operations of the Farmers' Home Administration should be called upon to take care of the ordinary credit needs of farmers outside these disaster areas. However, some means should be developed to make the more liberal credit available in those individual or localized disasters not covered by the general disaster declarations. Another point I would like to make, Mr. Chairman, is that any legislation you approve or develop should be liberal enough to meet the needs of these farm people. The people who will apply for this credit are in financial difficulties through no fault of their own. Their property has been destroyed and so has their income. In some cases, even their capacity to produce income will have been temporarily destroyed. Many of them will be bad credit risks and that is why they will be coming to the Farmers' Home Administration for these loans. The repayment record of the Farmers' Home Administration has been outstanding. Through the years, their loss record has been very, very low and any banker could be proud of that record. However, I want to leave one word of caution with you today. No one is more anxious to see these farmers pay back every cent of their loan than I am, but at the same time I expect to see some losses. If we did not have some losses, considering the fact that all of these borrowers are very low or borderline credit risks who cannot borrow from any other regular lending agency, I would think that we had been too stringent in our loan operations. Now, when you come to this disaster type of loan, you should expect a little higher rate of loss. In other words, we do not want to be so liberal in these loans that we destroy the program, but we do want to be sufficiently liberal that we help all of those deserving of the assistance. If we do that, we will have some losses and we should be prepared for them. To illustrate my thinking, let us assume that we have 100 farmers in financial distress as a result of a disaster. Perhaps 50 of them would go under without the credit proposed here today. Then let us assume that we make loans to 80 of them and all but 10 pay out. Instead of 50 farmers going under, only 10 have failed and I think that is a good investment of public funds to keep those farmers, solvent and in the business of farming. I do not think it is at all in the national interest to simply stand by and let these people go under if there is any chance at all of saving them by the judicious advancement of credit. Finally, I am very much interested in the feature of these bills which will enable farmers in the disaster areas to pay their bills at the local stores. I know that in my district a great many farm implement and other rural merchants are about at the end of their rope on credit. They have so much on their books that their credit is, in turn, being impaired and their suppliers are tightening up on them. As a result, they simply cannot extend any more credit and there is a great danger that the entire rural economy may be needlessly in jeopardy. I think it is good business all along the line to make this credit available so some of these farmers can pay their local bills and help not only themselves but also the small-business men who need these payments on account if they are to stay in business. Many of these small businesses in the rural areas have had to close their doors because of the slump in farm income, and I know that in disaster areas such as we have in most of my counties the problem is intensified. I hope, Mr. Chairman, that your subcommittee will give every consideration to the problem and the proposed legislation before you. It will be a good thing for farmers and their businessmen neighbors if you can bring out a good bill. Mr. O'HARA. In my particular district we have had 3 floods beginning in 1951, a record flood in 1952, and again last year almost a record flood which seriously affected and created disaster areas in about 6 or 7 of my 14 counties in my congressional district, due to the flooding of the Minnesota River. Last year the flood came along about the middle of June, and subsequent to that. Some of the crops were in the ground. They were about ready to be put in corn, and some of them or most of them had planted their corn. As the result of the flooding and the long time which elapsed before the ground dried out so it could be reseeded, the short growing season in that part of Minnesota left them almost hopelessly out of a crop except for what they might put in, in the way of grasses and things like that which some of them may have been able to produce. Mr. WILLIAMS. I would say that it is considerably less. Mr. JENNINGS. But you have no figures to substantiate that. Mr. WILLIAMS. No. I do not feel that it has entered into the production. There may be some isolated cases where the farmer has gotten some. But it is not a serious threat. We never know when it could be. It could be during these winter months that these seeds have been scattered out and in 1958 it could be a serious thing. The flue-cured problem hit almost overnight. Mr. JENNINGS. You are familiar with it, and you are officially appraised of the situation that you could give us the information which we need beltwide that would prevent the burley program coming in the same jeopardized position as the flue-cured with the so-called resistant varieties? Mr. WILLIAMS. I am not familiar with, and I don't think we can become familiar with it, unless there is enough production of this type of tobacco for us to analyze and ascertain the quality of that tobacco. Mr. JENNINGS. Let me say this then very frankly, that I am very much interested in that particular phase of this program. And I hope that you will become sufficiently acquainted with it, that it will not reach the stage that the Coker and so-called other varieties reached in the flue-cured tobacco; that it will not reach that stage before we in burley take some action, if action is warranted. Mr. WILLIAMS. I would appreciate that, and I think you are very wise. We will cooperate with you to give you the full benefit of any information that we can get as we get it. Mr. JENNINGS. Let me ask that you concern yourself with it to the extent that you seek that information rather than wait until the information happens to descend upon you, because I have reason to believe the threat is much larger than you have indicated to me. I think that it is something which we should be investigating and we should have an eagle eye upon because I think it could wreck our program almost in 1 year or almost overnight. And to me it is something that should be given every consideration before it reaches alarming stages. Let me say in addressing myself to this problem of suckers I want to associate myself with the remarks that have been made by those who are in support of the program, and I think it is very imperative that we pass legislation which will prevent the growing of sucker tobacco or the growing of 2 crops of tobacco on 1 allotment, on the same acreage. I think it would be disastrous and ruinous to the program, and I certainly want to advocate that we pass this legislation. As I understand it, you say it will take legislation and the practice cannot be prevented administratively? Mr. WILLIAMS. That is true. Mr. JENNINGS. That is all, Mr. Chairman. Mr. CHELF. May I make one other remark? I would like to have the record straight and clear on one point. In my statement a while ago I may have left the implication or the meaning that I condemn everybody who has raised a sucker crop up to now. Frankly, I cannot blame the farmer, especially the little farmer who has been subjected to financial woes and obligations that he cannot meet for trying to make an extra dollar. The Lord knows he is carrying a terrific burden this day and age, especially down in my part of the country. There are more blank store fronts on my little town of Lebanon, Ky., that I have seen since the thirties, because the little farmers are leaving the little farms and are going to Louisville and to General Electric and other places to seek employment because they can't make it on the farm. I don't condemn them for doing it, but I do say we have got to do something to preserve and protect our program. My desire is to let the little fellow make a living; I don't want to destroy for the sake of 1 or 2 or even 5 or 10 percent the living of the vast majority of my people, because as Mr. Spence said it is the lifeblood of my people. It is the cash crop. It is the lifeblood of my people. This tobacco program is that. I for one, if I never come back to this place and believe you me I mean that we have got to stick together and preserve and protect this program at all costs. Thank you very much. I feel very deeply about this program. Mr. WATTS. I would like to associate myself with Mr. Jennings in his remarks a few minutes ago about a program that would produce results. I agree with Mr. Williams, it has not become a problem yet, but the same thing that caused the farmer to go into the sucker business is going to cause him to grab on to anything that will produce some money. I agree thoroughly with Mr. Jennings that we should give thought to those things and watch them as they come along. If we do that it is much easier to stop a practice that has not gained too firm a foothold than to stop one that is very well entrenched. That is the reason that so many of us moved so quickly on the sucker bill. We realized that as yet it has not become a catastrophe or a threat that is insurmountable, but we are fearful of what the ultimate consequences will be if we do not stop it now. And I am sure that is what Mr. Jennings was talking about when he referred to the hope that you would look into the situation, to see that it did not develop before we had a chance to do something about it, if we could do anything about it. I agree with Mr. Chelf, too, nobody wants the farmer not to have the opportunity to make a dollar, but the same rules should fit all parties. Mr. ABBITT. I was interested in what you said some time ago about the meeting in Lexington. You say all of the States were there. I may have misunderstood. Did you mean all of the burley States were there? Mr. WILLIAMS. All burley States were there. Mr. ABBITT. Have you had any information from the flue growers or from any other types of tobacco how they feel about this measure? Mr. WILLIAMS. It never has been a serious problem. If you interpret it, their interest is in the long-range program. I think it is one of those things that most of you need in the program everywhere, and I think the people down there will find pretty much the same interest. Mr. ABBITT. I wonder if you had any expression from the other types of tobacco? Mr. WILLIAMS. No, sir; I have not either way. Mr. MATTHEWS. You were able to come up with, of course, a very broad estimate. I think you said some 8 million to 15 million pounds of burley that might be affected. Do you have any idea as to whether or not there would be 7 million pounds of flue-cured tobacco affected now, or would you hazard a guess as to whether there is hardly any of that particular type where they harvest 2 crops? Mr. WILLIAMS. I would say in flue-cured it has been isolated up to this point. There may be some isolated cases where they have gone a little into it. I can visualize if it becomes a 20 million crop in burley that it won't take long. It will spread. Mr. ABBITT. Your idea now is there is no problem at all, not being done in any consequence whatever in the flue-cured tobacco? Mr. WILLIAMS. No; there would be some cases, of course. Mr. ABBITT. One farm in a hundred or 1 in 200? Mr. WILLIAMS. One out of 10,000. Mr. ABBITT. Is there anything else you would like to say about this particular legislation? Mr. WILLIAMS. No, sir; that is all. Mr. ABBITT. Any of your people who are here with you, would they like to say anything? So far we have had 1 witness and the other 10 of us have testified along with him. Mr. WATTS. We anticipate the Department can give us a formal report. Mr. WILLIAMS. We will send up the report. Mr. ELLIS. If the committee will make a formal request, then we will have something to go on. Mr. CHELF. Get going. Mr. ABBITT. I do not make those requests. Mrs. Downey will attend to that for us. On behalf of the subcommittee, we will request you to get us a report as soon as you possibly can. Mrs. Downey will attend to the request from the chairman of the full committee, who has always cooperated with us. The reason I was asking about the flue-cured, I know our chairman is extremely interested in all tobacco, particularly flue-cured, and I was trying to get that information on that situation so he would understand the situation. If you will get that for us as soon as possible we will appreciate it. I am sure the chairman of the full committee will get a letter over there, too. Mr. WILLIAMS. I might say this, I know you are interested in this: We have up through this week sold about two-thirds of the discount variety that we set up. We have got about 1,000,000 pounds left and, if we can sell the other third for what we have sold the two-thirds, we are going to be able to pay those individual growers down in your district there about 8 or 15 cents a pound dividends. Mr. MATTHEWs. I want to express again my appreciation for what you have been doing, Mr. Williams, to help those men. And since you brought that up, I was going to ask you in an aside, but as I understand it you have actually begun selling that tobacco and before long you will be able to get rid of all of it? Mr. WILLIAMS. We sold two-thirds. We tried to sell immediately after the closing of the market, but we did not consider that the prices that we had were sufficient. We refused. We have priced it at a I like the 10 percent item, also, that is the 90 percent guaranty provision that is in the bill, because of the fact that that 10 percent would cause these 3 different lending institutions to have the interest and incentive to go out and see that that money is repaid. I do believe that his bill is preferable. Legislation of this kind will be, in my judgment, a recession curb, by pumping new funds into these various affected communities over the Nation. That was one of the principal reasons that I wanted to read the weather reports, to give you an idea of how widespread this disaster was. It came from Minnesota right down through the Mississippi River area, right on down through to Texas and in recent weeks, no doubt, it would affect the Florida citrus crops, the freeze conditions there. So it will be a recession curb. The farm losses and crop failures have heretofore caused serious economic trouble. By legislation of this kind it would in a large measure pump new economic breath into these areas that so badly need the loans. I would like to pass out to the members of the committee these pictures, to give you an idea of the floodwaters in the particular district that I serve. The farmers were unable to harvest their crops in many instances. The farmer had to wait for the waters to recede. These heavy rains would come and, particularly, one rain when I was home in the fall during the harvest season, there was 6 to 72 inches of rain in 24 hours time. It made it very difficult to harvest the crop. And when the crops were harvested the quality of the product had been reduced to such an extent that the value was cut tremendously. For example, cotton that would sell for 34 cents, if it is good white cotton, per pound, after those rains came continuously, the quality of that cotton was depreciated to a great extent and they were only getting some 19 to 23 cents a pound. In many instances they were unable to harvest it at a profit at all. I have, Mr. Chairman, quite a lot of correspondence. And some of it of such note that it should be incorporated in the record. And I would like to ask consent to incorporate paragraphs of telegrams and letters that have come to me with respect to this matter, that they be made a part of the record. Mr. POAGE. Without objection that may be done. Mr. GATHINGS. The need for emergency refinancing credit assistance to these farmers struck by climatic disasters has been known, and the Department of Agriculture should have been on top of this situation months ago. Certainly, the information was given to them. Back on August 7, 1957, Mr. Henry L. Alstadt, of Rector, Ark., wrote me, enclosing an article from the Arkansas Gazette, in which the president of the Arkansas Farmers Union criticized severely the narrow scope of surveys of the disaster needs by the Farmers' Home Administration. Based on this survey, however, the Department did find that their programs would not be adequate. On August 16, 1957, I wrote to Acting Secretary of Agriculture Morse, stating in part: Since receiving your letter of August 15, regarding our discussions of the situation in eastern Arkansas, I have been informed that calamity in the form of another 6.63-inch rain has added to the plight of these disaster-stricken 2320458- -4 |