frsbog_mim_v37_0492.pdf
Transcript of frsbog_mim_v37_0492.pdf
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FEDER L RESERVE BO RD
WASHINGTON
X-7293
T O
T H E FEDERAL RESERVE BOARD
December
16, 1932.
Dear
S i r :
For your further information i n connection with t h e grading
and inspection work now conducted by th e Bureau of Agricultural
Economics
of the
United States Department
of
Agricul ture,
you
will
find inclosed a copy of a letter dated November 15 from M r. Nils
A.
Olsen, Chief
of the
Bureau
of
Agricultural Economics,
i n
which
he sets forth a clear and concise description of this service. You
will also find attached a copy of the inclosure transmitted with
h i s
letter showing
t h e
inspection markets where this service
i s
conducted.
On th e
reverse side
of
th i s l i s t
of
inspection markets
you wil l f ind a brief announcement by the bureau regarding the
service with respect
to
canned fruits
an d
vegetables.
— Very tr ul y yours,
Chester Morrill,
Secretary.
Inclosures.
TO CHA.IEMEH AND GOVEENORS OF ALL F . R . BANKS.
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X-7293-a
UNITED STATES DEPARTMENT OF AGRICULTURE
BUREAU OF AGRICULTURAL ECONOMICS
Washington,
D. C.
November 15, 1932 .
M r, Chester Mo rr il l, Sec reta ry,
Federal Reserve Board,
Washington, D. C.
Dear M r. Morril l :
Following your conversation th e other day with M r. Wells
A.
Sherman
of
this Bureau,
i t i s my
understanding t ha t
you
desire
a brief sta tement of the grading and inspection work now conducted
by
this Bureau.
The
legal authori ty
f o r
conducting work
of the
kind
described to you by Mr. Sherman i s found in the annual agricultural
appropriation
A ct
reading
a s
follows;
For
enabling
th e
Secretary
of
Agriculture, independently
and
i n cooperation with other branches of the Government, State agencies,
purchasing
and
consuming organizations, boards
of
trade, chambers
of
commerce, o r other associations of business men or trade organizations,
and
persons
o r
corporations engaged
i n t he
production, transportation,
marketing, an d d i s t r ibu t ion of farm and food pro duc ts , whether ope ra tin g
in one or more jurisdictions, to invest igate and ce r t i f y t o shippers and
other interested part ies
th e
class, quality, and/or condition
of
cotton,
tobacco, fruits and vegetables whether raw, dried, o r canned, poultry,
bu t t e r ,
hay, and
o the r peri shable farm products when of fe re d
f o r
i n t e r -
state shipment o r when received a t such important central markets as t he
Secretary
of
Agriculture
may
from time
to
time designate,
o r a t
points
which may be conveniently reached therefrom, under such rales a n d regula-
t ions
as he may
pr es cr ib e, includi ng payment
of
such fees
a s
w i l l
be
reasonable and as nearly as may be cover the cost f o r t h e service r e n -
dered: Provided, That certificates issued
by the
authorized agents
of the
Department shall be received i n a l l courts of the United States a s prima
facie evidence of the t ru th of the statements therein contained.
In
providing such
a
service
i t i s
necessary
to
develop off icial
grades o r standards of the various products i n order that t h e grade and
condition
may be
accurately ref lected
i n t he
o f f i c i a l ce r t i f i ca t e
of
grade. The chief advantages of the development of such standards may be
considered briefly in two groups:
( l ) The advantages of a common language between buyer and s e l l -
er and other fi na nc ia ll y inte rest ed pa rt ie s, l ike banks, that a r e i n -
terested
i n
loaning money
on
agricultural products covered
by
warehouse
receip ts , and
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X-7293-a
(2) The
advantages
of
actually separating
th e
various prod-
ucts into different grades
of
market quality.
The following paragraphs indicate th e extent to which grades
have been formulated
f o r t h e
principal commodity groups
and
whether
cer t i f ica t ion service
i s
avai lable .
(1) Raw f r u i t s and vegetables and related products: Grades
have been established
f o r
p ra c t i c a l l y
a l l o f t he
important fresh fruits
and fresh vegetables and an extensive official inspection service i s
available both
a t
shipping poi nts
and
important receiving markets,
(2 )
Canned f r u i t s
and
vegetables
and
related products.
The
grading service
on
these commodities
h a s
only recently been organized
and
standards have been formulated
f o r
several
of
these products.
Cert if icat ion service
i s
gradually being developed.
(3)
Grades have been es ta bl is he d
and
o f f i c i a l c e r t i f i c a t i on
carried o n f o r bu tt er , cheese, eggs, and dressed poultry. The inspection
of
dressed poultry
f o r
condition
and
wholesomeness
i s
also conducted
a t
a number of po ul try canning p l an ts . Likewise a l l o f the carlot receipts
of
live poultry
a r e
inspected
f o r
health
and
crop condition
in the
city
of New York
(4) Hay, beans, soybeans, rice and broomcorn. Grades have
been formulated
f o r
these products
and
considerable certification work
performed,
(5 )
Meats. Grades have been es ta bl is he d
f o r
beef, lamb, mutton,
veal and pork and a cer t i f ica t ion service i s avai lable i n a number of the
important markets.
(6 ) Livestock. Grades have been formulated f o r ca t t l e an d hogs
and
sheep
b u t
thus
f a r t h e
Bureau
has no t
undertaken
to
grade
and
c e r t i f i -
cate th e grade of live animals.
(7 ) Tobacco. Grades have been es ta bl is he d f o r a l l o f t h e impor-
tant types
of
tobacco
and a
grading service
i s
conducted both
a t t h e
time
tobacco i s sold by growers on auction floors and a t tobacco prizeries,
(8) Wool. Limited grades , based on diameter of fiber only, have
been formulated
f o r
wool
b u t
thus
f a r th e
Bureau
has no t
developed
a
certi-
f icat ion service f o r this commodity.
(9 )
Hides . Tentative grades have been formulated
f o r
hides
b u t
no
cer t i f ica t ion service
h a s y e t
been developed.
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X-7293-a
The grading service on the commodities just mentioned i s
performed only upon request
and the
ava i l ab i l i t y
of the
service
depends upon
th e
extent
to
which
i t h a s
been developed.
The
scope
of the service varies with th e different commodities.
The
standardization
and
inspection work conducted
f o r
cotton
and grain i s carr ied on under specific Acts of Congress such as the
United States Cotton Standards
Act , and the
United States Grain
Standards
A ct . The use of the
off icial grades established
f o r
cotton
and grain i s mandatory i n transactions made on the bas i s of grade.
The use of
grades
f o r a l l
other commodities
i s
permissive.
You a r e
famil iar ,
of
course,
a s I
believe
a l l o f the
members
of the
Federal
Reserve Board a r e , with th e United States warehouse Act and the stand-
ardization provision contained therein which requires that
th e
grade
o f a l l
fungible products stored
i n
Federally licensed warehouses must
be
shown upon
th e
warehouse receipt
but may, at the
request
o f the de -
pos i to r ,
be
omitted
on
receipts issued
f o r
non-fungible products.
The location of offices performing inspection and grading
services i s such as to bring them into close proximity with th e most
important producing areas
and
with
th e
important receiving markets
of
th e
country.
A few
copies
of the
l i s t
of
off ices grading f rui ts
and
vegetables a r e enclosed.
Official inspection, grading,
and
ce r t i f i ca t i on
may be
requested
by any par ty f inancial ly in teres ted i n a given l o t o f fann product s, i n -
cluding sh ippers , common ca r r i e r s , pub lic warehousemen, broker s, bankers,
and
receivers.
The c e r t i f i c a t e s a r e useful :
(1) As
supporting evidence
of
quali ty
i n
making deliveries.
(2) As
off icial evidence
of
condition
and
qual i ty
to
enable
bankers
to
correctly appraise paper offered them
a s
co l la te ra l .
(3) To
assure rec eivers
and
bankers
of the
compliance
o r n o n -
compliance
of
products
f o r
which there
may be
legal minimum require-
ments
of
quality when moved
i n
interstate commerce.
For
example
the
Federal Food and Drugs Act now re qu ir es ce rt ai n canned products below
U. S.
Standard
to
bear certain legends
on
labels.
(4) Transportation companies use the c e r t i f i c a t e s of grade and
condition
i n
settlement
of
claims.
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X-7293-a
O f f i c i a l ce r t i f i ca t e s
of
grade
a r e
widely used
on
staple
products which
of
necessity must remain
a t
warehouses
f o r
inde f i -
ni te periods while awai ting marketing. Many producers
of
such
products
a r e
obliged
to
borrow heavily
i n
order
t o
finance their
operations
and
natu rall y resort
to
pledging their warehoused stocks
a s
co ll at er al . Thus
th e
in t e r e s t
of
f inancia l ins t i tu t ions
a n d d i s -
counting
and
rediscounting agencies
i s
re ad il y appar ent. Quite
a num-
ber of
these insti tutions f ind
i t t o
their advantage
t o
fortify them-
selves with official assurance of the character of the merchandise
on which they a r e asked t o advance money in addit ion to the claims
of the borrower.
A c e r t i f i c a t e of grade covering canned fruits and vegetables
f o r
example covers
a t
least four salient points:
(1) The size and precise location of the lo t graded, i f the
samples have been officially drawn.
(2) How the
samples were drawn
and by
whom.
(3) An
accu rate determination
of the
condition
o f t h e l o t .
By
condition
we
r e f e r
n o t
only
to the
condition
of the
product
bu t
to the condition of the glass o r t i n container i n which preserved
and the
type
o f
package
in
which packed.
(4) Hie
statement
of
grade based upon standards
o r
grades
approved
f o r t h e
purpose
by
this Bureau.
I t has
been
th e
earnest endeavor
of
this Bureau
i n
developing
t h e
various grades
to
have
i n
mind
th e
needs
of the
interes ted par t ies .
In
such commodities
a s
canned fruits
and
vegetables
we
have been parti-
cular ly careful
to
embody those factors
in the
grades which make possible
their proper evaluation.
Die
in t e r e s t s
of the
lending agencies
a r e
being
served,
we
f e e l ,
in ou r
e f f o r t s
to
give
a s
accurate
a
picture
a s
possible
of the
condition
a s
well
as the
grade
of
stored merchandise.
Very truly yours,
Enclosures
(S )
Mils
A.
01sen
Chief
of
Bureau.