or class 2 supervision, because they did tell you that when they found one area would not comply with the rules, that they removed their class 2 designation.

Another thing they did not tell you was in this ICC docket, was the ICC found that there should be a one-quarter of 1 percent shrink allowance instead of one-eighth of 1 percent that existed for many years.

They did not tell you that they, as a matter of practice, do not pay claims on covered hopper shipments.

I know of one or two instances where they did pay claims but they had to have substantial proof.

Pictures that the slides were worn, that there were broken welded seams in the ends of the cars where these leaks were detected.

They do not generally pay claims on covered hoppers. I have personally witnessed many boxcars that had leaks that leaked through the floor or the A end or the B end of the car, because of the age of these cars. There are many leaks that developed, not only around grain doors.

Senator BELLMON. You feel like, then, the only supervision that is needed is at the points where the grain enters the car?

Mr. MATHEWS. We do supervise that.

Senator BELLMON. We, being

Mr. MATHEWS. Fort Worth Grain Exchange.

Senator BELLMON. If we set up a system of Federal supervision, do you need-as the previous witness said-three supervisors on duty at all times where grain is being loaded?

One to watch the scales, one to watch the elevator, and one to be present where the grain was entering the car.

Do you disagree with that?

Mr. MATHEWS. I do not think that it is a practical solution. For example

Senator BELLMON. If you do not have a supervisor standing there by the scales, what is to keep the weigher from getting his hand over on that scale from time to time, like a butcher getting his thumb on it when you are buying a pork chop?

Mr. MATHEWS. We compare weights crosstown and we compare weights market to market continuously.

Senator BELLMON. Answer my question.

What keeps this guy honest unless somebody is watching him? Mr. MATHEWS. Nothing but his integrity.

Senator BELLMON. Which seems to be lacking, at least in New Orleans.

Mr. MATHEWS. I think that is the big extent of the problems. Senator BELLMON. I have no further questions.

Do you have anything further?

Mr. MATHEWS. I would appreciate if the committee would look at the reliability and the inspection, the appeal basis from these various inspection agencies, that we have mentioned on pages 9, 10 and 11. Also, one other thing that I think that is highly important, under the S. 3055, as I understand the proposal, is that Federal supervision would perform primary inspections at terminal points where 50 million bushels are inspected within a year.

I think it is extremely worthy to note that all of these inspection agencies who are at such terminals provide extensive service to country elevators and feed mills throughout the trade territory, which I feel, on the basis of 3055 would be deprived of that service because of the low volume.

That volume is not sufficient to economically justify private persons or a State to pick up the crumbs.

You have got to have the volume in the terminal to help subsidize and continue service to these country points and there are hundreds of country points that are served by these agencies; they now have service that would not continue through 3055.

Senator BELLMON. That service is on a sporadic basis.

Mr. MATHEWS. Yes, sir, it is.

Whenever they get cars, and these country elevators do not know that they are going to get cars until the local train stops.

Then they do not know if they are going to have two or three that are suitable for loading.

Senator BELLMON. Under the present arrangement when they have cars, they call the grain inspector and they pay a fee for that service. Mr. MATHEWs. Yes, sir; that is correct.

These are nonprofit corporations and inspection agencies and to the best of my knowledge they are not profit oriented.

We pay no dividends.

In periods where the business would be extremely bad and the reserve exhausted, they would pay dues to maintain the service until the fees could be adjusted to take care of that,

Senator BELLMON, Mr. Mathews, I have no further questions.

We appreciate your presence here and your entire statement will be made a part of the record.

Thank you very much.

[The prepared statement of Mr. Mathews with appended material follows:]

STATEMENT OF CARROLL G. MATHEWS, EXECUTIVE VICE PRESIDENT, FORT WORTH GRAIN EXCHANGE AND ALSO REPRESENTING THE ASSOCIATION OF INDEPENDENT GRAIN INSPECTION AGENCIES

My name is C. G. Mathews. I have been the General Manager of the Fort Worth Grain Exchange since May 1963. I have no financial interest in the grain, feed or milling industry, transportation for hire or storage. I have direct oversight and responsibility for the day to day services of the Exchange in all facets of operation.

I am also presenting a portion of this statement on behalf of the Association of Independent Grain Inspection Agencies, which includes: Amarillo, Lubbock, Plainview, Fort Worth and Corpus Christi, Texas; Lincoln, Nebraska and Memphis, Tennessee.

However before I comment on S.B. 3055 I think it only appropriate to give some background on the Forth Worth Grain Exchange.

The Fort Worth Grain Exchange was established in 1907 for the purpose of establishing uniform grades on Grain and to provide for the inspection of grain as well as the dissemination of information which would promote the orderly marketing of grains. This was two years before the Grain Dealers National Association adopted national grain standards and nine years before passage of the United States Grain Standards Act, 1916.

Since that time primary inspections have been made by inspectors employed by Exchanges, Boards of Trade, private inspectors and to some extent

various States. Appeal inspections are performed by Licensed Inspectors in the various Field Offices of the United States Department of Agriculture. Finally, Board of Review Appeals are performed by USDA Licensed Inspectors in Beltsville, Maryland.

The Fort Worth Grain Exchange is a non-profit corporation which is composed of 36 members, including individuals, brokers, persons employed by grain firms, feed and flour mills, country elevators, stock brokers and newspapers and no single firm has more than three employees who are members. In other words no one firm has more than 9% of the total membership. None of the Officers, Directors, Committees or Members exercise control over nor do they provide any technical instructions to our employees. None of the employees nor their close relatives are engaged in the grain business. All of our samplers, laboratory technicians and inspectors are licensed by the USDA only after having demonstrated their ability to perform certain functions involved in the Official Inspection of Grains. There has been no taint of scandal in connection with the Fort Worth market.

The storage capacity of grain storage facilities at Fort Worth, Texas is 59,000,000 bushels which is about sixth or seventh in the United States. During the last 10 years a total of 429,546 carloads of grain or grain products have been weighed, both unloaded and loaded, at the facilities under the supervision of our Weight Department.

GEOGRAPHICAL AREA OF OPERATION-INSPECTION DEPARTMENT

Licensed Inspectors employed by the Exchange have performed Inspection of Grains for the general public as well as members of the Exchange in the Fort Worth area since 1907.

We have inspected wheat for several years for the Waco, Texas area; however since the Licensed inspector who was in Waco failed his renewal examination for his Grain Sorghums license we have been performing inspections on their shipments of Wheat and Grain Sorghums.

Since 1969 we have operated a sampling station in the Brownwood-ColemanTuscola-Lawn and Santa Anna, Texas area. Our licensed sampler probes the grain and sends the sample to our Fort Worth laboratory for grading and protein analysis.

With the closing of the Dallas Grain Exchange in August 1973 we responded to the request of firms located in Dallas, Denton and Waxahachie, Texas by performing sampling and inspection of grain received at and shipped from these towns.

With the closing of the Sherman, Texas Grain Exchange in 1974 we responded to the needs of firms in that area by operating a sampling station whereby samples are obtained by a licensed sampler and sent to our laboratory in Fort Worth, Texas for grading and protein analysis.

Mr. Chairman, I submit that we have made the Inspection of Grains available to meet the needs of our area on a reasonable fee basis-the same for all-which is non-discriminatory. We haven't lost our integrity therefore we don't need to restore it. Our fees for grain inspection are kept at a minimum, having been increased only one time in the last twelve years (October 1, 1974). There are many inter-related factors in the growing, harvesting and marketing of this nation's grain crops. The harvesting of our grain crops moves at a much faster pace now than it did just a few years ago. The railroads now haul a major portion of the grain in covered hopper cars whereas it used to move in forty foot box cars. Therefore the sampling techniques have changed; however the inspection methods are the same except there have been improvements and innovations such as: Motomco Electronic moisture testers and Strand shaker-sizer which is used in separating shrunken and broken kernels of wheat from the test sample.

Whenever the regulations required the use of the Motomco Moisture tester; Strand shaker-sizer; retention of file samples; etc. we have complied therewith.

In December 1975 an inspector from the Fort Worth Field Office suggested we (1) improve the lighting in the inspection laboratory area; (2) train our technicians to determine various grade factors, i.e. damage, foreign material, and DHV; (3) provide for additional inspector desks and lighting. We have changed out the lighting system and replaced it with high intensity lighting; we have 3 technicians studying on wheat grading factors and have hired an

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other inspector; we have installed 3 more inspector tables and purchased necessary additional Torsion balance scales and equipment. We have additional changes in the planning stages to provide more space for retention of file samples. After spending several thousand dollars we are somewhat shocked to see the proposed changes in S.B. 3055 which would result in our Inspection Department being taken over by the USDA, along with about 24 other interior areas. The Fort Worth Grain Exchange, as do most members of the AIGIA, inspect grain for many small shippers located throughout the trade area. The volume of inspections at these outlying towns in not sufficient to support a private inspection service; therefore if S.B. 3055 is adopted there will be many shippers who will be automatically deprived of Official Inspection Service. The volume of grain to be inspected is extremely variable from month to month and year to year. During the past ten years the annual volume of inspections on carloads, truckloads and submitted samples has ranged from about 20,000 in the low year to 65,000 in the high year. On a monthly basis our lowest has been around 850 whereas our largest has been approximately 12,256. We keep in close contact with the crop conditions; shippers loading schedules (prior to actual loading); railroad car supply, etc. in an effort to adjust our work schedules and level of employment to meet the needs of the Grain Industry in the orderly marketing of Grain and to help insure the best possible utilization of the nation's transportation facilities.

In our Inspection Department we have 7 full time Inspectors who have a total of 151 years experience in grain handling, sampling and inspection for an average of 211⁄2 years. Our Chief Inspector who has 30 years service with the Exchange, has charge over and responsibility of all employees within the Inspection Department. It is his responsibility to see that they are properly trained in accordance with the United States Grain Standards Act and the Rules and Regulations of the Secretary of Agriculture.

Our Assistant Chief Inspector, who has 23 years of experience in grain sampling and inspection, assists the Chief Inspector but has a primary responsibility over the sampling operation.

All of our grain inspectors have started their work first as a grain sampler, grain technician and then after extensive training and study they take their examination at the U.S.D.A.-Field Office for license to inspect the various grains. We have a training program whereby each of our samplers learn, within the first year of employment, to operate the various laboratory machines to make the mechanical separations and moisture tests.

ACCURACY AND RELIABILITY

During the calendar year 1975 our Inspection Department performed 58,504 inspections. The monthly volume ranged from a low of 920 in May to a high of 12,243 in June. During June and July 1975 we inspected 20,337 samples and only had requests for 6 reinspections. During August 1975 we inspected 6,732 samples and only had request for 3 reinspections.

During August 1975 our inspectors graded 197 carloads of grain sorghum which had been sold on USDA-Appeal Grade, for export into Old Mexico. The USDA Appeal inspection, based on our file sample, sustained our initial grade on 183 samples which is 93% of the time. The 14 samples which were not sustained were primarily related to differences in moisture tests. You should be aware of the fact that 25% is a fairly reasonable variation in a moisture test on the same machine, depending on the temperature of the Grain. In 1968 the USDA made a study of such variations and this is the results:

During January and February 1976 we inspected 5,132 samples and had requests for 11 Federal Appeals. The USDA sustained the initial inspection on all but 1 sample and that was due to the DHV count on a carload of wheat.

Our Inspection Department worked 7 days a week from June through December except for about 10 days. Our work schedule is flexible enough to meet the needs of the grain trade; many times a railroad would not place cars for loading until after noon which necessitates the shipper to load late; or in the case of country points they never know ahead of time when or how many suitable cars they will be furnished for loading until the local train comes through. These situations combined with the short amount of time allowed for loading cars prior to demurrage penalties requires a highly flexible working schedule.

In our particular operation none of our personnel are on an assigned basis at any elevator or area of town. All of our samplers are working on a floating basis wherever the sampling is to be done and all of our inspection work is done in facilities owned by the Exchange. We do not lease from nor are we located adjacent to any grain firm.

PROTEIN LABORATORY

Our protein laboratory is located in the same facility as the Inspection Department; however in separated quarters. Our chemist holds his BS degree from Texas Wesleyan College. We use the Kjeldahl procedure which is fully recognized by the American Association of Cereal Chemists. It is my understanding that most laboratories who run protein test on grain use this method. Periodically the Lone Star section of the AAOCC exchange test samples and reproduce the results. In addition to this testing we exchange test samples with other laboratories from time to time.

Our chemist has found that reruns on the same sample with the Kjeldahl method we use he can expect an average deviation of 0.10%. During the heavy part of the wheat harvest we are equipped to run 400-500 protein analysis by working 10-12 hours. During this past wheat harvest our laboratory was working 7 days a week for several months.

It is essential that the protein tests be kept current with the inspection of the grain so that the owner can make timely disposition of the rail cars to avoid unduly delaying them. If they are not released promptly then the customer incurs additional reconsignment and demurrage charges; and it created bottlenecks in our nation's transportation system.

WEIGHT SUPERVISION DEPARTMENT

The Association of American Railroads recognize Fort Worth grain elevators and feed mills as being a Class 2 Official Weight market. Under Texas laws there are three ways a person can qualify as a Public Weigher (1) Independent (2) Appointed by the Governor or (3) Elected Public Weigher.

Our Chief Weighmaster qualifies through the offices of the Governor, Secretary of State and Texas Department of Agriculture and is Appointed by the Governor. In accordance with Texas Laws our Chief Weighmaster has the power to appoint Deputy Public Weighers. A bond in the amount required is posted by the Public Weigher and his deputy appointees. All persons weighing grain under our supervision take an oath of office and are bonded.

Also under the Texas laws any person doing public weighing for hire or who issues a weight certificate upon which the purchase or sale of the commodity weighed is based, must first qualify as a public weigher and secure a Certificate of Authority from the Commissioner of Agriculture.

Our weight supervision department uses the "Handbook of Uniform Instructions for the weighing of Grain issued by Terminal Grain Weighmasters National Association" as their guide in instructing their appointees in the proper weighing procedures. Each facility uses pre-numbered weight certificates and maintains loading-unloading sheets in accordance with A of AR and WW&IB regulations.

Some of the facilities located at Fort Worth which are under the supervision of our Weight Department have railroad track scales and others have Hopper Scales.

All of the scales whether they be track or hopper are tested twice each year by the State Department of Agriculture or the Railroads with their test cars. The Scales must meet the tolerance requirements of the U.S. Department of Commerce, National Bureau of Standards which has been adopted by the State