a manner that the consumers' interests will be protected as set forth in the above declaration of policy. The decrease of $3,000 is due to the fact that a transfer of this amount was made to the Bureau of Labor Statistics in 1934 for the collection of certain price data and it is estimated that no further expenditures for this work will be necessary in 1935. ADVANCES TO AGRICULTURAL ADJUSTMENT ADMINISTRATION Appropriation: 1934.. Estimated obligations, 1934 Budget estimate, 1935... Decrease, Budget 1935 compared with estimated obliga- This is the appropriation made by section 12 (b) of the Agricultural Adjustment Act, explained below under "Work done under this appropriation." WORK DONE UNDER THIS APPROPRIATION The section of the Agricultural Adjustment Act establishing this appropriation reads as follows: "SEC. 12 (b). In addition to the foregoing, the proceeds derived from all taxes imposed under this title are hereby appropriated to be available to the Secretary of Agriculture for expansion of markets and removal of surplus agricultural products and the following purposes under part 2 of this title: Administrative expenses, rental and benefit payments, and refunds on taxes. The Secretary of Agriculture and the Secretary of the Treasury shall jointly estimate from time to time the amounts, in addition to any money available under subsection (a), currently required for such purposes; and the Secretary of the Treasury shall, out of any money in the Treasury not otherwise appropriated, advance to the Secretary of Agriculture the amounts so estimated. The amount of any such advance shall be deducted from such tax proceeds as shall subsequently become available under this subsection." The major portion of the funds required for effectuating the declared policy of the Agricultural Adjustment Act are provided by this appropriation. These funds are used for the payment of rental and benefit payments in connection with various programs for the reduction of acreage or reduction in the production for market, or both, of various agricultural commodities. Such payments are being made in connection with production control programs for cotton, wheat, tobacco, corn, and hogs. Similar programs for other commodities may be adopted. These funds are also used for the purpose of removal of agricultural surpluses. Expenditures have been approved for the removal of surplus hogs, wheat, and butter. Refunds of taxes collected under the Agricultural Adjustment Act are made by the Bureau of Internal Revenue to whom funds from this appropriation are transferred for that purpose by the Department of Agriculture. These refunds include refunds for previously taxed commodities sold for charitable purposes or exported and refunds of floor-stock taxes which are to be made upon the discontinuance of processing taxes. Administrative expenses directly connected with any of the above projects also are charged to this appropriation. EXPLANATION OF PROJECT STATEMENT (1) Effectuating reduction in acreage, or reduction in the production for market, or both.-Estimated obligations for 1934 consist of total estimated expenditures (including administrative expense) in connection with reduction programs adopted or being formulated at the time the Budget was prepared. Estimates for 1935 are based on the assumption that such reduction programs will be continued or repeated in 1935. Estimated obligations for 1935 are reduced, first, because in 1934 benefits payments are included for reduction of 2 years' cotton production (1933 and 1934) whereas the 1935 estimate only includes 1 year's payments; 35962-34-64 and second, because of an anticipated decrease in administrative expense in repeating or continuing reduction programs. (2) Removal of agricultural surpluses.-Estimates of removal of surpluses for 1934 include surplus removal costs and administrative expenses occasioned directly thereby. The estimate for 1935 is decreased because it is anticipated that expenditures for removal of surplus pork products in 1935 will be reduced and that administrative expenses will also be less. (3) Refund of taxes.—The estimate for refunds of taxes for 1934 covers refunds for charitable organization purchases and for exports only. The estimate f 1935 is increased by $90,000,000 to allow for the refunding of floor stock taver when processing taxes are discontinued. The actual payment of these refunds will be made by the Bureau of Internal Revenue in a period subsequent to 1931 Inasmuch as the obligation to refund is incurred with the levying of processing taxes and the date on which such taxes will end is not determined, the obligations are recorded as such in the 1935 estimates. PROCEEDS FROM PROCESSING TAXES AGRICULTURAL ADJUSTMENT ADMINISTRATION (SPECIAL FUND) This is the special fund, authorized by the first part of section 12 (b) of the Agricultural Adjustment Act and is established for the receipt of proceeds from processing taxes. Obligations to date and estimated for 1935 from this spec al fund are included in the preceding item covering advances under section 12 of the Agricultural Adjustment Act. PERMANENT APPROPRIATION, SPECIAL FUND Special deposits (cotton).-This fund operates to take care of the financi transactions in connection with the acquisition and disposition of spot cotte and cotton futures contracts by the Secretary of Agriculture, as provided for b part 1, title I of the Agricultural Adjustment Act approved May 12, 1933, and the disposition of the proceeds from the sale of such cotton holdings as follows. (a) The excess of the sales price at which options are exercised over 6 cents per pound (the price at which the Secretary of Agriculture sells cotton to producers is paid to producers. (b) The 1-cent excess of the price at which the Secretary sells cotton to producers (6 cents) over the purchase price of the cotton from the Farm Credit Administration (5 cents basis price) is to be used to cover the carrying charges on the cotton holdings. No acreage payments or administrative expenses are disbursed from this func The statement of receipts and disbursements from this fund will be found on page 479 of the committee print. EMERGENCY FUNDS APPLICABLE UNDER THIS HEADING National Industrial Recovery, Agricultural Adjustment Administration. This expenditure schedule covers an allocation of $37,000,000 under the provisions of section 220 of the National Industrial Recovery Act, to supplement the pro ceeds derived from processing taxes levied in connection with the control and reduction in the production of corn. GENERAL STATEMENT Mr. SANDLIN. Mr. Davis, we will be very glad if you will give us a statement showing what was done with this money, or that part of it which was used by this Administration. We will be glad to have a general statement from you. Mr. DAVIS. On that particular point, Mr. Chairman, the expenses of the Agricultural Adjustment administration, for administrative purposes here and in the field, are made from two sources: That is, the expenses that are properly allocated to a commodity that is defined in the act as a basic commodity, with respect to which processing taxes are in effect, are made out of the processing tax and not out of the $100,000,000 fund appropriated when the act was passed. Expenses of a general nature, which cannot be attributed directly to one of these basic commodities, are set up against the $100,000,000 fund. For the fiscal year 1934, the estimate of withdrawals from the $100,000,000 fund, for adminstrative expenses runs in the neighborhood of $3,251,000. The estimate for the fiscal year 1935 is somewhat larger by reason of the fact that we are allowing for enforcement in connection with the marketing agreements, field audit ng, and field investigation work. It is impossible to give anything more than an estimate, but the expenditures out of that $100,000,000 fund for administrative purposes for the 2 fiscal years, 1934 and 1935, are somewhat less than $9,000,000, according to our Budget set-up. The detailed figures are supplied in the Budget. That leaves, according to our set-up, for the 2 fiscal years, $91,000,000 or something in excess of that figure, untouched out of the $100,000,000 fund. That is true, because while that fund is available for rental and benefit payments, the several campaigns and programs that we have under way are all calculated to come within our receipts from the processing taxes, and, barring some unforeseen developments, we are not allowing for any withdrawals from the $100,000,000 fund for rental and benefit payments. The only things we have taken into account there are the administrative expenses. AMOUNT OF PROCESSING TAX COLLECTED TO DECEMBER 31, 1933 Mr. SINCLAIR. Do those processing taxes come in right along, or have they already started to accumulate? Mr. DAVIS. Yes, sir. I will give that in round numbers. Mr. SANDLIN. If you do not mind, let us go through with this statement you are on before taking that up. Mr. DAVIS. I can answer that in round numbers. Approximately $140,000,000 had actually been collected to the end of the calendar year. There was an accrual greater than that, for the reason that there is a lag of 30 days, and sometimes more, between the date when the tax accrues and the date the tax is payable. Our collections to December 31, were of taxes that had accrued up to, let us say, December 1. ADMINISTRATION EXPENSES-NUMBER OF EMPLOYEES With your permission, I would like to make a general statement about the Agricultural Adjustment Act. Mr. SANDLIN. We will be very glad to have that. First, let us finish with this part of it, or with regard to the money that is expended for administrative purposes. Mr. DAVIS. Mr. Seidemann calls my attention to the fact that, perhaps, I should make a little clearer the statement in regard to the $91,000,000 which we estimate will not be required for administrative expenses. That money is held in reserve for possible shortages in collections of the processing tax to match rental and benefit payments. However, as I have said, we have set up a program for collections that we anticipate will meet the disbursements without touching that fund. Mr. SANDLIN. You have a statement at pages 369, 370, and 371 that shows the work done under this appropriation. That statement will go into the hearings. Do you have a statement giving a list of the personnel? Mr. DAVIS. I have a statement here giving the number of employees, with the total annual salaries, classified as to their location in the Agricultural Adjustment Administration. Mr. SANDLIN. How many employees do you have in the field that are paid out of this fund? Mr. DAVIS. Do you mean directly out of this fund? Mr. JUMP. There is a schedule in the committee print of the bill, which will answer the question as to the personnel under the $100,000,000 fund. Mr. SANDLIN. The detailed statement on page 474 of the committee print of the bill shows 22 permanent field employees and 531 employees in Washington. Mr. JUMP. There is also an item of $1,240,000 for temporary employees in the field. Following the regular form, these are not broken down in detail. Mr. SANDLIN. They are paid out of this fund? Mr. JUMP. Yes, sir; that amount is $1,240,000. Mr. SANDLIN. Do you have any statement that would cover that number of employees, paid out of that amount of $1,282,120? Mr. DAVIS. This sum represents both permanent and temporary employees in the field of which $42,120 covers salaries of 22 permanent employees. Mr. SEIDEMANN. As to the remainder, this is purely an estimate. That is, an estimate of the salaries of temporary employees required. Mr. SANDLIN. That is the estimate for 1935? Mr. SEIDEMANN. Yes, sir. We have a general idea of the number, and could detail it. Mr. DAVIS. The general work that is done in the field which is charged to this administrative appropriation is in connection with field auditing, field investigations, and enforcement of the marketing agreements. Those expenses are not charged against the processing tax income. That is in general the line of work done. Mr. SEIDEMANN. As of January 2, we had 119 employees, involving an annual payroll of $352,000, in the licensing and enforcement section. That is, in the field offices. Mr. SANDLIN. They are paid out of this appropriation? Mr. SEIDEMANN. Yes, sir; they are paid out of the $100,000,000 appropriation. Mr. SANDLIN. You estimate for 1935 $1,282,120 for this same work. Mr. SEIDEMANN. Yes, sir. In the past it has been a matter of setting up a skeleton organization. At the time our estimates were prepared we contemplated a large field organization to do enforcement work during the fiscal year 1935. Mr. DAVIS. I was just going to say, with reference to the statement of Mr. Seidemann with regard to that force as of January 2, that following that date, we discontinued the regional and district investigation offices, and cut them back very sharply, so that, as it stands today, the number and the total expense are far below the figure given. It will be built up just as it needs to be built up to do specific jobs in the field in connection with the marketing agreements. The best we can do is to give an estimate of it. All of that depends on the extent to which we get these effective marketing agreements, and the cost of their administration. As it stands today, the number and the total annual cost are far below the figure given there. I should emphasize again the fact that the remainder of this $100,000,000, which is not called upon to meet current administrative expenses in the field and in the Washington office, is strictly in reserve against the possibility of income not meeting the disbursements of the major crop programs. Mr. SANDLIN. Yes; I agree with you on that. I think that would be a good plan. That explains why it is carried over. Mr. CANNON. Up to this time, there has been no indication that you will need the surplus. Mr. Davis. I will say that we do not see it now, but we have not gone far enough into the expenses to know. We are just going into the corn and hog program, which is the most extensive of them all. We have not gone far enough to tell whether our estimates as to the income and outgo will be borne out by the collections, or not. We do not know as to that. We are just getting into that. ACTIVITIES AND ACCOMPLISHMENTS Mr. SANDLIN. We will be glad if you will give us a general statement covering what has been done under this appropriation, and with the money you have received from any source. Mr. Davis. The Agricultural Adjustment Act provided for certain powers resting in the Department of Agriculture to attempt an emergency readjustment of Agriculture along two major lines. One is entering into contracts or agreements with individual producers calling for adjustment in acreage or production for market, or both, of certain crops mentioned in the act as basic, and authorizing the Department to make rental or benefit payments on those contracts, financing them out of the processing tax to be placed on the processing of the commodity. The measure of the processing tax fixed in the law is the difference between the so-called fair exchange value of the crop and the current market price at the last period for which statistics are available. It is not mandatory that the tax be for that full amount. If there is reason to believe that there will be a decrease in consumption, or a serious effect on the farmers' prices, this tax may be fixed at a lesser amount than the difference between the fair exchange of value and the current market price. Now, the act names seven commodities as basic, wheat, cotton, corn, hogs, tobacco, rice, and milk and its products. Of those seven, we have underway farreaching, and I believe, effective campaigns or programs, on 6 out of 7. I think that, in general, the committee is familiar with the type of activity that has been carried on with those six commodities, but I will sum them up briefly. Mr. SANDLIN. We will be glad to have that for the record. COTTON PROGRAM Mr. DAVIS. Starting with cotton, with which I know Judge Sandlin is entirely familiar Mr. SANDLIN. Too familiar. Mr. DAVIS. When the act was passed, on May 12, the cotton crop was practically all planted, and was beginning to mature in the extremi |