Mr. FLEMING. About 10 percent, sir. It is from about 47 cents to 52 or 53.

The CHAIRMAN. How is the crop?

Mr. ATKINSON. The prospects for coffee are good. I believe we are at a price level now which encourages production. The figures for Brazil have been altered upward within the past 2 or 3 months. The general expectation is that the crop will be good and we shall have a good balance between production and consumption, all of which must naturally be predicated upon the reduction of hoarding. There is not enough coffee if everyone is going to hoard. If everyone buys what they need and no more, there will be sufficient coffee to go around. There has never been a shortage in coffee.

The CHAIRMAN. Is there a tendency to hoard?

Mr. ATKINSON. There has been a tendency on the part of housewives to buy more coffee than they immediately need, from what I understand.

The CHAIRMAN. That is probably because of the results in the last

war.

Senator CAPEHART. They are hedgers now.

Senator ROBERTSON. Even before June 25, when the fighting started, there has been a sharp increase in coffee in the previous several months, so that a Senate committee decided to look into it. There was speculation and it was not due to actual charges.

How much had coffee advanced before the 25th?

Mr ATKINSON. A year ago today, more or less, coffee advanced from about the 30-cent level to about the 50-cent level.

Senator ROBERTSON. What was that due to?

Mr. ATKINSON. That was due to an anticipated shortage.
Senator ROBERTSON. Which did not materialize?

Mr. ATKINSON. Which now has shown up to be not as severe as expected and in fact we are hoping that everything will even out so there will be sufficient coffee.

Senator ROBERTSON. What does the 10 percent since the 25th of June do to it? You found out before the 25th of June that the anticipated shortage did not exist.

Mr. ATKINSON. I think that can be largely attributed to war economy buying.

The CHAIRMAN. War economy buying?

Mr. ATKINSON. In other words, expecting a war economy to bring about controls and people hoarding coffee.

Senator ROBERTSON. Or would you call it war speculative dealing? Mr. ATKINSON. Do you think a housewife is speculating when she buys 5 pounds of coffee?

Senator ROBERTSON. That 5 pounds did not put that price up. It went up before she bought it. She paid the high price.

Mr. ATKINSON. She was already paying a good price for coffee.
Senator ROBERTSON. How much has sugar gone up?

Mr. ATKINSON. In the United States market, about a half a cent a pound.

Senator ROBERTSON. What is the story about somebody in New York buying sugar from the Philippines for delivery in August and September at 6 cents a pound?

Mr. ATKINSON. That is not unusual, sir. In fact, that is very cheap sugar if you get it in here at that price. Sugar is dealt in that far ahead, and sugar from the Philippines all comes here.

Senator ROBERTSON. What was the price on Philippine sugar or other sugar a month ago?

Mr. ATKINSON. In the United States market, the price, we will say, was around $5.60, delivered. It is now around $6.10. It has advanced that much.

Senator ROBERTSON. There is an abundance of sugar?

Mr. ATKINSON. Senator, there was. There was a surplus in Cuba of practically 1,000,000 tons. You had a surplus in Puerto Rico, and you had a surplus in Hawaii. At the end of the year there was around 1,800,000 tons, and in view of the coming crops being so large it was considered of sufficient importance to try to get the International Sugar Conference started again.

In the last month that surplus has practically disappeared, sir. Senator CAPEHART. You mean it is still there, but it is in the pantries of the housewives?

Mr. ATKINSON. It has been brought by foreign countries and has been brought here in the form of refined sugar for the housewife.

Senator ROBERTSON. You still say there is an abundance of sugar for use?

Mr. ATKINSON. For actual consumption, yes. If you are going to stockpile more, then there are visible supplies.

Senator ROBERTSON. If who would stockpile more?

Mr. ATKINSON. The housewife here, the manufacturer here, and your foreign countries.

Senator ROBERTSON. I thought we had already made arrangements for a quota from Cuba in excess of anything we have ever used before, that the others cannot take from us?

Mr. ATKINSON. That is correct, sir, but that quota even now that you have raised does not appear to be large enough, and it appears that very shortly you are going to have to raise it further.

Senator ROBERTSON. We used more last year than ever before in history, did we not?

Mr. ATKINSON. Yes.

Senator ROBERTSON. We raised that quota about 350,000 tons.

Mr. ATKINSON. Yes. It is now to a record of 7,850,000 tons, and you are going to raise it higher, sir, and very shortly.

Senator ROBERTSON. If everybody puts in their pantries all they can store in there, then that would run out?

Mr. ATKINSON. Yes.

Senator ROBERTSON. Then that sugar would get hard in there and difficult to use and would deteriorate?

Mr. ATKINSON. I have seen it happen, yes, sir.

Senator ROBERTSON. You do not think you will need any new regulations on the commodity exchange?

Mr. ATKINSON. Senator, that is not reaching the persistent buying that you see now. That does not control that buying in any way. If you are after something here that will be effective in time of war, that certainly will never be effective. Insofar as sugar is concerned you worked it out beautifully in the last war.

Senator ROBERTSON. What would you recommend we do, take these two sections out completely, or limit them to properly defined speculative buying?

Mr. ATKINSON. Senator, I do not believe you can ever define speculative buying as unnecessary hedging. I do not know how you would police it, particularly when you have in these foreign-grown commodities, foreign houses dealing in it. How are you going to police somebody in Brazil or somebody in Italy? It will be a difficult thing. Senator ROBERTSON. That is all, Mr. Chairman.

The CHAIRMAN. I wish you would file a short statement with the committee for its meeting tomorrow morning at 10: 30, in connection with what you believe to be the fact about the amendments that you heard me suggest, or that were suggested to me.

Mr. ATKINSON. Yes, sir.

The CHAIRMAN. The next witness is Mr. Robert Cargill, Jr., of the National Grain Trade Council.

I will make the same request of you that I have made of these other witnesses, if you will file a statement on how these suggested amendments would affect you.

Mr. CARGILL. Yes, sir; I will.

(The following was later received in response to the above:)

You have requested our views on the proposal that section 411 of the bill be amended to limit the exercise of the authority to set margins to speculative purchases, sales, and positions.

The obvious intention of such an amendment is to attempt to incorporate in S. 3936 the proposals embodied in S. 1881 of the Eightieth Congress. That bill was considered in rather exhaustive hearings by the Senate Committee on Agriculture in February 1948. As a result of the evidence and testimony produced at that hearing, the Senate Committee on Agriculture voted not to report the bill. We are opposed to the grant of authority to the Executive to set margins on futures contracts. We believe that the margin requirements have been, are now, and will continue to be safely and satisfactorily handled by the governing bodies of federally licensed contract markets.

Mr. CARGILL. I believe Mr. Brooks can give you information on a recent question that was asked.

Mr. BROOKS. Title section of the code, section 7 (b) is the section which says:

The failure or refusal of any board of trade to comply with any of the provisions of this chapter, or any of the rules and regulations of the Secretary of Agriculture thereunder, shall be cause for suspending for a period not to exceed 6 months, or revoking the designation of such board of trade as a contract market in accordance with the procedure and subject to the judicial review provided in section 8 of this title.

Section 8 is rather lengthy. I will read it if you want me to.

The CHAIRMAN. We could have it put in the record, but the code is readily available.

Senator CAPEHART. They can only do it when you violate a law. You can put anybody in jail who violates a law.

Mr. BROOKS. There are hearings that are required, proposed by the Secretary of Commerce and the Attorney General.

The CHAIRMAN. If there were excessive speculation, would that be a violation of the law?

Mr. BROOKS. No.

Senator CAPEHART. You have a limit of 10 cents a day fluctuation on grain.

Mr. BROOKS. There is a speculative line. The boards of trade themselves have business conduct committees constantly scrutinizing the activities of traders and members. They meet a couple of times a week, perhaps.

The CHAIRMAN. Before you testify, just for the record, what are your marginal requirements?

Mr. CARGILL. On wheat they are 25 cents a bushel.

The CHAIRMAN. That would be about 10 percent of the present price, or a little more?

Mr. CARGILL. Yes, sir.

The CHAIRMAN. If the present price went up to $3, would it be increasing it?

Mr. CARGILL. That would be reviewed by the boards of the commodity exchanges and all the factors taken into consideration then. There is no set schedule for raises, but it would be reviewed and possibly raised.

The CHAIRMAN. You have no law that fluctuates with the market like cotton?

You may proceed, Mr. Cargill.

STATEMENT OF ROBERT G. CARGILL, JR., VICE CHAIRMAN OF THE NATIONAL GRAIN TRADE COUNCIL, ACCOMPANIED BY WILLIAM F. BROOKS, EXECUTIVE SECRETARY

Mr. CARGILL. My name is Robert G. Cargill, Jr., and I am president of the Victoria Elevator Co. with headquarters in Minneapolis, Minn. This company owns and operates country grain elevators and engages in grain merchandising. I appear before your committee as vice chairman of the National Grain Trade Council, the Washington representative of nearly all of the organized grain exchanges and boards of trade in the United States, as well as representing seven national associations. A list of these groups is attached hereto.

We are aware of the urgency of legislation to accomplish the purposes of this bill and, therefore, we doubly appreciate the opportunity granted by your committee to express our views.

I should like to say immediately that it is not the wish of those whom I represent to obstruct or delay passage of any legislation essential for swift rearmament. This bill does not itself deal with defense measures, these being determined elsewhere by the President with the advice of the Departments of State and Defense. The bill has to do, rather, with economic controls needed to service the program and to lessen its inflationary impact upon the economy.

The controls here requested are based presumably on proposals by the President's various advisers. It now becomes the right as well as the responsibility of the Congress and of citizens to examine these proposals, and if they do not agree, to oppose those parts for which, in their opinion, there is not sound reason.

The duty of the Congress and of citizens to raise questions about political and economic proposals is peculiarly applicable to the present emergency. I say this because the very need for this legislation grows out of the world-wide conflict between communism and free nations. One of the fundamental differences between them is the right and the duty of free citizens to question the policies of their governments; to trouble themselves about their own social and political problems.

Communism, on the other hand, does not answer or even permit such questions. The questions are disposed of by so treating questioners that the problems vanish from their minds, never to trouble them again.

These hearings and discussions proclaim to the world that we do not so readily abandon our basic principles of government.

I should like to speak first about section 411 which would grant authority to the Executive to regulate margin requirements in commodity markets. This is not new legislation. It has been proposed several times during the past 3 years and extended hearings have been held on the subject before the Committees on Agriculture, as well as by the Joint Committee on the Economic Report.

I believe Mr. Moore spoke of these hearings. Just to show you how thorough they were, the Joint Committee on the Economic Report heard discussion of this for 11 days, including the testimony of 38 witnesses. The Agricultural Committee listened on this subject for 4 days, and 20 witnesses.

The CHAIRMAN. Of course, that is basic legislation, anyway, and this is a question of price fluctuation. Nobody knows what will be done when this gets on the Senate floor. They put the Baruch plan on in the House and it lost by one vote.

What I want to know and what I want you to let me know is how price control is going to affect the future markets.

I want to talk to Senator Ellender, the acting chairman since Senator Thomas has been away. The members of the committee will discuss it with him. I noticed some people referred to this committee and its origination of the OPA, back in 1942 and 1943.

Mr. CARGILL. We are, of course, willing to go along with that if it becomes necessary to do so.

The CHAIRMAN. Whether or not an over-all ceiling is necessary, do not know, but it was defeated in the House by one vote.

I

Mr. CARGILL. This is a highly technical subject, and we believe it should be deleted from this emergency legislation. We believe there is ample time, under existing conditions, to deal with this proposal on its own merits by the committees in Congress who have given it long study. This is particularly true of agricultural commodities under pricesupport programs, where there is little immediate danger of run-away prices, and where other effective means of controlling it exist.

We have always opposed the granting of authority to the Government for setting margin requirements in commodity exchanges for the purposes of regulating prices because, first, we are convinced that this method of controlling prices will not work; and, second, the attempt to use margins to control prices may well cause the breakdown of the entire marketing structure, leaving State trading as the only alternative.

I should like to assure your committee that individuals and firms in the grain do not like inflationary high prices. We are not opposing the prevention of excessive prices, but we are opposing the use of this method to accomplish it.

The CHAIRMAN. Will you furnish for the record the amount of grain the Government owns? I was much impressed by what Mr. Fleming said, that you could better control the price of cotton by selling this cotton when necessary to bring the price down. Do you have that in your statement?