culture under date of August 6, 1941, as to the stocks of sugar on hand

on June 30.

In short tons, raw value refineries rose 666,241 tons.

Refiners' refined, 318,430 tons; beet sugar processors, 797,233 tons; importers' direct consumption sugar, 178,525 tons; mainland cane factories, 8,059 tons. That is a total of 1,968,488 tons on hand June 30, 1941.

Now, I offer, if the committee wishes, to supply a special memorandum on the supply situation; but I have this observation to make. I believe I am correct, as against Congressman Crawford, because I do not issue statements to the general public relating to their consumption habits without a great deal of serious thought and without being able to back them up.

If there is a situation either present or likely to develop, such as the Congressman has suggested, that is the more reason for fixing the price and having a normal distribution of sugar; and that is all the more reason, if there are going to be shortages, general in character, why we need this legislation, and why we need it, quickly.

Mr. CRAWFORD. Mr. Henderson, I am not attacking this because you fixed the price. I am trying to find out how this basic commodity, so vital to every consumer of food in this country, fits into this bill. And perhaps I should apologize to the committee for asking questions about it, but the people of this country are entitled to know how you propose to administer these basic commodities, sugar as well as cotton. I am interested in cotton and sugar. Some people are interested only in cotton, for instance. I could sit here and listen to a man asking questions, for a week, on cotton, and I would enjoy every moment of it.

Now, you come here with a sweeping statement covering a situation, when we know that the people of this country are primarily dependent upon Cuba for their sugar, as evidenced by the factand we have no control over Cuba whatsoever-as evidenced by the fact that of your 8,000,000 tons-in round figures-of consumption, and you get over 2,000,000 of it from Cuba alone, and any time Cuba pulls that 25 percent out of the sugar bowl, the prices go sky high. And as I started to develop here a moment ago, as long as that sugar was available in the continental United States, your prices did not advance, did they? When I say "advance," you did not have the runaway market you had the last 3 weeks, did you?

Mr. HENDERSON. That is right.

Mr. CRAWFORD. I believe the last statement you made was to the effect that the trouble developed when the speculators thought they had control of the situation. I do not know that the speculators control the situation; and I am not going to criticize you for stepping into the picture when you say the speculators do control the situation. It will not do the sugar industry of this country any good for prices to go back to 15 and 20 cents a pound. It will wash it out again as it did in 1921. I do not want to see that happen. But I do not want us to get confused through the policies of the Agriculture Department, or through any other statements issued to the effect that the sugar is in the continental United States. It is not here and we have no guaranty that it will be here. You put in the figures to refute that statement, if you can.

Mr. LYNCH. Will the gentleman yield for a question there?
Mr. CRAWFORD. Yes.

Mr. LYNCH. You stated quite emphatically before that there was a surplus of sugar in the country at the present time. Do you likewise state as emphatically that despite the labor situation as outlined by Mr. Sacks, or any other considerations, that there is no necescity at this time, or for some considerable time in the future, for a rise in the price of sugar to the consumer?

Mr. HENDERSON. Yes, sir.

Mr. LYNCH. You say that just as emphatically?

Mr. HENDERSON. Just as emphatically.

Mr. LYNCH. That is all.

The CHAIRMAN. Mr. Crawford, would it be satisfactory to you if the committee recessed until 3 o'clock?

Mr. CRAWFORD. Yes, Mr. Chairman.

The CHAIRMAN. The committee will take a recess until 3 o'clock. (Whereupon the committee recessed until 3 p. m.)

AFTERNOON SESSION

The committee reconvened pursuant to the taking of the recess, Hon. Henry B. Steagall (chairman) presiding.

The CHAIRMAN. Mr. Crawford, you may resume your interrogation of Mr. Henderson.

Mr. HENDERSON. Mr. Chairman, in the course of the discussion with Congressman Crowford this morning as to whether or not the $3.50 price would yield parity for the sugar-beet growers, I asked if he included the probable Federal payments and said I thought that was where his computation and what I had in my mind disagreed. And, during the recess, I have had a check made, and I desire now to insert the following into the record:

For the 1941 sugar-beet crop, payments will be made to sugar-beet growers under the present Sugar Act at the base rate of 60 cents per hundred pounds of recoverable sugar. This is equivalent to a payment of about $1.90 per average ton of sugar beets.

In addition, growers, under their contracts with processors, will receive payments on the basis of the net returns to the companies from the sale of their sugar, generally, during the period October 1, 1941-September 30, 1942. Consequently, if the ceiling price of 3.50 cents per pound for raw sugar, duty paid New York, just established, should remain in effect throughout that marketing period, it is estimated that with the usual price differential between raws and refined of about 1.535 cents per pound, an average price of $5.30 per ton of sugar beets will be paid to growers by processors, or a total of $7.20 per ton, as compared with a parity figure of $7.15, calculated as follows:

Average index number of prices paid by farmers, including interest and

taxes, for the first 7 months of 1941.

Pre-war average_

Total parity price-

130

$5.50 $7.15

In other words, it hits it almost on the nose.

Mr. CRAWFORD. For the benefit of our friend from Louisiana [Mr. BOGGS], who is not present just at the moment, could we go so far as to say that, taking into consideration the influence of the sugarcane contracts, the same price will apply for sugarcane? Would you want to say that?

Mr. HENDERSON. Approximately; but it would be at least the panty return, I know. We have made a calculation on that.

I should like to introduce into the record the press release that I got cut yesterday when we announced our action on sugar. The CHAIRMAN. There will be no objection to that. (The matter above referred to is as follows:)

OFFICE FOR EMERGENCY MANAGEMENT

OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY

[For immediate release, Tuesday, August 12, 1941]

Moving to protect the American public from rampant speculation in sugar which has been pushing prices far above levels justified by large supplies in hand, Leon Henderson, Administrator of the Office of Price Administration and Civilian Supply, today announced a ceiling of 3.50 cents per pound on 96° raw sugars, duty paid, New York.

This is the price which prevailed in mid-July prior to the recent excessive speculative advance. It is 0.30 cent per pound under the price of 3.80 cents prevailing on August 11.

* **

Action was taken after consultation with officials of the Department of Agriculture and other Government agencies. Section 201 of the Sugar Act directs the Department to determine sugar requirements "so that the supply shall not result in average prices to consumers in excess of those necessary to maintain the domestic-sugar industry as a whole." Plans have been laid for conferences with processors and refiners to consider the question of placing a ceiling on refined-sugar prices.

The total supply of sugar for 1941, which has been made available by the Secretary of Agriculture under the sugar-quota law, is 7,769,621 short tons, raw value. This supply exceeds by over a million tons the actual consumption of last year and is sufficient to give consumers the highest per capita consumption on record. Supplies already received to date from offshore areas or marketed by continental areas of production are in the aggregate far greater than in other years. The total deliveries of sugar for Jarary-June 1941 are up 919,000 tons, or about 30 percent in excess of the first half of last year.

"Consumers should not under any condition permit themselves to be cajoled into paying more for sugar in retail stores than at the present time," Mr. Henderson added. "There is more than enough sugar for everyone. Speculators have been endeavoring all through the year to reap a profit at expense of consumers throughout the country by frightening them witht scare reports of one kind or another, although the actual situation is one of unusual abundance, not scarcity."

Mr. HENDERSON. I have just one more item. I want the committee to know two things: First of all, this was not a sudden and precipitous decision on our part. The Consumers' Division of my Office has, of course, been acutely concerned with the items which house holders buy and has had this particular item closely under review for many months and has thought of the actions to be taken in case the necessity arose. That called for frequent contact with the Department of Agriculture and other departments. And the activities, beginning in the middle of July, as they coursed along until last Saturday, were observed very closely and the market was reviewed as to the nature of the influence at work.

The second thing is that when Mr. Wolcott took as his example the other day a case involving the law in which he used sugar as the commodity, I was a bit perplexed to say the least, because I knew what action was contemplated by our Division. I was quite anxious to serve the purpose he had talked about, namely, of preventing

information in my Office from being availed of for speculative purposes, and I was not a free man in that discussion, because it did relate to sugar.

Mr. CRAWFORD. Mr. Henderson, continuing with the thought of the Consumers Supply Division, I want to go back to this point and I want to say I want to close on this sugar as quickly as possible and make it short.

Today, Cuba is the primary reservoir on which we can draw the balance of the year under our whole sugar scheme; is that correct? Mr. HENDERSON. I think that is correct.

Mr. CRAWFORD. It is substantially correct?
Mr. HENDERSON. Yes, sir.

Mr. CRAWFORD. Now, this concerns me because, as I said this morning, I do not want to see run-away prices on sugar, for it does not do any of us any good. We have no power to force Cuba to sell; we have no power to force those speculators who have the financial structure which ties directly into the Cuban operating mills to sell, and while on the books the sugar may have been transferred from the mill operations to the large stockholding interest operations which you now designate as speculators, they can still hold this sugar off of the market and refuse to sell it at the 3.50 price for more reasons than one. First, we might say, they have an order for sugar to go to England and the so-called Allies, but they are so far down on their selling season that they are out of the woods; the pressure to sell is not there; furthermore, I understand we have made a loan to them for financing some 400,000 tons of sugar which they can hoard, as I understand hoarding is defined in this bill; they can hoard at least 400,000 tons, hold it off the market indefinitely as nonquota sugars with money which we have put up for them to enable them to hoard that sugar.

Now, as we move into the heavy consuming period of September and October, in particular, and going back to the needs of sugar users on the Atlantic seaboard in particular, is there any way that you know of that we can effectively force Cuba to disgorge her sugar, insofar as market quotas are concerned, to the people of the United States from now, say, until December 31, or until February 1, when the new crop comes in?

Mr. HENDERSON. May I tell a story?

Mr. CRAWFORD. Yes, sir.

Mr. HENDERSON. During the last war, there was an article acutely needed by the munitions industry of this country, which was supplied from India, and the price of it rose very high. Mr. Baruch was concerned about it and he went to the British officials on duty here in Washington and asked their intervention concerning the supply and price of that particular item. He got what you would call the No. A-1 brush-off-there was no relation between the British and India whereby they could do anything about the matter.

Then Mr. Baruch went over to the Treasury because we had an arrangement for supplying silver to India, which was very much in demand, because of the war needs. And, because he exercised his persuasive powers, there was delay, lingering, and waiting about that matter until it became acute in India, whereupon there was a visit from the representatives of the British Embassy to Mr. Baruch. He said, "Why, of course, you are not qualified to be a representative of India in

this matter; you have already told me so in connection with this item I want." Well, the situation got cleared up.

I have used a story to illustrate that things not directly written into law come into play time and time again in the matter of persuasiveness as between countries, just as they do between individuals. And, to my mind, I do not think we can expect difficulty from that country and I know, also, that you cannot make a price schedule based on one of those indefinite series of possibilities of what may happen to disrupt it.

Mr. CRAWFORD. You feel sure, based upon your investigation up to date on this subject, that you will not have to increase your price ceiling of $3.50 on 96-degree sugars in order to induce Cuba to let her sugars moves to this market? That takes in the whole field. And may I say this, before you answer: Now, Cuba, as I see it, is in a horsetrading position. She is tied into the "good neighbor" policy and, when hearings are called on these reciprocal trade agreements, the State Department makes no announcement to the interested parties of the purpose of the hearing, and you have to shoot into the poke. If you want to file a brief, there is nothing you can shoot at. If you say "You are calling this in order to reduce the duty from 90 cents to 75 cents." the State Department will say "We did not put that in the notice of a hearing."

Now, what is there to keep the Cuban fellows from holding back for 2 weeks, 5 weeks, 8 weeks, until the duty is reduced from 90 cents to 75 cents, and just let the consumers of this country sweat? They have to consider the whole Latin-American relationship. Personally, I think Cuba is on the trading end of this whole proposition and I think we have euchred ourselves into the position where she is on the trading end of this whole proposition, and I am making these observations in the hope you get all of the sugar you want at $3.50, instead of having to up your ceiling price if Cuba refuses to function.

Mr. HENDERSON. Mr. Crawford, if you were charged with my responsibility and you were still dealing with the trade at large and with numbers of people who had specific interests, would you willingly disclose the strengths or weaknesses of your position?

Mr. CRAWFORD. No; I would not.

Mr. HENDERSON. I say that as an advance. If you press me, I will tell you; but I want you to know that in what you are saying you may unwittingly interfere with what I have to do in this situation.

Mr. CRAWFORD. That is true, but may I say it this way-I have a memorandum here that I think covers that; I do not find it at the moment, but here is the substance of it-that during the last two or three hundred years, and especially in this country, our standards of living have flown directly from free enterprise. We are dealing with a bill here which, in my opinion, is an attempt by the Government to reach out and arrest, for the time being, during the emergency, the operation of free enterprise. Now, in trying to find out how the bill will be administered, I make these observations: If it interferes with the Administrator's function after he attains this power, that may or may not be unfortunate; that is something time will have to answer; I cannot answer; but I do not feel I should refrain from asking questions for fear I might interfere with the powers which you will exercise after the bill becomes operative.