(d) That not more than one-third of the total cost of the market facility, including the land set aside for future expansion, is to be expended for the acquisition of land, graded and placed in condition for construction.

(e) That the market facility will not be operated in a manner which would discriminate against any perishable agricultural commodity on account of geographical origin of such commodity or prevent any producer, seller, or buyer from utilizing the market facility because of his organization, business methods (if not unfair or unlawful), membership or nonmembership in any organization, or on account of the method of transportation of the products.

(f) That the rentals and other charges for the use of the market facility will be established at reasonable levels approved by the Secretary and designed to meet the obligations, defray the costs of maintaining and operating the market facility, and provide reasonable reserves.

(g) That any substantial alterations of the market facility will be made only with the approval of the Secretary.

(h) That reports will be made to the Secretary at such intervals and giving such information concerning the market facility as the Secretary may require, and that the books and records of the market facility will be available for examination by the Secretary at its offices at any time during business hours.

(i) That the title to the market facility, or any part thereof, will not be transferred or encumbered, or leased for any purpose not related to the operation of the market, and that any of the vacant land of the market facility will not be leased for a period longer than one year (including the period of any renewals or extensions of such lease), except with the approval of the Secretary.

MAXIMUM CHARGES

SEC. 11. If mortgage insurance is extended by the Secretary under this Act, to aid in financing the construction of a market facility, the maximum charges which may be received for the use of the market facility shall be subject to the approval of the Secretary during the period between the date the assistance is extended and the maturity date originally specified in the mortgage instruments. The Secretary shall approve such maximum charges if he determines they are reasonable and nondiscriminatory.

DEFAULT

SEC. 12. Whoever knowingly demands or receives a charge in excess of the applicable maximum charges approved under section 11 or violates any covenant or condition arising out of a mortgage insurance contract, other than a default in payment, shall be liable to a penalty of not more than $2,000 for each such offense. Each distinct violation shall be a separate offense, and in the case of a continuing violation each day shall be deemed a separae offense. Such penalty shall accrue to the United States and may be recovered in a civil action brought by the United States.

ACQUISITION, OPERATION, AND DISPOSAL

SEC. 13. In the event of default, and conveyance of the property to the Secretary under the applicable provisions of this Act, the Secretary is authorized to accept title to such property; to maintain and operate (but not including engaging in the business of buying or selling perishable agricultural commodities) or lease such property for such period as may be necessary to protect the interest of the United States therein and to sell or otherwise dispose of such property at public or private sale to the highest responsible bidder on such terms and on such conditions as the Secretary deems feasible. All net amounts realized from the operation or disposal of any property acquired under this section shall be deposited in the insurance fund. This insurance fund shall be available to defray expenditures in connection with the acquisition, maintenance, operation, and disposal of any such properties without regard to the provisions of section 3709 of the Revised Statutes.

FEES AND COMMISSIONS

SEC. 14. No officer or employee of the Department of Agriculture shall directly or indirectly be the beneficiary of or receive any fee, commission, gift, or other consideration for, or in connection with, any transaction or business under this Act other than such salary, fee, or other compensation as he may receive as such officer or employee. Any person violating any provision of this section

shall upon conviction thereof be punished by a fine of not more than $2,000 or imprisonment for not more than two years, or both.

ADMINISTRATIVE PROVISIONS

SEC. 15. (a) The Secretary is authorized to promulgate such rules and regulations as may be necessary for the administration of this Act.

(b) The Secretary shall administer this Act by agencies within the Department of Agriculture presently engaged in investigating and developing plans for improved market facilities.

ADMINISTRATIVE EXPENSES

SEC. 16. There is authorized to be appropriated such sums as Congress may from time to time determine to be necessary to enable the Secretary to carry out the provisions of this Act, except that any expenses in connection with marketing facility research, development of plans for market facilities, determination of the need for market facilities, and methods of operation of market facilities shall be financed from funds made available pursuant to the Agricultural Marketing Act of 1946 and the "marketing farm products" item in the Department of Agriculture Appropriations Act.

Mr. THOMPSON. The Chairman is on his way and has asked that we start the hearing.

We first welcome Hon. Gerald Ford, author of H. R. 3623. Mr. Ford, we are very glad to have you here.

STATEMENT OF HON. GERALD FORD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. FORD. Mr. Chairman and members of the committee, I greatly appreciate the opportunity to testify this morning on this legislation which seeks to set up marketing facilities for the handling of perishable agricultural commodities, and other agriculture production.

The chairman of the committee, Mr. Cooley, has been the sponsor of legislation of this sort for a number of years and, during the last session of the Congress, I tried to work with him in seeking affirmative action on this type of legislation.

Unfortunately that legislation did not get affirmative action in the House in 1956. This year, after consultation with local people in Grand Rapids, Mich., which is my hometown, I took the so-called Cooley bill of last year which was H. R. 4054, and worked with them in seeking any changes that might be necessary to help the local situation so that we could proceed with our marketing facilities.

Mr. Cooley introduced this year H. R. 4504 which is a duplication of his bill of last session. My bill which incorporates the changes recommended locally is H. R. 3623. It might be helpful to the committee if I gave a little background on the local situation for I feel it explains the need and necessity for this legislation very well.

The city of Grand Rapids, Mich., is a community of about 190,000 and a metropolitan area of almost 300,000. We have had a small and insufficient wholesale market for a number of years. There has been a recognized need for expansion and improvement, but the whole problem was precipitated by the fact that a superhighway is to be built more or less through the existing wholesale market, which forced the local people to look around to see what they could do to build a new one and to expand the present facilities.

They had heard about the chairman's legislation and they were hopeful that it would be enacted. Before we could take any advan

tage of it, however, they had to go to the State legislature to get authority to set up a public marketing authority, and the Michigan Legislature approved the so-called enabling legislation to authorize a community to set up marketing authorities.

That legislation was enacted, the City Commission of Grand Rapids had now actually approved a marketing authority and this authority is in existence.

The authority is authorized to issue revenue bonds, to procure lands by condemnation and otherwise, and to actually run and manage a marketing authority. The commission or the marketing authority has been in being about a year or year and a half. They have had $225,000 from the city commission to procure land. They have secured options on certain property. They will get additional money from the State highway department for the land which they will have to sell. In fact, they have all of their own money that they can raise but they cannot, through regular loaning channels, borrow sufficient money to proceed to construct a wholesale market that will cost approximately a million three hundred thousand dollars.

They have exhausted every possible avenue that they know of to raise private capital for this purpose. Consequently, they feel that this kind of legislation is absolutely essential to solve their problem.

Now, as I indicated earlier, they have proposed certain amendments to the chairman's bill which I incorporated in my version of the legislation, H. R. 3623, and if I might, I would like to explain the individual amendments that they suggested to me which they think might be beneficial.

On page 4 of H. R. 4504, section 4 (a) they have proposed this amendment, beginning on line 14, strike out all after the word "including" down through the rest of the paragraph and substitute in place thereof the following:

Facilities for handling livestock but including such lands as may be held for sale or lease to those persons or corporation desiring to construct related facilities, utilities and complementary food processing storage and packaging facilities.

I have before me a letter from the attorney for the local food marketing authority and he explains in this letter the reasons for this proposed change and I would like to read his explanation:

A change in section 4 (a) on page 4 of the bill to make the legislation fit our State act which permits us to dispose of land to persons in business closely allied to the wholesale marketing of perishable farm commodities who might desire to have their facilities located near the wholesale market. The purpose of this would be to develop a district wholesale food center. I have stricken out the provision with respect to cold storage warehouses of more than 10,000 cubic feet capacity because we see no reason why this particular exception should be made.

The CHAIRMAN. May I interrupt you? It was made for the reason that we did not want it to appear that it was the purpose of this legislation to permit any authority to go into the cold storage warehouse business as such. I do no know whether 10.000 cubic feet is small or large. I suppose it depends upon the marketing facilities where it is stored.

Now, Mr. Ford, why wouldn't your suggestion fit at the end of this? You could explain to your constituents why it was put there?

Mr. FORD. I think that would fit in very well, Mr. Chairman. What they want to do is to have the authority to sell land to private en

trepreneurs who would like to build facilities in the overall area so they would have a truly central marketing area.

The CHAIRMAN. The idea appeals to me, but I would like to know what the people in the Department say. Mr. Crow, of the Department, has worked on this for 10 years or more. We shall discuss it with him when he appears before the committee and ascertain whether or not the Department has any objection.

Mr. FORD. I might say the Department, with Mr. Crow and others, has done a very fine job in going out to Grand Rapids, picking a site or making several selections for a site and drawing up models as to how it should appear and how it should be arranged. He would be very familiar with this specific problem.

The CHAIRMAN. I think the situation you have described, would be found throughout the whole country. In Raleigh, N. C., the people realize the urgency of this need. They got busy and built modern marketing facilities and they have been able to finance it thus far, but they are hoping this legislation will be passed so that they may obtain the benefits therefrom. We visualize this as a self-liquidating program. It is a program in the interest of the public, not only the farmer-the people who buy and the retail merchants. It is in the interest of the public generally because the markets we now have are wasteful, unsanitary, and otherwise objectionable.

With the committee's consent and approval, I should like for Mr. Crow to show to the committee a very brief motion picture that he has of this antiquated marketing facility, through which millions and millions of produce go every year. I think it would emphasize his testimony more to see it in a movie, especially for the new members who have not had an opportunity to give this problem consideration. I think they should be very much interested in seeing these pictures.

The markets are just as they were, in many instances, over 100 years ago, back in the horse-and-buggy days. Washington Street Market in New York is a complete disgrace to the city in which it is located and you find that true throughout the country. This legislation has been reported by our committee several times, passed the House at least once or twice, but it always gets bogged down in the Senate. We do have someone over in the Senate who is interested in it. I say this for the benefit of the members of the committee.

Mr. Crow, how long will it be before they will be here with that picture?

Mr. CROW. They are on their way.

The CHAIRMAN. Then suppose you go ahead, Mr. Ford.

Mr. FORD. There are two other changes which the local people suggested.

The second refers to an amendment on page 9, section A (c) 4. It would provide beginning on line 5, the following additional language:

The mortgage terms may permit the later extension of the mortgage to cover additional sums borrowed under the same mortgage for expansion of the market facility subject to the same limitations and requirements as are applicable under this act to the initial borrower.

And the following is the reason given by the attorney for the local marketing authority for this:

In addition to section A (c) 4 on page 9 of the bill to make it clear that the mortgage in question may be open ended which would enable us to expand the

original market development if necessary, but subject to the same limitations as would apply to the initial borrower.

The CHAIRMAN. I don't see any objection to that. I believe that would be an improvement.

Mr. FORD. Apparently they feel once they got the market established, there would be a continuing need for financing as the proposition grew and if they had an open end mortgage, it would give them a greater flexibility than they would have under the original proposal. The third proposed amendment refers again to page 9 of the bill, and it would strike out and change section A (c) 6 and substitute in lieu thereof the following:

A. The mortgage shall bear interest not to exceed such rate of interest per annum on the amount of the principal obligation outstanding at any one time as shall be determined by the Secretary.

The reason for that as given by the attorney for the local marketing authority is as follows:

A. A change in the provision on section A (c) 6 on page 15 of the bill to remove the specific maximum limitation on such mortgage and substitute therefor a determination by the Secretary of Agriculture as to the sound maximum rate for such mortgages. This is necessary because of the present proposed limitation of 4 percent would be entirely inadequate to attract lenders and the question of what is a fair maximum may well vary from time to time. The question of what is appropriate should be determined by the nature of the proposal, the state of the earning and the state of the money market at the time of the borrowing.

Those three changes are the ones I incorporated in my version of the bill. They were caused by practical problems encountered by the local people.

The CHAIRMAN. Your first suggestion about expansion seems to me to be compatible with the provision on page 14 subsection (c) line 8 where the bill provides

that sufficient land is included as a part of the facility to meet the need of the initial construction plus a reasonable amount of land for expansion of the market facility, and in no case shall the land available for future expansion be less than one-fourth of the acreage utilized in the initial construction.

The chairman. Yourb

Mr. FORD. That is one of the requirements of eligibility.

The CHAIRMAN. Your suggestion would fit in exactly with that. I haven't any fixed notions about this 4 percent but it may be that your suggestion should be put in the bill for the very reason that if the interest rate happens to be too low, nobody will be able to finance them. That is what has happened in some of the housing programs, and I believe you would find that the Secretary would not be disposed to raise the interest rate beyond a reasonable figure.

The CHAIRMAN. Does that conclude your statement?

Mr. FORD. I do have a statement from the chairman of the Grand Rapids Food Marketing Authority which I would like to insert in the record at this point with the chairman's permission.

The CHAIRMAN. Yes; without objection it will be inserted in the record.