made in 350 receiving markets and at shipping points in cooperation with 44 States. The service is also being rendered on tomatoes delivered to canneries, in fact in the past year there were 257,000 tons of cannery tomatoes certified in nine States.

The service was extended to canned fruits and vegetables by Congress in the appropriation act for the fiscal year 1932, and extended to tobacco the year before.

It covers now fruits, vegetables, butter, eggs, cheese, poultry, beans, soybeans, broomcorn, rice, tobacco, and certificates of origin for alfalfa and clover seed.

Mr. BUCHANAN. Now, right there you might state how much of this appropriation, what per cent does the Federal government get back?

FEES RECEIVED FROM INSPECTION SERVICES RENDERED

Mr. KITCHEN. This last year, 53.6 per cent.

Mr. BUCHANAN. Now, we used to get back 70 per cent.

Mr. KITCHEN. Not for the whole appropriation, Mr. Chairman. Mr. BUCHANAN. I know, but on perishable fruits and vegetables, when it first started, we used to get back 70 per cent.

Mr. HART. Could not that be brought under a fee basis?

Mr. KITCHEN. It is all working on a fee basis now, Mr. Hart.

Mr. BUCHANAN. Discretion is vested in the Secretary of Agriculture to make such charges as he sees fit.

Mr. HART. It is a pretty good sized appropriation.

Mr. KITCHEN. We can not use the fees. They must be deposited in the Treasury.

Mr. HART. Yes; but even after 53 per cent is returned, we are still spending a lot of money.

Mr. KITCHEN. The deficit in the fruit and vegetable work is in the service at the receiving markets. The work at the shipping points is self-supporting, but we have inspectors stationed in 44 receiving markets. In some of the smaller cities they do not get enough applications for inspection to make the office self-supporting, yet it is necessary to have them there if they are to serve the shippers, because about 50 per cent of our applications for inspections in the receiving markets come from the shippers.

Mr. HART. How large a market, say from a population standpoint, do you furnish inspectors for, how small a market?

Mr. KITCHEN. We have never based it on population.

Mr. HART. I mean a receiving population.

Mr. KITCHEN. I do not think we have a man stationed at any place with a population of less than 100,000.

Mr. BUCHANAN. These inspectors at the receiving point, do they report only on carload lots that have already been inspected and a certificate given at the shipping point?

Mr. KITCHEN. Many of them have been inspected at the shipping point, although not necessarily so.

Mr. BUCHANAN. In other words, the receiving agent or receiving companies utilizing the department may do so to convince the shipper that the stuff is not of that quality specified or that is it not sound, or something of that sort.

Mr. KITCHEN. Yes; or it may work this way, that the car arrives and the buyer in the receiving market objects and says it is not good

delivery on the specifications and the shipper does not want to accept his word for it, so he asks us to make another inspection.

Mr. BUCHANAN. He wires and asks you whether it has been inspected or not.

Mr. KITCHEN. That is right.

Mr. HART. Inspection at point of origin is not final.

Mr. KITCHEN. It depends on the terms of the contract.

Mr. BUCHANAN. It could not be on perishable products.

Mr. HART. Well, if the buyer bought it on the f. o. b. basis, it could be.

Mr. BUCHANAN. Well, of course.

Mr. KITCHEN. By contract, you can make it final.

Mr. HART. If bought on the f. o. b. basis, he buys it on the track subject to United States grades, and I think he would be bound by that.

Mr. BUCHANAN. The auction sales by which the buyer bought carloads of fruits and vegetables alone upon the Government certificate, did that play out or is that still going on?

Mr. Kitchen. I think you have reference to the telegraphic auction, do you not?

Mr. BUCHANAN. Yes.

Mr. KITCHEN. That has pretty largely disappeared. It is not an important factor in the distribution of fruits and vegetables.

Mr. HART. Take Detroit as an illustration. Do you have a man on a salary basis at Detroit or on the fee basis?

Mr. KITCHEN. On a salary basis.

Mr. HART. On a salary basis?

Mr. KITCHEN. Yes; and there he charges $4 a car for the inspection and that $4 is deposited in the Federal Treasury.

Mr. HART. Is he self-sustaining, do you remember?

Mr. KITCHEN. I do not know for Detroit.

Mr. HART. He is used in a radius of a hundred miles around. Mr. KITCHEN. Yes, some one made reference to inspections having been made in 350 cities. That means that these men stationed in 44 markets make inspections at that many outlying points.

Mr. BUCHANAN. Well, I like the service, but I do not like for it to cost the Federal Government so much.

Mr. HART. I venture to say in Detroit you could get that on a fee basis if you wanted to. In a town of that size we have had services that I knew of on a fee basis. It is just a question of working it out. I think you can save the Treasury some money.

Mr. BUCHANAN. Of course the private individual's certificate would be a different thing.

Mr. HART. Of course I know he would not be a Government man. He would have to pass an examination. Is this employee a civilservice employee?

Mr. KITCHEN. He is a civil-service appointee. The grain inspectors to whom you have reference are not Government employees. Mr. HART. But they have to pass an examination.

Mr. BUCHANAN. That does not make them anything but private citizens, unless they are appointed by the Government. Mr. HART. They are licensed by the bureau?

Mr. BUCHANAN. They are just like cotton graders-licensed.

Mr. KITCHEN. Holders of their certificates may appeal to us from their decisions and we issue a final certificate.

Mr. HART. None of their work is final.

Mr. BUCHANAN. You would not be willing, as a matter of law, to make inspections by a private inspector prima facie evidence in the courts.

Mr. HART. I would be just as willing to accept a man who is licensed as a man who was on a salary. One is as competent as the other. They both pass the same examination. It is just a question of character and ability.

Mr. BUCHANAN. And responsibility.

Mr. KITCHEN. Of course you are asking a man to take a considerable risk to go into a large city like Detroit, as expensive as it is to live there, and depend for his living upon the applications he could get. And there is another very serious difficulty about that procedure. He would depend largely on the receivers there for his livelihood and the first thing you know he would be making decisions in their favor.

Mr. BUCHANAN. The most serious thing is he is liable to lean to the side that employs him.

Mr. KITCHEN. The chief value of the inspection service is the honest judgment of the inspector.

The fruit and vegetable service was 64 per cent self-supporting during the last fiscal year. It was 67 per cent the year before but was dragged down somewhat because canned fruits and vegetables were added. That is an entirely new service. It is going along very well, but we got into it too late last year to make a very good showing. Mr. OLSEN. After all, this service is looked upon as a helpful service, if we want to help the industry. Fifteen years is a relatively short time to establish a nation-wide service on a purely voluntary basis. It has been growing every year, until last year when we had some decline along with everyone else. If it continues, I have no doubt it will improve.

Mr. BUCHANAN. It is going down. My recollection is that in one of the years it was 87 per cent self-sustaining and then it got down to 67 per cent and now it is down to 54 per cent. If it keeps on going down, it will eventually be wholly supported by the Government. Of course, it is in the power of the Secretary to make it self-sustaining if he wants to.

Mr. KITCHEN. On that, there is some difference of opinion. Many of these people do not have to have an inspector, and if we make the fee too high, we will receive less income than we are now. When watermelons were selling for $25 a car we could not expect shippers to pay $5 a car for an inspection certificate. It is much the same with potatoes now.

Mr. BUCHANAN. In other words our prices have fallen so far that they will not stand even a reasonable fee for the amount of work it takes to inspect a car.

Mr. KITCHEN. That is true.

Mr. OLSEN. Still a further word on this inspection. These certificates that I have spoken of are used very largely in wholesale transactions; but for meats, butter, and eggs, they are finding their way right down to the consumer in the form of certificates on various products. For instance, in the case of meats, this past year, we

inspected 184,000,000 pounds as compared with 104,000,000 the year before; and in the case of butter, 190,000,000 pounds. So the certificate is finding its way down to the consumer and we think it significant, that the consumers have taken hold of the matter in that way. Mr. BUCHANAN. I am just wondering under this meat inspection act why another inspection should be required under this provision here.

Mr. OLSEN. That is for health and this is for grade and quality. The meat inspection is only for health and disease.

Mr. BUCHANAN. Did not we put an item in the appropriation bill a few years ago for those packers who wanted to have the quality stamped on the meat to do it by paying for it?

Mr. KITCHEN. This is it.

Mr. BUCHANAN. This is the service they wanted?
Mr. KITCHEN. Yes, sir.

Mr. BUCHANAN. Under that provision, how much did you inspect? Mr. KITCHEN. In the fiscal year 1931 we graded 126,382,120 pounds and 206,601,300 pounds in 1932, of which 183,784,399 pounds were actually stamped with the grade

Mr. BUCHANAN (interposing). What per cent of the expenditures on that are they paying?

Mr. KITCHEN. That work last year was 82 per cent self-supporting. That is the best project we have.

Mr. BUCHANAN. That is what we want; something like that I do not object to.

Mr. OLSEN. I want to add another word on the extension of this inspection service abroad. I told you about the fruit specialist we had in London, reporting on the fruit market and fruit production. He has been very helpful to us on this inspection work. Last year, the British put through an apple order directed against the apple maggot, forbidding the importation of apples of less than fancy grade for boxed apples or grade No. 1 for barreled apples. Some of those shipments arrived without any certificates. Our man being equipped to render a certification, inspected them and issued a certificate.

The French quarantined against the San José scale and in that he rendered very able service. The French laid down a very severe quarantine. We negotiated with them, working through this fruit specialist who knew the whole fruit service and on the basis of that we were able to arrange a satisfactory inspection service to get our apples into France. In other words, I want to get across to the committee the fact we are extending these inspection services to foreign markets wherever we can find a man to make the inspection, and it is necessary to do so.

Mr. JUMP. Also, that this kind of service no consul or other man without the particular technical knowledge involved could render. That is why you have to have a small group of special men for this service abroad.

Mr. OLSEN. I want to discuss the inspection work under the grain. standards act.

ENFORCEMENT OF THE UNITED STATES GRAIN STANDARDS ACT

Mr. BUCHANAN. The next item is:

To enable the Secretary of Agriculture to carry into effect the provisions of the United States grain standards act, including rent outside of the District of

Columbia and the employment of such persons and means as the Secretary of Agriculture may deem necessary, in the city of Washington and elsewhere, $771,630.

Mr. OLSEN. The following is presented under this item:

WORK UNDER THIS APPROPRIATION

This work consists of carrying on the service and regulatory work required by the grain standards act. This act provides substantially four things: (1) To establish official standards of the United States for grain; (2) to license inspectors to apply the official standards; (3) to supervise the work of such licensed inspectors to the end that there will be a correct and uniform application of the standards, and to entertain appeals from grades assigned by such inspectors in cases where a party to a grain transaction is dissatisfied with the grade originally assigned by the licensed inspector; (4) to conduct hearings and publish findings in cases of violations of the act. This authority is designed to prevent and do away with fraud and misrepresentation.

At the present time official standards have been promulgated for shelled corn, wheat, oats, rye, grain sorghums, feed oats, mixed feed oats, and barley. These standards are in general use throughout the United States and in our export commerce. They form the basis of merchandising transactions in the various steps from the producer to the consumer. It is imperative that an inspection agency which serves an industry which is highly competitive should be organized and maintained on a plane which merits the highest confidence in its integrity. Grain inspectors and grain supervisors stand as impartial and unbiased arbiters between sellers and buyers and the use of this service has been so well established that it forms a basic feature of the highly organized merchandising practices in both domestic and export commerce.

COST OF HAY INSPECTION SERVICE

Mr. HART. Are you still maintaining inspections of hay?
Mr. KITCHEN. Yes.

Mr. HART. How are you handling those?

Mr. KITCHEN. The major part of that work is done in cooperation with the States and some of the hay exchanges.

Mr. HART. Have you a breakdown showing what that is costing? Mr. KITCHEN. I do not know about the cost for hay alone. For hay, beans-edible and soybeans-barley, corn and feeds and seeds, it is around $56,000. I can put in the record the cost of the hay inspection. Last year we inspected around 20,000 cars.

The cost of the entire hay inspection service for the current year will be around $19,000.

Mr. OLSEN. Did you wish to ask some specific questions on the appropriations, Mr. Buchanan?

ITEMS ENTERING INTO REDUCTION IN ESTIMATE

Mr. BUCHANAN. Yes; just a minute. In 1932, you had in the appropriation for the grain standards act $860,040; in 1933, for the current year you have $833,370, and your estimate for 1934 is $771,630, a decrease of $61,740; $2,760 represents a saving in office rental by obtaining space in a Federal building; $58,980 represents the decrease on account of the legislative furlough. What is this reduction in 1933 under the appropriation for 1932?

Miss CLARK. It was $26,670.

NATURE OF REGULATORY MEASURES

Mr. OLSEN. Just a word in regard to the regulatory measures in general. As our economic life has become more complex, and as the distance between producer and consumer has increased, and as more