommerce. Mr. TAYLOR. You did not take that away. They never had it. ou gave that to us for the first time. This is a new loan authority ich was never in the law before. It was put in last year and the thority is for the RFC to make loans on our recommendation. It not a thing that came from the Department of Commerce. Mr. Nicholson. I would not say he was a hundred percent wrong. e might have been wrong.
Mr. TAYLOR. Well, I would be prepared to whittle that percentage down to two or three.
Mr. Nicholson. That is true; we never needed them in the Department of Commerce.
The CHAIRMAN. Well, that is a question of law.
Mr. GAMBLE. Well, you had a similar organization during World War II?
Mr. TAYLOR. That is correct, sir.
Mr. Taylor. Yes. We do not have that authority. You have given us the authority to recommend loans to the RFC and thereafter the RFC to disburse the money.
The CHAIRMAN. I am glad you are inducing the RFC to make some small loans. I have a case somewhat similar to that mentioned by Mr. Patman. A fellow-townsman of mine, whom I knew well, applied to the RFC for a small loan of about $5,000. I told them I thought he was a good risk and that he would pay the loan back. They turned him down. They said he did not have quite sufficient assets. I inquired as to his general credit reputation. “Well,” they said, "he has discounted all of his bills. He owes no money." I suppose in his case the loan was not big enough to be respectable and that is why he was turned down.
I hope you can induce the RFC to make some smaller loans.
Mr. TAYLOR. Our test of respectability has nothing to do with size, Mr. Chairman. We are just as keen on the smaller ones as on the others.
The CHAIRMAN. Are there further questions?
Mr. McDonough. There is just one other point I have, Mr. Chairman.
In a small manufacturing plant that has been awarded a contract, and must seek financial aid to carry the contract out, in your investigation do you require him to assure you, before you certify to the RFC, a faithful performance of the contract, faithful performance and assurance of production? Do you investigate to see that he has the machinery, the facilities, the personnel, that he can complete the contract? Do you inform him of the responsibility that he is assuming? I do not suppose you have any authority to tell him how fast he has to return that loan to the RFC. Or do you? Do you go through all of those motions in order to complete the loan?
Mr. Taylor. No, we cannot tell him how fast to return the money, but when we recommend the loan to the RFC we can say that in our belief this loan should be approved subject to the following terms and conditions: Repayment within such and such a period of time, and such a provision is ordinarily in there when we recommend it.
As to whether we survey the plant and satisfy ourselves about the applicant, we either do that or else we are satisfied with the RFC field report that has already been made.
If it is a matter of recommending a loan, we will ordinarily act on the basis of the RFC field report, unless we do not find it satisfacory. But if we have to go further and issue a certificate, not only to the RFC, but to the procurement agency, saying that we certify this
man can do the job, we do not do that unless we have looked at the plant and satisfied ourselves.
Mr. McDonough. Is that a normal function of your Department?
Mr. TAYLOR. Well, it is a necessary adjunct of issuing certificates, because the last thing I want to do is to discount our own certificates by issuing a lot of poor ones.
Mr. McDonough. I would say before a man is eligible to bid, the procurement officer ought to know his facilities. In other words, you can get a lot of paper on your hands, you know, and they could broker these contracts around. In other words, do you know that the man who is bidding has the plant facilities, owns them and operates them, and has the labor and machinery available to do the job?
Mr. Taylor. We certainly know that before we issue a certificate. In the usual case, where a company comes to us asking for a certificate, they have already bid and very probably they are the low bidder and will get the contract if the procurement officer can be satisfied that performance is to be expected. But the procurement officer may not be fully confident of the financial resources of the company. In that event, we do examine the company, just the way you outlined a minute ago, and if we are satisfied that the company can be counted upon we give them the certificate and the procurement officer has to accept that certificate and the company gets the contract. If upon examination we are not satisfied, we do not give him the certificate, and in all probability he does not get the contract.
Mr. McDonough. Have you been operating long enough to have seen any one of these contracts that you had anything to do with completed?
Mr. TAYLOR I do not believe so. We have seen them embarked upon and rolling along well, yes. Whether any have been completed, I would have to check our records. But we certainly stay in touch with all these situations because once again it is not going to do anybody any good, least of all our agency, least of all small business, to get a manufacturer into a position where he has borrowed money, he has embarked on a project which he cannot complete. We follow it through and make sure it is going well. As a matter of fact, during the last couple of days I have been spending considerable time in connection with a small company which does have a defense contract and an RFC loan and started having difficulties because one of its subcontractors was not performing properly.
We have in that case located the necessary machinery to correct the process, given him access to that machinery-which does not cost very much, fortunately-and are in a fair way to getting him back to the road and producing acceptable goods for the Government. We do not have to do that every time, but we have to stand ready to make sure these things work out.
The CHAIRMAN. If there are no further questions, we are glad to have your views, Mr. Taylor. I think your agency performs a very useful function. I know we all wish you success.
Mr. TAYLOR. Thank you, Mr. Chairman.
Mr. WOLCOTT. Mr. Taylor, those 64 loans totaling $7 million, that is an average of $109,375 per loan, roughly $100,000?
Mr. TAYLOR. Yes, sir.
Mr. TAYLOR. Thank you very much, Mr. Chairman, and gentlemen. The CHAIRMAN. The clerk will call the next witness.
The CLERK. Mr. F. B. Wise, secretary-treasurer of the National Renderers Association.
STATEMENT OF F. B. WISE, SECRETARY-TREASURER, NATIONAL
RENDERERS ASSOCIATION The CHAIRMAN. Have you a written statement? Mr. WISE. Yes; I have a two-and-a-half-page statement, which I will be glad to furnish for the record. I also have a supplemental statement to that which I would similarly like to offer for the record.
The CHAIRMAN. Very well, you may do so and it will be considered. Mr. WISE. Thank you.
(The statement referred to is as follows:) STATEMENT OF F. B. WISE, SECRETARY-TREASURER, NATIONAL RENDERERS
AssOCIATION, BEFORE HOUSE BANKING AND CURRENCY COMMITTEE CONSIDERING DEFENSE PRODUCTION LEGISLATION
My name is F. B. Wise; I am secretary-treasurer of the National Renderers Association, an organization of approximately 275 domestic producers of inedible animal fats with national headquarters at 1424 K Street NW., Washington, D. C.
We had not originally intended to ask the committee for time to make an oral statement at these hearings; however, a public announcement made by Price Administrator Ellis Arnall the day before yesterday has made it absolutely necessary that we bring certain facts to the attention of the committee. Mr. Arnall's announcement canceled the price ceiling roll-backs on crude soybean oil, crude cottonseed oil, crude corn oil and lard which he had previously promulgated on April 28 at the same time that he suspended the effective price ceilings on all of these products. We assert that this roll-back cancellation by Mr. Arnall is unfair and discriminatory and that it clearly sets one segment of domestic producers off against another segment of domestic producers, all within the same general class or category.
Briefly, the background of the situation is this. Members of the industry which this association represents are domestic producers of inedible tallow and greases which are processed directly from oil and fat-bearing animal byproducts. The Office of Price Stabilization has imposed two successive price-ceiling roll-backs upon inedible tallow and grease and when the second roll-back was under consideration by OPS last November, 7 out of 14 members of the so-called OPS Industry Advisory Committee for these products resigned en masse in protest to what they termed a “cut and dried” proceeding which, according to industry members present, involved endorsement of the proposed roll-back to the level already determined by OPS and without sincere consultation with representatives of industry as contemplated by Congress in the Defense Production Act.
Announcement by OPS in January of this year of the second roll-back to levels initially proposed by OPS at the November 1951 Industry Advisory Committee meeting provoked a further storm of industry protest and thereafter the industry, through this association, presented its case some weeks ago, at the Senate Banking and Currency Committee public hearings on defense production legislation. Our principal point of objection in testimony before the Senate committee was to the effect that the inedible tallow and greases produced by the members of this industry have historically been recognized as moving in the same general price pattern as other domestically produced fats and oils such as lard, soybean oil, etc.; if you will refer to the chart shown as the final page of the attached statement, you will see what we believe is adequate confirmation of this. We contended that this fact should entitle tallow and grease ceiling prices to be fairly related to the ceiling prices of the other domestically produced fats and oils but were not on the basis of the then current OPS ceiling levels although former OPA ceiling prices for all of these products had seemed to be on a fairly related basis.
Now when Mr. Arnall announced his suspension and roll-back action with respect to lard, crude corn oil, crude soybean oil, and crude cottonseed oil on April 28, we considered that this at least put us in a more favorable over-all ceiling price relationship with the other principal domestically produced fats and oils. But
Mr. Arnall’s Monday announcement again relegates our industry into the position of being directly discriminated against.
We feel that the domestic production of approximately 2 billion pounds annually of inedible tallow and grease compares favorably in size and importance to the domestic economy with the annual domestic production of 2.5 billion pounds of lard, 2.5 billion pounds of soybean oil, 1.5 million pounds of cottonseed oil, and 250 million pounds of corn oil and that the domestic inedible animal fat rendering industry deserves just as fair consideration and treatment by the Office of Price Stabilization as other segments of the domestic fats and oils economy.
We therefore respectfully ask this committee to instruct Mr. Arnall to cancel the second roll-back action with respect to inedible tallow and grease in order that these products may be placed on a fair and equitable price-ceiling basis in relation to the other principal domestically produced fats and oils.
I also request that the attached statement be printed in the committee record as a part of our presentation,
STATEMENT OF THE VIEWS OF THE NATIONAL RENDERERS AssoCIATION WITH
RESPECT TO DEFENSE PRODUCTION CONTROLS
This statement is submitted in behalf of the National Renderers Association-an organization composed of approximately 275 member companies which are largely single, independently operated establishments primarily engaged in the production of inedible tallow and grease which is extracted from fat-bearing materials obtained from literally thousands of farms, ranches, feed lots, meatpacking establishments, wholesale slaughterhouses, retail meat shops, and chain stores, hotels, restaurants, Government and State institutions and agencies. Members of the association also produce animal proteins, commonly known in the trade as meat scraps or tankage, and some plants also accumulate hides and skins in connection with their operations. Inedible tallow and grease are principally used in the manufacture of soap; meat scrap and tankage are extensively used in poultry and hog feeds; and the many uses of leather goods are well known to everyone. Member plants of the association will be found in all States of the United States except two.
Due to the perishable nature of the material, the operations of the industry are in most cases very closely supervised and regulated by city, county, or State health authorities and it is now a general practice that members of the industry be bonded or otherwise licensed to assure diligent performance of this special type of assignment. As a matter of fact, in the areas where plants of this industry are already in operation it generally follows that the local health requirements prohibit removal of such materials by general refuse disposal procedures. Moreover, were it not for the existence of these plants, local units of government would have to provide for collection and disposal of such materials at great additional expense to their taxpayers.
We urge continuance of the fats and oils import-control authority as set forth in section 104 of the Defense Production Act of 1951, for the following reasons:
1. Definity.--Domestic producers of fats and oils are entitled to a strong, specific, positive provision of law such as section 104 which enables the placing of all necessary limitations upon imports of competing fats and oils, especially in view of current price conditions in these markets. We are unwilling to leave too much discretion in the hands of the Secretary of Agriculture for fear he will fail to act just as in 1948–49 the Secretary of Commerce delayed removing export controls on fats and oils (although he had full authority to do so) with the result that remendous domestic stocks of these materials accumulated in this country causing prices to decline precipituously and inflicting substantial losses on all segments of the domestic fats and oils-producing industry; it finally took literally a mandate of a congressional committee to cause the Secretary to remove the controls.
And this unnecessary incident is undoubtedly well remembered by Congress-certainly it has not been forgotten by domestic producers. In other words, on the basis of our experience with Government in the past, we believe in preventive provision rather than remedial redress.
2. Interchangeability.—All fats and oils have a high degree of interchangeability which means they can either be substituted directly one for another or by additional processing at reasonable cost can be made acceptably similar to another oil or fat. It is well recognized that imports of any directly competitive article increase the available supply of the commodity and, in times of domestic surplus and forecasted large production such as is presently the case in fats and oils, this inevitably results in a decline in prices either because the abundance of supplies