COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

EIGHTY-FIFTH CONGRESS

SECOND SESSION

ON

H. R. 10158, H. R. 10317, H. R. 10318, H. R. 10356,
H. R. 10397, and H. R. 10954

MARCH 7, 1958

Printed for the use of the Committee on Agriculture

Serial VV

23204

UNITED STATES
GOVERNMENT PRINTING OFFICE

WASHINGTON: 1958

There is no disagreement on the point that emergency financing credit assistance is needed urgently by the farmers.

Mr. GATHINGS. I would just like to pass on to you a copy of a letter that was sent to me from a businessman in the city of West Memphis, Ark., with regard to the policies of the SBA, in meeting the needs of small business.

This businessman goes on to say:

I own a minority interest in the Co. We sell locally, principally to farmers. We carry $75,000 in Goodyear Tire inventory and $54,000 in notes and accounts. Of these notes and accounts 90 percent are to farmers. We made application for $50,000 loan for 10 years. The SBA manager informed our attorneys, Mr. Graves and Mr. May, that the SBA money could not be used to buy merchandise to sell to customers-it could not be used to sell customers who were delinquent and it could not be used to pay back debts.

Mr. Nance asked him what we could use the money for. The manager could not answer this question.

That gives you an idea of the policy that the SBA is following. Mr. POAGE. They could use it to pay interest to the Small Business Administration; couldn't they?

Mr. GATHINGS. Well, in any event, this agency had the best purpose in the world but it is not meeting the needs of small business and I think it is a travesty that the Reconstruction Finance Corporation was folded up by this Congress. I think that is one of the greatest mistakes that we have made because the RFC did make loans to these needy businesses and did a good job and made money. As a matter of fact the RFC, I believe, had a profit of several million dollars over the long pull of its operations.

This money would be paid back, a major part of it. These loans are unsecured, that is true, but let us look at the record of repayment to the Farmers Home Administration.

Here is the record on the emergency credit legislation before this very committee on January 17. I would like to read from a statement of Mr. Bernard, Director of Budget and Statistics Division, Farmers Home Administration, Department of Agriculture. Mr. Bernard:

On all of the various types of emergency loans, Mr. Chairman, we have advanced $390 million as of June 30, 1957. These are the only figures I have on repayment: $330 million of this has fallen due, and we have collected $300 million of it. The payment for 50 percent of maturity. We are carrying a reserve of our books for losses at about 42 percent. In other words, we figure we will lose about 42 percent.

That is a marvelous record of repayments. These farmers will pay the money back to a great degree. There will be some losses, yes. But they want an opportunity; they want a chance to get these debts cleared up.

It is a very distressing matter to have a debt hanging over anyone's

head.

This bill of Mr. Jones would do the job.

Regardless of the fact that the Committee on Agriculture is this morning making a study of these different proposals, I do trust that you will see fit to give favorable consideration to the last Jones' bill.

We Democrats are now in the majority in both Houses. The people back home will look to us irrespective of the fact that the Department may oppose these proposals. I do not know what their views are going to be on this legislation, but we are the ones now that

they will look to back home, and I do trust that we will move in
here and pass this legislation.

Mr. Chairman, give us this bill or a similar bill, approve it and send
it on to the full committee. And give these farmers an opportunity to
have these small debts refinanced in addition to their regular require-
ments for 1958.

That concludes my statement.

Mr. POAGE. Thank you, Mr. Gathings. We appreciate your coming
in here. Are there any questions?

Does anyone want to ask any questions?

Mr. JONES. I want to remind you of one thing that happened in
your district. I drive through Mr. Gathings' district as I come back
to Washington. And as I came back to Washington the latter part
of December I drove through his district where floodwaters were,
and I saw in one soybean field where the land was completely cov-
ered, with the beans sticking out of the water about his high, and
the farmer had a combine in that field with huge tires on it on a
Sunday afternoon because the sun happened to be shining and
he was trying to combine soybeans in a field covered with water.
That is how desperate those people were down there at that time
trying to just salvage a little bit of the crop that in ordinary times
would have been just abandoned. That was on a Sunday afternoon.
Mr. GATHINGS. Our people faced crop failures throughout our
whole area and they were trying to harvest every bit of their crop
that they could get irrespective of the adverse conditions that you saw.
Mr. POAGE. May I say to this subcommittee, that I believe that we
are pretty thoroughly familiar with the fact that you had a disaster.
I believe we are pretty thoroughly convinced that those areas that
were declared disaster areas by the Department last year are disaster
areas. I don't believe anybody has to sell this subcommittee on the
proposition that we had disasters in various parts of this country.
What we have got to have, though, gentlemen, is a real study of the
words of this bill. I have read this bill further and I find blank
spots in this bill.

This subcommittee is not going to report a bill with blank spots, in
my opinion.

Mr. JONES. Are you talking about the amount of money?

Mr. POAGE. Yes. We will take judicial knowledge of the fact that
there was a disaster, but we want to know what is in it.

Mr. GATHINGS. I realize that you will painstakingly go into this
language.

Mr. POAGE. I am just suggesting that we will make more progress
in talking about the details of this bill than about the disaster.

Mr. JONES. May I say this, Mr. Chairman, that blank space for the
total amount of money to be authorized was left blank purposely to
give this committee an opportunity to determine.

Mr. POAGE. We would like to have your suggestions on these details,
rather than telling us it is a disaster.

Mr. JONES. Here is the reason. Most of the bills introduced prior
to the time I introduced this last bill, had reached up in the air and
grabbed a figure of $200 million. I don't know whether that is the
right figure or not. I could have put $200 million in.

Mr. POAGE. What do you think we ought to put in?

Mr. JONES. That will have to be developed by the committee to place the correct figure in there. I could have put $200 million in there and I would have been conforming to the views that have been expressed, in probably 15 or 20 bills that have been introduced in this body and in the other body. Frankly, I do not think it will take $200 million to do it. I think when we get Mr. Smith from the Farmers Home Administration on the stand, we will develop the fact that they have spent less money in the program they are now carrying on than they had anticipated they would spend.

Mr. POAGE. What do you suggest we put in here? The committee has to make a decision. That is what we need help on. We know that they had floods. We do need help on what we ought to do.

Mr. JONES. I hope you will, Mr. Chairman, take into consideration the fact that I have been conscientious in not trying to

Mr. POAGE. You are the man that has a bill here before us?
Mr. JONES. I can tell you how much it will take for my section.

Mr. POAGE. We have to pass a bill for the Nation.

Mr. JONES. I know that. Take these various sections and add them

up. That is the way we will get it.

Mr. POAGE. Somebody has to make some suggestions.

Mr. JONES. I will suggest $200 million.

Mr. POAGE. All right.

Mr. McINTIRE. Either you or Mr. Jones can answer this question. On page 3

Mr. POAGE. We have already gone into that.

Mr. McINTIRE. All right then.

Mr. POAGE. They are going to take that out.

Mr. McINTIRE. I am sorry for being late this morning. May I ask this question, Mr. Gathings? In your support of this legislation, why limit it to December 31, 1958?

Mr. GATHINGS. Because of the fact that the disaster that has befallen our people was due to 1957 excess rainfall. They are right now in need of relief. They are in need of credit. They need these loansbadly need these loans to wipe out these open accounts.

Mr. McINTIRE. I am not presuming to make an observation that would be interpreted as a commitment on the legislation, but there is an awful lot of machinery to be set up administratively under this bill. There is a lot of policy that has got to be determined.

Mr. GATHINGS. That is right. I believe, though, you will find that the Farmers Home Administration probably would be the agency that would administer it. They have their representatives in every affected county.

Mr. McINTIRE. I know that. But you are reaching into areas here which at the present time have no administrative procedure set up to perform the function which you set up here.

Mr. GATHINGS. That is right. It might be necessary to ask for funds for that very purpose to employ personnel--the needed personnel. Mr. McINTIRE. I am sure it will.

Mr. GATHINGS. To go before the Supplemental Appropriations Committee.

Mr. McINTIRE. But my point is that it seems to me that the justification for this resides in the fact that while it is directly more appro