of the type specified in section 2 hereof. Any arrangement for the operation of the plant shall be under such terms and conditions as will further the purpose of this Act and may include provision for reimbursement by the payment of a fee or otherwise for any losses incurred by the operator thereof. In the event it is determined by the Secretary that no appreciable amount of grains which are inferior, damaged, deteriorated or in immediate danger of damage or deterioration are available either from private interests or from Commodity Credit Corporation owned stocks, he may operate the plant (1) for the manufacture of alcohol from surplus grains regardless of the condition of such grains, and/or (2) for conducting research into new and improved uses of surplus grains for industrial uses. Any grains used in the operation of the plant may be obtained by the Secretary of Agriculture in accordance with the provisions of section 2 hereof.

SEC. 5. The Secretary of Agriculture may store alcohol manufactured at such plant or sell it at such price as he deems reasonable. All proceeds from the sale of such alcohol shall be deposited into the Treasury of the United States as miscellaneous receipts.

SEC. 6. There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act. The Secretary of Agriculture may also transfer from funds available to the Commodity Credit Corporation such sums as may be necessary to carry out the purposes of this Act.

[H. R. 10514, 85th Cong., 2d sess.]

A BILL To transfer to the Secretary of Agriculture certain alcohol-producing facilities of the United States, to require him to produce alcohol from surplus agricultural products and certain corn and wheat, to provide for the disposal of such alcohol, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there shall be transferred to the Secretary of Agriculture (hereinafter referred to as the "Secretary") the Governmentowned alcohol-producing facility at Omaha, Nebraska, known as plancor numbered 1608, and any other Government-owned facility useful in any program authorized by this Act, upon request for such transfer by the Secretary. The Secretary shall request the transfer of all such facilities within a reasonable time after the date of enactment of this Act but not later than January 1, 1959. SEC. 2. The Secretary shall operate the facilities transferred to him pursuant to the first section of this Act to manufacture alcohol from surplus agricultural products and from corn and wheat purchased under section 6 of this Act.

SEC. 3. No officer or employee of any department, agency, or independent establishment of the Government of the United States shall purchase any motor fuel for use by such department, agency, or independent establishment unless at least 5 per centum of such fuel, by volume, is alcohol manufactured under section 2 of this Act.

SEC. 4. The Secretary shall sell for any use, other than human consumption, any alcohol which is not disposed of under section 3 of this Act at a price equal to the cost to the United States of manufacturing such alcohol.

SEC. 5. The Secretary shall, in addition to the manufacture of alcohol as required by section 2 of this Act, conduct experimental programs for manufacture of butadiene from alcohol produced from surplus agricultural products and from corn and wheat purchased under section 6 of this Act for the purpose of demonstrating the commercial feasibility and ascertaining the cost of such production, and shall carry on such other research as may be necessary to carry out the programs authorized by this section, including the development of improved processes and the development and commercial production of byproducts.

SEC. 6. The Secretary is authorized to purchase for use in manufacturing alcohol under section 2 of this Act and for carrying out the programs authorized by section 5 of this Act, any corn and any wheat which by reason of its high moisture content is ineligible for purchase by the Commodity Credit Corporation under any other provision of law.

SEC. 7. Section 3 of this Act shall not apply to any purchase of motor fuel during any period when the Secretary certifies that, by reason of a lack of surplus agricultural products or of corn or wheat eligible to be purchased under section 6, he is unable to produce sufficient alcohol to meet the requirements of section 3 of this Act.

SEC. 8. As used in this Act

(1) The term "motor fuel" means any petroleum product (including gasoline, kerosene, naphtha, benzine, and crude oil) which (A) has a specific gravity of thirty-six degrees or above, Baumé scale, and (B) is suitable for use as fuel in an internal-combustion engine.

(2) The term "United States" includes the States, Territories, and possessions of the United States, and the District of Columbia.

(3) The term "surplus agricultural products" means so much of the supply of any agricultural product acquired by the Commodity Credit Corporation in the course of providing price supports for such product as the Secretary determines to be in excess of the normal needs of the United States.

[H. R. 11189, 85th Cong., 2d sess.]

A BILL To provide for the transfer to the Department of Agriculture of a certain Government-owned alcohol plant, for the purchase and use of grains in connection with the operation of such plant, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, notwithstanding any other provision of law, the Administrator of the General Services Administration is hereby authorized and directed to transfer to the Secretary of Agriculture, without reimbursement or transfer of funds, the Government-owned alcohol-producing plant at Omaha, Nebraska, known as Plancor Numbered 1608, together with the equipment, facilities and other property pertaining thereto.

SEC. 2. The Secretary of Agriculture is authorized, upon such terms and conditions as he deems reasonable, and notwithstanding the provisions of any other law, to operate such plant or provide for the operation of such plant under Government supervision by lease of other arrangement, for the purpose of manufacturing alcohol from grains which, in the opinion of the Secretary, are inferior, damage, deteriorated, or in immediate danger of damage of deterioration.

SEC. 3. The Secretary of Agriculture is authorized to procure such grain by purchase without regard to the provision of law governing the making of contracts and by transfer, without reimbursement, of Commodity Credit Corporation owned stocks.

SEC. 4. The Secretary of Agriculture is directed to operate the plant, or cause it to be operated, in such manner as to utilize to the fullest extent possible grains of the type specified in section 2 hereof. Any arrangement for the operation of the plant shall be under such terms and conditions as will further the purpose of this Act and may include provision for reimbursement by the payment of a fee or otherwise for any losses incurred by the operator thereof. In the event it is determined by the Secretary that no appreciable amount of grains which are inferior, damage, deteriorated or in immediate danger of damage or deterioration are available either from private interests or from Commodity Credit Corporation owned stocks, he may operate the plant (1) for the manufacture of alcohol from surplus grains regardless of the condition of such grains, and/or (2) for conducting research into new and improved uses of surplus grains for industrial uses. Any grains used in the operation of the plant may be obtained by the Secretary of Agriculture in accordance with the provisions of section 2 hereof.

SEC. 5. The Secretary of Agriculture may store alcohol manufactured at such plant or sell it at such price as he deems reasonable. All proceeds from the sale of such alcohol shall be deposited into the Treasury of the United States as miscellaneous receipts.

SEC. 6. There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act. The Secretary of Agriculture may also transfer from funds available to the Commodity Credit Corporation such sums as may be necessary to carry out the purposes of this Act. Mr. POAGE. All of us want to do something on this problem of using this soft corn. I think that everybody wants to use this soft corn if it can be done effectively, economically, and practically and if it can be done profitably.

However, there have been several questions in the minds of some that I know, of the public and I am sure of people from the Corn Belt as to

what the situation actually is and as to whether it would be a feasible proposition to reopen that plant.

One of the main questions has been whether it would be possible to reopen the plant in time to use up the soft corn that is on hand. I think that actually that is the problem that we need to consider this morning and I believe that I am justified in saying that that will be the problem that we will consider this morning, whether it can be reopened in time to use up that corn. So as to keep this hearing within bounds, because we have other problems and we just cannot devote the time that this thing deserves, we will try to limit our discussion to this phase of the problem.

I am saying that just to point out that there will not be any use for anybody to be telling us about the desirability of getting rid of this soft corn. All of us realize that that is desirable, and I could say that the committee could take judicial notice of that fact.

What the committee wants to know this morning is how fast this plant can be reopened; what can we do with the alcohol; when can we reopen the plant and after it has been reopened, what price will we pay for the material that goes into this alcohol, this soft corn, and then what the alcohol will sell for, the selling price of the product; in other words, what are the economics of this proposition and is it economical to reopen the plant just for a short time and then close it down again; and what will be the total costs and when you have added up all of those costs, to find out what would be the profit from the product produced to the Government. I think that these are the things that we want to know this morning.

We have a number of interested parties here this morning, we have a number of people who have come a long ways to attend this hearing, I know.

We have Mr. Harrison, the author of one of the bills on this subject matter, as well as Mr. McGovern and Mr. Hoeven.

Mr. HARRISON. Mr. Chairman, I have invited some of these people who are here in the back of the room. I would like to introduce them. Mr. POAGE. All right. Suppose that you call them as you want to call them. I have a list here but that does not necessarily mean that they are listed the way that you want to call them, in that order. Would you introduce them?

Mr. HARRISON. Mr. Chairman, I have Mr. Leroy Welsh, Mr. Joseph G. Johnson, Mr. Lewis Smithberger, and Sidney Caughey of the Department.

Mr. POAGE. The Department of Agriculture?

Mr. HARRISON. Yes.

At the outset, Congressman Poage, I want to thank you for giving us this time to appear here and present our argument for the purpose of opening this particular plant.

After your consideration of it as of last Friday I called these people to ask them if they would come. Mr. Welsh has come from California, Mr. Johnson from Nebraska and Mr. Smithberger from Nebraska.

Mr. Johnson was the engineer and original designer and operator of this plant for several years so I think to answer the questions that you have brought up, that Mr. Johnson possibly should be the first witness.

Mr. POAGE. All right, we would be glad to hear from him.

STATEMENT OF JOSEPH G. JOHNSON, ENGINEER AND OWNEROPERATOR OF THE PLANT UNDER CONSIDERATION, ACCOMPANIED BY LEROY WELSH, CHAIRMAN OF THE COMMISSION ON INCREASED INDUSTRIAL USE OF ALCOHOL, LEWIS SMITHBERGER, GRAIN DEALER AND ELEVATOR OPERATOR, STANTON, NEBR.; AND SIDNEY CAUGHEY, UNITED STATES DEPARTMENT OF AGRICULTURE

Mr. JOHNSON. Mr. Chairman, I will try to make this statement as brief as possible. I realize that you people are all very busy here. At the time that this plant was constructed it was necessary for us to work here for some time and we worked on it over a year with the Senate Committee on Agriculture, when we had the allotment and finally it was released, the money, and we started building the plant.

Prior to that our group had developed many methods, new methods of economically converting grain into alcohol primarily for the purpose of using the alcohol and other products for industrial purposes.

These different programs were built into this plant so that there are a great many things that you can do there with the grain besides making alcohol out of it. So we began working there.

It was released in 1943, January 1943 and we went into production in about 12 months and we processed about 60 million gallons of alcohol-no, about $33 million worth of alcohol during the period that it was operated for the Government.

The cost of producing alcohol in that plant is based or was based on operating it on the cost of the grain per gallon of 190-proof alcohol, and we were getting about 234 gallons to the bushel of grain.

The residue that we sold for cattle feed was paying all of the operating costs, so that I would say that as a rough figure that the cost of the alcohol produced at that plant would be the cost of the grain per bushel divided by about 2.75 for the alcohol.

Now, as to the question of the time for getting that plant into operation. I would say that it would take from 60 to 90 days for 2 lines of production and we probably could get the first line of production in operation in about 60 days and the second line in about 30 days later.

There would be a considerable amount of work to do after you get into production because I assume that in making these statements that the plant has been taken care of according to the general regulations of the General Services Administration when it closed down. If it was not, why then it might cost a little more money, it might take a little more time; but I believe that was done, from all of the information I have, that it was done.

As far as the steam supply of the plant goes, that does not belong to the Government; it belongs to the Omaha Power District; their plant is across the street from the alcohol plant.

I inquired before I came down here and that steam can be made available in 3 days time; and also the gas can be made almost immediately available for use for drying the feed and for other purposes.

So, from the standpoint of getting the plant in condition and getting it into service, I believe that the best estimate would be something between 60 and 90 days.

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Now, the ultimate cost, if the plant is going to run any length of time a great many things would have to be renewed as we go along and that would cost some place between $600,000 and $1 million, in my opinion, if it is going to be placed in permanent operation.

Mr. POAGE. Well now, if that is true then, your estimate as to the cost of this alcohol is going to be wrong; if you are going to have to spend $600,000 or $1 million, you have got to add that to the cost of the alcohol, in addition to the cost of the corn; isn't that right?

Mr. JOHNSON. That would depend, if you were just going to start the plant up, for taking care of this particular corn; but you have an agricultural program where you are spending billions of dollars and we worked out several programs and I am satisfied that if that continued a short time that you could entirely eliminate all of the money you are putting out now in your agricultural program for crops that contain starch and sugar, and that was our program that we started with and I am satisfied that can be done if there is an honest effort made to do it.

Mr. HARRISON. That would be a longtime program. At the present time, as I say, it is an emergency program, to open that plant to take care of the corn going out this year.

Mr. POAGE. Yes, I understand that is the purpose of the bill.

Now, in order to get through with the testimony that is to be presented, it might be better to have no questions asked until all of the statements have been received, and perhaps more of the committee members wil be here by that time.

Mr. HARRISON. Very well, Mr. Poage.

Mr. POAGE. Could we hear your next witness now?

Mr. HARRISON. Well, I would like to have Mr. Welsh say a few words.

Mr. POAGE. All right. Mr. Johnson, you may just remain seated there. We will hear you now, Mr. Welsh.

Mr. HARRISON. Mr. Welsh is one of the original owners and operators of this plant and he knows the figures.

Mr. WELSH. Mr. Chairman, as I think most of you know, my name is Leroy Welsh and I am Chairman of the Commission on Increased Industrial Use of Alcohol and I was a partner of Senator Butler of Nebraska and I spent my lifetime in the grain business and in cooperation with Mr. Johnson we built and operated this alcohol plant now in question.

During the past year you fellows here in Congress have had the bill that required the President to appoint a commission to study the industrial uses of farm surpluses, and I was chosen by President Eisenhower to be Chairman of that Commission.

I spent last year, most of my time, commuting back and forth from Omaha to here and I had under my supervision some 200 of the top research scientists of America studying the problem of industrial uses of farm surpluses and I made the report to Congress on the 15th of June this past year on these industrial uses.

In the beginning I want to make it perfectly clear I have no personal interest in operating an alcohol plant for the Government for profit, now or in the future. That seems to have been misunderstood sometimes. But I am willing to donate my services or my counsel at any time I can to this committee or to this Congress or to the Govern

ment.