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Senator Douglas. Is that all? Do you have any other comments?
Mr. HOLLAND. Well, I wanted to call attention to the fact that Mr. Robbins referred to earlier legislation which imposed the requirement of making butadiene from alcohol and to the testimony that Senator Capehart brought out in the last hearing, at which time it was brought out very definitely, Mr. Brown, that the limitation on that made Publicker practically the only potential buyer of that plant because, under their own statement, they were the biggest producer that controls the alcohol situation. And I do not think there has been any change from that today.
Senator Douglas. Does that complete your statement?
Senator DOUGLAS. Now, Mr. Brown or Mr. Wilner, do you have uny surrebuttal that you would like to make ?
Mr. WILNER. No surrebuttal, sir.
Mr. Brown. I would like to make only one point, Senator. It is perfectly true that we are the only company in the country with surplus alcohol capacity, and Mr. Holland is probably right in saying that we are almost a favored buyer because we have excess alcohol capacity. But I think it only fair to point out that in the synthetic-rubber industry as a whole that has been true right down the line. There was only one bidder for Kobuta. Nobody else could have possibly bought it. "There was only one bidder for the Baytown butyl plant—that was Humble. There is only one bidder for the Baton Rouge butyl plant. There was only one bidder and only one person could have bought the Borger butadiene plant—that was Phillips. And, in fact, nobody could buy Nechez except somebody who could come to some sort of satisfactory arrangements with Gulf and Texas for the necessary feedstocks.
I mean it has been characteristic of this industry as a whole.
Mr. HOLLAND. All of which was a handicap in negotiations, and so testified when you mentioned that question to us, and you so testified.
Mr. BROWN. Yes.
Senator Douglas. He is saying that this is not a disqualification in the case of these other sales, why should it be made a disqualification in this case.
Mr. BROWN. Yes.
Senator DougLAS. Mr. Brown and Mr. Wilner, there is just one final point I would like to ask about. Is Publicker in any less generous mood, considering differences in cost and amount, in making any price offer than it was last year?
Mr. Brown. We are in a no less generous mood, but we do have to consider the differences that a year has made.
Senator DOUGLAS. Suppose you were the only bidder, would you turn the screws on the Government, or would you be generous ?
Mr. Brown. Well, I think, sir, that if Mr. Holland is in it, as I hope he would be if it is to be going around again, I am sure Mr. Holland is quite qualified to protect the Government's interest.
Senator Douglas. I have here a clipping from the Wall Street Journal, with whose editorial opinions I am seldom in accord, but which tends to have rather accurate news items. I would like to put it in the record :
PUBLICKER SAYS IT HAD PROFIT LAST YEAR, FIRST EARNINGS SINCE 1953 Publicker Industries, Inc., got into the profit column in 1956–the first time since 1953—according to a preliminary report by the industrial alcohol, chemicals, and alcoholic beverage manufacturing concern.
The company said it had net profit for the year ended December 31, 1956, of $293,176. After allowing for preferred dividends, this equaled less than 1 cent à share on the 3,355,861 common shares outstanding at year-end.
It does not show you are getting rich—that is my comment. But then the story continues: In 1955, Publicker posted a net loss of $1,809,006.
I would say that while your profit and loss statement does not exactly flourish, it is not as bad as it was last year when you made an offer of $3,125,000. Therefore, if you were generous last year in this, you should not be less generous this coming year.
Mr. WILNER. Provided, sir, we are given the proper opportunity. Senator DOUGLAS. I understand. That is what I am trying to
Mr. HOLLAND. Mr. Chairman, there was one item mentioned here about the next-door neighbor handling butadiene from this plant. In considering our recommendation before, we checked with that company, and they said they had no interest at all in the butadiene plant next door and had no apprehension about their ability to buy butadiene if that plant did not operate.
Mr. BROWN. I am afraid, Mr. Holland, that Mr. Robbins misunderstood me.
Mr. HOLLAND. I just wanted to be sure.
Mr. Brown. No; I never made any argument that the American Synthetic Co. needs us. Senator DOUGLAS. Well, thank you very much, gentlemen. Now we have two other witnesses who come great distances.
First, Mr. Marion T. Weatherford, of the National Association of Wheat Growers, Arlington, Oreg. Senator Morse was very anxious that Mr. Weatherford be given a chance to testify, and we are very glad to have you, Mr. Weatherford. STATEMENT BY MARION T. WEATHERFORD, NATIONAL ASSOCIA
TION OF WHEAT GROWERS, ARLINGTON, OREG. Mr. WEATHERFORD. Thank you very much, Mr. Chairman.
For the record, I might say that my name is Marion Weatherford, that I am a wheat farmer, and that I live at Arlington, Oreg.
Senator DOUGLAS. In the Great Inland Empire.
Mr. WEATHERFORD. Yes; about halfway between The Dalles and Pendleton.
I am appearing here today representing the National Association of Wheat Growers, at the request of Mr. Herbert Hughes, who is president of that organization and whose address is Imperial, Nebr. I also am authorized and wish to represent the Oregon Wheat Commission and the Oregon Wheat Growers League.
I might say that I have in the past had official participation in both of those organizations as the past president of the Wheat Growers League and as past chairman of the wheat commission.
My statement, Mr. Chairman, is not written, but I should like to separate it into 5 or 6 separate points:
The first point being that there can be no question of the worth of alcohol-butadiene. I think that point has been well established. The research has all been done on that by the United States Department of Agriculture. And actually, the only reason the plant is not operating today is because of a reason of economics——the grain is priced too high.
Senator Douglas. The quality is all right, but the cost is too high? Mr. WEATHERFORD. The cost is a little high.
The second point, there was a great need for this plant and for alcohol-butadiene, and agriculture responded quite vigorously in supplying the raw materials when that need existed.
And I might say that that is one of the reasons we now have an agricultural surplus. Because we did respond so all-out in supplying raw materials for industrial products.
The third point is that there may be a great need for the plant and for alcohol-butadiene for at least two reasons, one with which the Senate has been concerned very vitally recently—the Middle East situation and the possibility of another national emergency. I am not so optimistic about the capacity of industry in the event of another national emergency as some who have testified here today, because I remember quite well when we were saying that if we were attacked in the morning, we would have it all cleaned up by Wednesday afternoon. But the war dragged on for years.
Senator DOUGLAS. I can remember the unofficial statements of the admirals that they were going to blow the Japanese fleet out of the water in the first 2 weeks of combat.
Mr. WEATHERFORD. But it was not quite as easy as that. It took lots of alcohol and lots of grain and lots of rubber and lots of gasoline before the war was over.
So I think there may be a need for it because of a national emergency and for the chance of war cutting off other petroleum supplies. And I am sure you have been very aware of that and have been concerned about it.
As a matter of fact, I think that was quite vigorously shown when we almost immediately received an increase in the price of gasoline because of the Middle East situation. I raise the question, if we have such adequate supplies of petroleum that we do not need standby alcohol-butadiene plants, why did we receive such an increase in our petroleum prices?
The fourth point I should like to make is that there very probably may be a need for the plant to again process surplus agricultural commodities, particularly in view of the findings that the President's Special Commission may bring out in the near future.
And I should like at this point to quote rather briefly a few sentences from a speech by Mr. Wheeler McMillan, who is vice president of Farm Journal, Inc., when he talked to the National Farm Chemurgy Conference in Chicago in 1956.
Senator DOUGLAS. Well, he is the executive director of the President's Appointed Bipartisan Commission on the Increased Use of Agricultural Products.
Mr. WEATHERFORD. Thank you, sir.
This speech was made over a year ago, before that committee or commission was appointed, so I am sure it is not colored by his job with the Commission.
Mr. McMILLAN says: Like most revolutions, this agricultural revolution is a hard period for those most directly affected as they struggle through its changes, because the farm revolution, like a military action, has advanced unevenly with some salients far ahead of others. The present generation suffers from the economic distortions that have appeared. The production salient has advanced more rapidly than the marketing salient, and far faster than the utilization salient. Unless markets and uses catch up to production, the present generation of farmers can lose this revolution.
Then he also says, further: For three decades Government has been making a series of legislative attempts to assure agriculture a full share of the national prosperity.
Senator DOUGLAS. Just a minute. Did you say Mr. McMillan is the editor of the Farm Journal ?
Mr. WEATHERFORD. Yes.
Senator Douglas. If my memory serves me right, that is owned by the Pew family; is that not true?
Mr. WEATHERFORD. He is vice president and publisher of Farm Journal.
Senator DOUGLAS. I know, but I mean the Farm Journal is owned by the Pew family; is that not true?
Mr. WEATHERFORD. I think that is correct.
Senator DOUGLAS. Is not Mr. McMillan, therefore, suffering from a conflict of interest in this matter?
Mr. WEATHERFORD. I think Mr. McMillan is; however, I am happy to see that his loyalty to agriculture remains unchallenged.
Senator DOUGLAS. That is fine. Mr. WEATHERFORD. May I repeat this? For 3 decades government has been making a series of legislative attempts to assure agriculture a full share of the national prosperity. The principal result of these efforts has been to demonstrate their distressing futility. Economic puzzles do not accept political solutions.
Then he says: The revolutionary advances in the production, the disproportionate lag in uses and markets for the resulting output, the vast changes in nonfarm business, all have combined with other factors to confront agriculture with new obstacles and with new opportunities as well. The political approach has been essentially negative and defeatist. It has said to agriculture, "Retreat, reduce your acres; produce less; go backward."
No American industry has ever advanced by going backward. Neither will agriculture. Americans have always gone forward; if one route appeared impractical, aggressive leadership has found or has created other routes.
Then he says:
The fact that there is no one solution—and however glibly one may speak of them, there are no easy solutions-does not mean that no solutions exist; when as much research and as much intelligent energy have been exerted in marketing and utilization as have been expended to increase production, the backward salients will catch up.
Senator Douglas. This is very excellent general language, but what does it have to do with the conversion of grain into alcohol and alcohol into butadiene?
Mr. WEATHERFORD. The next point I mean to make, sir.
There are at present surplus agricultural commodities. And that is one of the reasons, I might say the economic reason, that the wheatgrowers regretted very much the veto of the farm bill last year, because it contained a multiple-price or a so-called two-price plan for wheat which would permit the utilization of excess quantities of wheat for industrial uses or for feed or export or any other secondary use of wheat.
And I might say, sir, that we still believe that that approach is reasonable and practical and might well even be applied to corn.
Senator DOUGLAS. Are you a member of the Grange?
Mr. WEATHERFORD. Yes. The Grange joined with the National Association of Wheat Growers and with the Oregon Wheat Growers League in sponsoring this new version of the old McNary-Haugen bill.
Well, actually, sir, if we had the kind of cooperation between the various departments in Government such as Agriculture and Defense, and others, as was pointed out here earlier today, we might very well take our surplus agricultural commodities and process them with Government-owned plants into alcohol for motor fuel and rubber, for use on Government vehicles, and we would go a very long way toward solving our problem, at a far less cost than the present program. It will take, however, a positive approach to get it done, rather than the negative approach that we quite often see which says, “Well, you cannot process feed into alcohol because you still have the feed left, and you have not solved anything.”
Senator DOUGLAS. Did you hear the testimony of Dr. Irving?
Mr. WEATHERFORD. No, sir; I was not impressed with it. It is the sort of approach the Department uses, the negative approach, that we have had coming from the Department of Agriculture for several years now.
Senator Douglas. How many years!
Mr. WEATHERFORD. I might say that we are most unhappy-most unhappy with the negative attitude of the Department, and the repeated suggestions that the only way to solve the farm problem is to drive prices down, limit production, reduce acres, and make it so uneconomical that farmers cannot stay solvent.
So my next point, sir, No. 5, is to remind us that every nation that has had an agricultural surplus has solved that problem by processing its surplus agricultural products into industrial products or for industrial uses. Brazil did that with sugar, and Germany did it with potatoes; and I am quite sure that if we solve our surplus problem here in the United States in the near future, we are going to have to do it by processing these raw materials into industrial uses.
Item No. 6: When alcohol or butadiene or any other industrial chemical is made from grain or agricultural products, it is made from