Mr. TENNY. They do inspection work, but they supervise the work of other inspectors, primarily. They do inspection work on the more important cases themselves.

The CHAIRMAN. How many supervisors have you?

Mr. TENNY. We have seven who act in a supervisory capacity.
The CHAIRMAN. Seven supervisors for 35 inspectors?

Mr. TENNY. Yes.

The CHAIRMAN. Is not that quite a large percentage, seven supervisors for 35 people?

Mr. TENNY. It is, but we divide up the country into different districts.

The CHAIRMAN. You would not divide up the country and make all the people in the different divisions sit around the office?

Mr. TENNY. I did not say they sat around the office. These chief inspectors are right out in the field.

The CHAIRMAN. You do not have to say it.

Mr. TENNY. They are not.

The CHAIRMAN. It does not take anybody with a great amount of discernment to see what they have to do if they only have one or two men under them.

Mr. TENNY. They are making inspections themselves, handling all the difficult situations that come up in their territory.

The CHAIRMAN. All seven of those men get $3,600 each?

Miss CLARK. Only one receives that amount. That is the highest amount paid.

The CHAIRMAN. How many of them get $2,400?

Miss CLARK. There are four that get between $2,400 and $2,740. The CHAIRMAN. You think after this year the work will be selfsustaining?

Mr. TENNY. I doubt it very much.

The CHAIRMAN. What is the plan-to make assessments against the warehouses to reimburse the Government for its expenditures in the enforcement of the act?

Mr. TENNY. The only way I see that it can be handled would be to charge so much for the subsequent inspections.

The CHAIRMAN. Instead of charging for only one inspection?
Mr. TENNY. Yes.

The CHAIRMAN. Of course, every inspection ought to be charged for. Are these warehouses paying the people who have money invested in them?

Mr. TENNY. I do not know.

The CHAIRMAN. How do you know whether or not a warehouse is trustworthy?

Mr. TENNY. The original inspection and subsequent ones would take into consideration the value of the property and the financial standing of the company that owns the warehouse.

Mr. BYRNS. Are they required to give bond?

Mr. TENNY. They have to give a bond in proportion to the amount of space that is licensed, with a maximum charge, of $100,000.

Mr. BYRNS. Is the bond required to be given by a bonding company, or is it a personal bond?

Mr. TENNY. Under the law I think it is not specified what kind of a bond it shall be, but we do not accept a personal bond.

CHARACTER OF INSPECTION.

The CHAIRMAN. What does your inspector inspect?

Mr. TENNY. In the original inspection he makes an investigationit is more of an investigation than an inspection. Then the subsequent inspection is the checking of the outstanding receipts against the commodities in the warehouse.

The CHAIRMAN. Does the Government have an agent in the warehouse to see that when grain goes out the receipt is discharged?

Mr. TENNY. Not permanently, but we are at that warehouse very soon after, and the agent checks the amount of grain the warehouseman has by grade against the outstanding receipts.

The CHAIRMAN. Are you sure you always safeguard the person who loans money?

Mr. TENNY. We have no legal responsibility.
The CHAIRMAN. I know that.

Mr. TENNY. We take the greatest care.

The CHAIRMAN. But the fact that we do inspect is, in a sense, a guarantee.

Mr. TENNY. And the fact that there has been practically no failures on any warehouse receipt outstanding under the act is, in our opinion, a good evidence of the standing of the grade of work we do.

Mr. BUCHANAN. How many inspections do you make a year?
Mr. TENNY. Four, in most instances.

Mr. BUCHANAN. That is more than the national bank examiners make, is it not?

Mr. TENNY. I do not know.

The CHAIRMAN. What would happen if you did not get this $10,000? Mr. TENNY. In the first place, we will advise all our agents to take on no more new business.

The CHAIRMAN. What do you mean by that?

Mr. TENNY. No new warehouses.

The CHAIRMAN. Is it not obligatory on the part of the Government of the United States to do that under the Federal warehouse act?

Mr. TENNY. No; this whole act is permissive.

The CHAIRMAN. What you mean is that if a warehouse were to be established under the act it will come under Government control if it wishes to, and not come under Government control if the Government wishes it to?

Mr. TENNY. That is the attitude we take.

The CHAIRMAN. So you can not take any additional orders for that or take on any more warehouses?

Mr. TENNY. We could issue orders to our people not to encourage new business.

The CHAIRMAN. Do you solicit it?

Mr. TENNY. Yes; we do educational work. If a man indicates he is interested our man explains the warehouse act to him. We have done a good deal of that in the past.

The CHAIRMAN. Would there be any real harm done between now and the 1st of July if you did not get this money?

Mr. TENNY. Yes.

The CHAIRMAN. What harm?

Mr. TENNY. The Federal warehouse work is progressing now; it is growing by leaps and bounds. It is one of the sanest pieces of work in all the field of marketing. And the Federal warehouse receipt is becoming the basis of the best collateral for marketing purposes. I would hate to see anything come in now to make a break on that work.

The CHAIRMAN. You would not want to discourage the development?

Mr. TENNY. We are encouraging it.

Mr. BUCHANAN. For loan purposes, too?

Mr. TENNY. Yes.

Mr. BYRNS. Have you any applications pending?
Mr. TENNY. Yes; we have a number of them.

Mr. BYRNS. How many?

Mr. TENNY. Probably 25.

Mr. BYRNS. If you do not get this money, you will not have the inspectors to make the necessary inspections and pass on these applications, and that is tantamount to cutting the farmers off from getting loans; I mean those who otherwise would borrow? Mr. TENNY. That is essentially true.

NUMBER OF WAREHOUSES.

The CHAIRMAN. How many warehouses have you now?

Mr. TENNY. On February 4, there were 891 licensed warehouses. The CHAIRMAN. Where are they located?

Mr. TENNY. That is in this hearing. There is an itemized list here, and I will be glad to insert that.

Alabama.

Number of licensed warehouses, by States, as of February 4, 1924.

87

1

11

Arizona

Arkansas

California.

Colorado

Georgia

Idaho.

Illinois.

Indiana

Iowa

Kansas

Kentucky

Louisiana

Massachusetts –

New York.

24

Texas

19

Mississippi

Missouri

There is one other feature of this that has not been discussed yet at all. At the last session of Congress the scope of the warehouse act was widened, so that now we have authority to put in agricultural commodities, as provided for in the act.

At the present time rules and regulations are pending for potatoes and beans, and the peanuts have already been held to be and are under the act. A considerable amount of this money will be used for travel expenses in holding public hearings on these other commodities and the reason why we are anxious to do the work between now and the 1st of July is that if we do not do it prior to July these commodities can not be stored under this act for the 1924 crop.

WEDNESDAY, FEBRUARY 20, 1924.

COLLECTION OF SEED-GRAIN LOANS.

STATEMENT OF MR. A. ZAPPONE, ACTING CHAIRMAN SEED GRAIN LOANS COMMITTEE, AND MR. N. A. OLSEN, ASSOCIATE AGRICULTURAL ECONOMIST, BUREAU OF AGRICULTURAL ECONOMICS.

The CHAIRMAN. There is an item for an additional amount to enable the Secretary of Agriculture to collect moneys due the United States on account of loans made under the seed-grain loan provisions of the act of March 3, 1921, and the seed-grain loan act of March 20, 1922, including the employment of such persons and means in the city of Washington and elsewhere as may be necessary, $13,000.

How much did these two loans made to farmers of the Northwest amount to? What was the total?

Mr. ZAPPONE. In the spring of 1921 Congress appropriated $2,000,000 for the purchase of seed wheat, oats, barley, and flax, and loans were made to the farmers in North Dakota, Montana, Idaho, and Washington.

In the spring of 1922 loans were made for the same purpose and in the same States, with the addition of South Dakota, the appropriation by Congress amounting to $1,500,000, making in all $3,500,000.

COLLECTIONS, INCLUDING INTEREST.

The CHAIRMAN. How much of that have we collected?

Mr. ZAPPONE. Briefly, the financial transactions under these two appropriations are as follows:

In 1921, $1,957,407.20 were loaned to 13,935 farmers, of which amount $1,224,441.26 has been collected to December 31, 1923, together with $94,180.10 in interest.

In 1922, $1,480,106.69 were loaned to 12,142 farmers, of which $1,033,218.84 has been collected to December 31, 1923, together with $42,426.13 in interest.

The total amount loaned in the two years was $3,437,513.89, of which $2,257,660.10, or 65.5 per cent, has been repaid.

The CHAIRMAN. That includes interest?

Mr. ZAPPONE. That includes interest on both loans to December 31, 1923, amounting to $136,606.23.

The amount of principal outstanding on January 1, 1924, amounted to $1,179,853.79.

OVERHEAD EXPENSES.

The CHAIRMAN. How much of the total of the appropriation was expended for overhead?

Mr. ZAPPONE. About $60,000.

The CHAIRMAN. How much has been appropriated for collection services since that time?

Mr. ZAPPONE. During the fiscal year 1923, $75,000 was appropriated for collections, and in 1924 only $20,000. The estimate for the appropriation of $20,000 for the 1924 collections was made during

the summer of 1922, at a time when it was impossible to forecast just what additional funds would be required for that purpose.

Mr. DAVIS. What is the chief expense of making these collections? Mr. ZAPPONE. The chief expense is for salaries of field agents, and their traveling expenses. Those are the two items of expense and the only expenses of the field agents. After the beginning of the fiscal year 1924, it was readily apparent that the appropriation of $20,000 was insufficient for the purpose if the department was to continue its vigorous campaign for the purpose of making these collections.

Therefore, in order to accomplish the best results, it was decided to push the work and use about $18,500 of this money in making collections during the first six or seven months, with the idea of submitting a supplemental estimate to Congress for a small amount to continue the work to June 30, 1924. This amount to be used for renewal of mortgages on the 1924 crop.

The CHAIRMAN. Was it not thought at that time, when the small amount was appropriated, that they would try to make their collections through the banks and other local agencies?

Mr. ZAPPONE. That was considered at the time, but it was not thought feasible. It requires a close contact between representatives of the department and the borrowers.

Mr. LEE. A great deal of these loans went to pay what the farmers owed the banks, did they not?

Mr. ZAPPONE. No, sir.

Mr. DAVIS. The loans were not made for that purpose?

Mr. ZAPPONE. No, sir; I think not. The Government has not prosecuted the work in such a way as to make it unduly hard on the farmers.

The CHAIRMAN. How many of the people who borrowed money still owe the Government?

Mr. ZAPPONE. About 9,000.

RENEWALS.

The CHAIRMAN. There is no lien on the crops now, is there? Mr. ZAPPONE. The liens on the crops are what we are now attempting to secure. We have already renewed, perhaps, one thousand of these liens on the 1924 crop, and this additional estimate of $13,000 is for the purpose of getting renewals of mortgages on the 1924 crop to cover the balance of the outstanding notes.

The CHAIRMAN. Whoever does that, will do it voluntarily.

Mr. ZAPPONE. Yes, sir; it will be done voluntarily, but they are perfectly willing to do it. The idea of trying to make further collections between now and June 30 next has been practically abandoned. We feel that it will be far better to use the money in getting renewals of the mortgages on the 1924 crop.

DETAILS OF ESTIMATE.

The CHAIRMAN. You want to use this $13,000 in sending your agents out in an endeavor to do that?

Mr. ZAPPONE. Yes, sir; I have a statement here that will show exactly how that amount is made up, if you care to listen to it.