At other times farmers would come to the dealer for feed, only to find that one purchase order was nearly exhausted, so they would go and get another. They needed feed in the meantime.

The dealer presumed nothing was out of order when he advanced the feed to the farmer between orders. These two practices account for so-called early deliveries.

When farmers found out that, for various reasons, they could not take delivery of all of their purchase orders before the deadline, they would ask the dealer to hold the balance for them until they could handle it.

The dealer felt he was accommodating the farmer, so he carried it willingly, never thinking that either he or the farmer might be in technical violation of a regulation which they had not yet seen.

The principal reasons for the farmer's delay in taking delivery were (1) delays caused by financing problems, and (2) lack of storage space on the farm. These two reasons account for most of the socalled late deliveries.

On early and late deliveries, the auditors' reports show (1) that in all cases the farmer actually received his feed or grain at the reduced price, and (2) that the dealer made no more than his normal profit on the transaction.

In the light of these facts, we do not feel that we confused the program, but actually implemented it by our cooperation with the farmers to aid them in time of distress.

The auditor's instructions were drawn up approximately 2 years after the program was put into effect. (The last ASC auditor instruction affecting Colorado was No. 1104 dated June 8, 1956.)

These instructions required that when the dealer was billed by the State office for his early and late deliveries he had to pay them even though they were paid under protest, if he wished to participate in the 1956-57 program.

In early January, however, the Department of Agriculture issued a memorandum letting people hold in abeyance their early and late delivery payments until Congress could settle the matter.

There are still many people to be audited. If this legislation becomes law, those people who have not been audited will automatically not be audited for early and late deliveries.

We, therefore, assume it will be the intention of Congress not to penalize those who have already paid their early and late deliveries and that these persons or firms will automatically get refunds if this bill becomes law.

Finally, may I emphasize that the law which provided for this special drought feed aid was passed in emergency by the Congress, to meet a long-standing natural emergency in the field.

Everyone, including dealers in the field, were principally intent on providing relief quickly. The technical regulations surrounding the program usually became known to the farmers and dealers only much later.

It was inevitable that there should be misunderstandings that would amount to technical violations.

We have supported this legislation as offering opportunity for the United States Department of Agriculture to settle these technical claims on their merits.

Certainly we do not even inferentially ask that there be any excusing of willful violators of law. But we feel sure that the Congress does not wish to see penalty visited upon farmers and dealers whose only error is in a technicality, and where the purpose and spirit of the drought feed aid program were carried out.

That is why we earnestly urge you gentlemen to approve this legislation in committee, and to support it when it comes to the floor of the House.

Mr. POAGE. Mr. Hill wants to ask you a question.

Mr. HILL. On page 2, Mr. Farr, you state this—and we want to be

sure

On early and late deliveries, the auditors' report shows (1) that in all cases the farmer actually received his feed or grain at the reduced price, and (2) that the dealer made no more than his normal profit on the transaction.

Now, what I want to ask is this: If we pass this legislation and there are no more audits and I know your firm has been audited— what happens to these folks who are not audited at all?

Mr. FARR. Well, I mean that the Department's auditors would not be auditing. They would be auditing books for mistakes.

Mr. HILL. But he would audit them to see that they delivered the grain?

Mr. FARR. Yes, certainly, but it would not be a matter of itemizing each. If he looked at it and saw that it was delivered properly, he would not worry about the date and have to copy it down to make a record of it like he did for us. Our audit took 6 weeks because they went through every ticket.

Mr. HILL. In the light of this statement you have made, then you feel because of the honesty and the integrity of the feed dealers there will not be any question whatsoever that they have delivered the feed to the farmer who was intended to get it, regardless?

Mr. FARR. That is right.

Mr. HILL. The only thing in question is that

Mr. FARR. That is right. I have every confidence in the Department of Agriculture's auditors that they will do a wonderful job of auditing and will catch anyone who has deliberately tried to cheat on the program.

Mr. HILL. Why do you make that statement? Your firm has been audited. You know the kind of audit they gave you, is that correct? Mr. FARR. Yes, sir. It was a very fair audit. We could not have asked for a more gentlemanly person to come into the office to go over our records than the gentleman who audited our books.

Mr. HILL. That is what I want the committee to know, that we are not trying to put anything over on anybody in this particular piece of legislation.

Mr. POAGE. Thank you very much, Mr. Farr.

Mr. FARR. Thank you.

Mr. POAGE. We will hear now from Mr. James L. Daniel, from Texas.

Mr. Daniel is a constitutent of Mr. Fisher's.

STATEMENT OF JAMES L. DANIEL, REPRESENTING THE TEXAS GRAIN & FEED DEALERS ASSOCIATION, EDEN, TEX.

Mr. DANIEL. My name is James L. Daniel, and my home is in Eden, Tex., where I am owner of the James L. Daniel Warehouse Co. Although I do not manage the warehouse business personally, I am in close touch with it, and have been for a number of years.

I am appearing here as the designated representative of the Texas Grain & Feed Dealers Association, an association that includes in its membership literally hundreds of grain and feed dealers concerned with this legislation.

The emergency drought feed program went into effect in our State in the summer of 1954; it became effective in my county of Concho in September of that year.

The program was instituted to meet the serious situation of a continuing drought that threatened to completely wipe out even the foundation herds of livestock.

While the program went into effect only late in 1954, the drought had been in effect in our county since 1949 and our economic situation was desperate before the program was actually in effect.

Under this relief program it was universally recognized that fast action was needed if herds were to be saved. When the program became effective in my own county on September 1, 1954, and as quickly as our farmers knew about it, which was almost immediately, there was a rush to the local FHA office to obtain certificates for the reduced-price feeds.

Sometimes this Government office did not yet have the necessary blanks; sometimes the county committee was able to meet only at intervals of 1 or 2 weeks; there were several and logical delays.

But everyone realized the necessity of getting relief to farmers as quickly as possible. We understand these county committees were advised, and in turn our farmers and dealers were advised that it would be logical for farmers to go ahead and get the feed, purchases to be covered by certificates where such certificates later was issued. At the beginning and we want to emphasize this point-there was no careful explanation of technical regulations surrounding the program, even where preliminary regulations had been written.

Everyone put first things first-which meant that feed was provided to needy farmers immediately, without thought of technicalities of regulation.

Much later, the Government auditors found many cases where feed slips show delivery of feed on dates prior to dates of issuance of certificates; in the other instances feedstore records show some deliveries after the last effective date of the certificates.

Auditors commonly threw out these deals as technically improper and made claims agains the feed dealers involved. Let's examine how these early and late deliveries usually took place:

First, we have said that dealers, usually with knowledge and even under approval of local county committees, delivered the feed at once when the program was announced, risking the probability that the purchase later could be covered by a relief certificate.

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The spirit and purpose of the program were carried out; the dealer did not seek additional profit; the farmer, even in his emergency condition, felt that he was proceeding in proper and logical manner. But the very technicality of a delivery date appearing as prior to date of the certificate, induced the auditors to throw out these cases for only this technical reason.

Second, there were, we repeat, delays in the handling of the program. Some farmers did not apply for, or were unable to obtain, their certificates until near the end of the program period.

Often the farmers were delayed by difficulties in financing their own part of the purchase price. Many of them did not have adequate warehouse space on the farm to house the full 120 days supply, so left unused balances with the dealer until called for.

There were a number of logical reasons why actual physical delivery of feeds out of the dealer's store were made sometimes later than the expiration date of the certificate.

Where there is no questioning the farmer's eligibility and need, where there is no doubt as to actual final delivery by the dealer, we maintain that there should be no question of validation of these dealer's claims merely because of a date technicality.

We think it is proper to point out here that rejection of claims by the auditors will financially cripple or wreck some dealers, whose only recourse would be to file recovery claims against the farmers themselves.

Since the drought has continued so long that the financial position of many farmers is clearly desperate, the rejection of claims merely suggests a spreading of community insolvency.

The bills under consideration by this subcommittee are designed to correct these inequities. There is no attempt to excuse or condone willful violation of the law of Congress or the sprit of that law.

The proposed legislation only gives the Department of Agriculture authority, which they say they do not now legally have, to examine each case on its merits and to validate those claims where technical errors did not interfere with the purpose of the program, where those technical errors did not result in additional private gain, and where there is no taint of fraud.

Our people in the drought areas have passed through many years of torment; they have suffered severely, but they are acutely conscious of the fine assistance that has been made possible by the Congress, and which has alleviated a part of that bitter experience.

Therefore we ask of you that, in the face of this situation, you make it possible for us to escape the further penalties of technical regulations issued too late or publicized too slowly, wherever the Department of Agriculture finds that the program was only facilitated by this technical error, and the intent of the Congress was only carried out to the best ability of communities that were intent upon their preservation, and not upon technicalities of regulations. We urge your favorable action on this legislation.

Mr. POAGE. Thank you very much, Mr. Daniel. We appreciate your coming here.

Mr. DANIEL. Thank you.

Mr. POAGE. We will now hear from Mr. Alvin E. Oliver, executive vice president of the Grain & Feed Dealers Association.

Mr. FARR. Mr. Oliver is not testifying but Mr. Gamble whom you

called is here now.

Mr. PoAGE. Does Mr. Gamble want to make or file a statement?

Mr. FARR. Mr. Oliver is not going to appear now.

Mr. POAGE. That is all right.

Mr. Gamble can testify or file a statement as he desires.

STATEMENT OF A. F. GAMBLE, GENERAL MANAGER, FARMERS UNION MARKETING ASSOCIATION, DENVER, COLO.

Mr. GAMBLE. My name is A. F. Gamble. I am general manager of the Farmers Union Marketing Association of Denver, Colo. If I may, I would like to make a brief statement.

In Colorado the 1954 emergency feed program was in August 1955 to June 1, 1956.

There were 26 counties in Colorado designated as disaster areas where farmers could obtain this feed at reduced prices.

In Colorado, audits of the dealers' records of the 1954 program were started in January of 1956. And in our case audit exceptions and results of the claims against dealers were in two general categories.

The first one broke down into three: ineligible feed, usually through an error or through misinterpretation of the regulations then under delivery, caused by inability of the farmer to accept physical delivery of the feed which he had agreed to purchase.

Most dealers showed this as a liability on their records and were ready and willing to pay it back and did do that.

And another is improper application of credit, where the value of the purchase order was applied to some purpose other than purchase of the approved feeds.

Our Colorado Milling & Grain Feed Dealers Association has taken the position that all of these types of claims should be paid immediately upon their determination. And in our particular company and all others I know of have paid these claims promptly.

The other category, which is covered by the legislation before you gentlemen is ineligible dates, both early and late deliveries where farmers delivered feed ahead of the purchase order date-where dealers delivered the feed ahead of the purchase order date trying to help our farmers.

And many times this was done upon the advice of the county committee. They told us that the farmer had the purchase order, to go ahead and let him have the feed.

On late deliveries, farmers still needed the feed, he did not have the money or he didn't have the space to store it.

And the farmer and the dealer agreed on the sale of the feed. And if we showed it on our records, the auditors would accept that as evidence of constructive delivery.

If we didn't have a written record of it the auditors would not accept that record and they made late delivery claims.

However, on these early and late deliveries all of the audits in our State, at least, showed that the farmer actually got the feed. And, of course, he got it at the reduced price.

The deaers did not profit and the Government did not lose from it.