Generally speaking, it was a lost production year for many of those farmers along the Minnesota River.

I was not familiar with the legislation which our colleague, Mr. Jones of Missouri, H. R. 10954, introduced until this morning. I appreciate there may be much to what he says as to the need of these small business loans because in the smaller communities, undoubtedly, there are small business people that are affected.

I consider this, as my colleagues do, as emergency legislation and short-term legislation. I think it would have to be on the basis of the character loan with some percentage of guaranty by the Government. I think that is imperative.

Mr. JONES. You did not understand me to say that I was suggesting to make the loan to the small-business man did you?

Mr. O'HARA. No.

Mr. JONES. It is to the farmer and he would in turn do that?

Mr. O'HARA. He would pay off. In other words, it is putting into that community which is a distress area, in a way in economically distressed area-it is pumping some money in there that is badly needed by the farmer, but which would, also, help the small-business man as well.

Whatever the language of the bill, Mr. Chairman, is, I think, that the principle is good at this time because I do not know how many have had repeated floods, as we have had in Minnesota, but I would assume that that has occurred. It does make a very deeply distressed situation.

I do think, Mr. Chairman, that it is highly imperative that we have consideration of this problem, and getting into the communities of these distressed areas this type of help-and it would only apply, in my opinion, and should only apply to these distressed areas for a short period of time. If they have 2 or 3 good growing seasons, these loans could be 95 to 99 percent paid off, in my opinion. They are that type of aid, because many of these people, as Mr. Jones has indicated, have had these bad growing seasons. They probably owe money on real-estate mortgages, they owe on cattle mortgages, in other words, they are in a bad credit situation.

Most of them are honorable people who would want to pay those loans off, and any additional loans that would be granted to them under this legislation.

Permit me to say that I have the greatest confidence that the committee will report out, regardless of the language of my own bill and the other bills, some type of legislation which meets the problem. Mr. Chairman, that concludes my brief statement. If there are any questions, I will be happy to answer them.

Mr. POAGE. Thank you very much.

Mr. JONES. The original bills, which you and Mr. Gathings and myself and others introduced, did not provide that those loans could be made by any agency other than Farmers Home Administration? Mr. O'HARA. That is correct.

Mr. JONES. Do you not think that it could be made by the bank or Production Credit Administration and try to preserve the normal credit channels?

Mr. O'HARA. I think the credit channels should be as broad as possible and as reasonable as possible. I think the more avenues there are possible the more good will be developed. I do not think

there is any question about it. Our original bills, I think, were rather restrictive in that regard. I thoroughly agree with the statement that you make.

Mr. POAGE. Are there any further questions?

Mr. HARRISON. He is now getting his money from the bank-should he go back to the bank for further loans or through the Production Credit Association?

Mr. O'HARA. I think that is the way it should be. I think that would be generally the way it works out. It may be he has reached his limit at the bank. The bank may not be able to go any further with him. Even with his 90 percent guaranty. But then if he can go to one other avenue and get it, giving him immediate help that he needs, it may be necessary.

I would like to see it follow the previous standards so far as possible whatever the loan avenue or channel was.

Mr. POAGE. Are there any further questions? If not, we are very much obliged to you.

Mr. O'HARA. Thank you, Mr. Chairman and gentlemen.
Mr. POAGE. Mr. Gathings, we will hear from you next.

STATEMENT OF HON. E. C. GATHINGS, A REPRESENTATIVE IN CONGRESS OF THE FIRST DISTRICT OF THE STATE OF ARKANSAS

Mr. GATHINGS. Mr. Chairman, at the outset I would like to say that Mr. Mills of Arkansas communicated with me late yesterday and stated he was vitally interested in legislation of the type that is before the committee this morning. He states that in his particular district his farmers are in need of loans that are provided by this proposed legislation, and that he wishes it would have been possible for him to have been present, but he is presiding this morning over his own committee and is unable to attend.

Also, Mr. Winstead, of Mississippi, has asked that I communicate to your committee that he, too, would like to have been present this morning in support of this legislation but was unable to attend due to another committee meeting.

As Mr. Jones has so ably stated, the Farmers' Home Administration moved in this year and liberalized its policy which has been most helpful to our people, by inaugurating a new plan which would advance interest payments, taxes, and up to 15 percent depreciation on chattels of the farmer. That was badly needed. And they did move into that area.

Before moving on into the discussion of the present bill, I just wanted to say to the committee that without the emergency Farmers' Home Administration loans that have been made in the past few years, I do not know what our people would have done. It is a great thing that they have taken care of the needs of the families that were unable to obtain loans from any other source.

Mr. Chairman, I want to give you a little information this morning with respect to the need for this legislation.

Is there an urgency? Is there a real disaster? Well now, in answer to that question that I propound, I would like to read from the United States Department of Commerce weekly weather and crop bulle

right? Whereas, in the Farmers' Home Administration you screen the applicant and all of his relationships to determine whether he is the proper kind of a credit risk at all.

Mr. GATHINGS. May I answer that: We have just returned, several of the members of this committee, from the great State of California; we went close to the district of the gentleman who has just propounded that question. And the situation in California is quite different from some of the other sections that are so hard hit; the situation there in California was such that they can make it rain whenever it needs to rain out there in that irrigated West. And they have a situation where they can make money. If they fail on one crop, why they will make money on something else. If they fail on vegetables, they will make money on alfalfa. If they fail on that, they will make money on citrus.

If they fail on citrus they will make it on cotton and on rice.

I do hope that the gentleman from California will bear in mind we do have problems that you do not have. We have a situation that this bill will correct. And we have this recession due largely to the fact that the farmer has lost the income which he has heretofore been enjoying. And if we could pump this new money into these communities it would be a shot in the arm.

There will be some losses, of course, but the American people pay their debts.

Mr. HAGEN. That particular category of farmer that you are talking about is a very poor risk. He does not deal at arm's length in the beginning.

Mr. GATHINGS. Any type of grower that is hard hit, whether he has been renting or owns land, if he is a farmer, he will come under the provisions of this bill. He is part of the community. We want to keep him there.

Mr. HAGEN. To really help him would be to provide him with a loan to make a crop in 1958?

Mr. GATHINGS. That has been done. These gentlemen here are doing that, and doing a good job in that respect.

Mr. HAGEN. His landlord should be willing to enter into some agreement, or standby agreement. His only possibility of getting any money out of that fellow on the average, I would assume, is to be kept in the farming business.

Mr. GATHINGS. He is in the farming business.

Mr. HAGEN. This is a creditor's bill rather than a debtor's bill. Mr. GATHINGS. The gentleman cannot appreciate the fact what that situation is. You do not have that in your part of the country. You do not get great stacks of mail, saying, "Why don't we get some help?" That is what we are trying to do. We would like for you to join with us and help us, like we are trying to help your folks in bringing this badly needed credit to these people. I hope you will join with us.

I would like to talk with you after this committee meeting is over about it.

Mr. JONES. I would like to reply to Mr. Hagen. One thing we are trying to do here is that we know it is an economic problem, but frankly, we realize that it is a hazardous loan. There is no question about it.

As was pointed out here by several of the witnesses, we think that if the Government will come in here and make this loan which they

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

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farmers already so badly hurt that Public Law 875 has been invoked to assist them.

This new deluge makes it imperative that immediate action be taken, for refinancing needs in that area are great.

On August 19, 1957, the regional administrator for the Civil Defense Administration informed me by telegraph:

President Eisenhower this afternoon approved request for amendment to his declaration of May 23, 1957, of major disaster in the State of Arkansas to include the additional damage in the State caused by excessive rainfall which began August 12. An additional allocation of $400,000 has been made. A representative of the region 5 FCDA office has been on the scene working with Mr. Owen Payne, Jr., Arkansas State civil defense director.

It is evident that if the Department of Agriculture could not properly evaluate the situation that the Federal Civil Defense Administration could, for the evidence was overwhelming.

On August 21, 1957, Mr. Buren Arnold, chairman of the Greene County, Ark., Disaster Relief Committee, advised me by telegram:

Survey has been made as mentioned in telegram of August 15, 1957, estimated 55 percent loss on 7,500 acres totaling $3 million. Public Law 875 as presently administered will not meet needs of this county. Recommend that refinancing be authorized on 1 to 5 years' schedule.

On December 5, 1957, Mr. Thomas Gist, chairman of the Lee County, Ark., Disaster Committee, advised the chairman of the Arkansas State Disaster Committee:

The Lee County Disaster Committee met today to review the disaster conditions in the county due to excessive moisture during the year.

It was unanimously agreed that specific recommendations could not be made until harvesting of crops was practically completed. However, it is the opinion of all members of the committee that disaster loans will be needed for producing the 1958 crop and that some type of direct aid will be needed for farmers in some

areas.

On January 8, 1958, Mr. R. L. Brooks, of Helena, Ark., wrote to me, stating:

I understand that the Farmers' Home Administration is arranging to make production loans but these will not be sufficient in the many cases where farmers made cash payments on implements such as combines, tractors, etc., and are unable to pay installments which are now past due. Could the Farmers' Home, or some other Government agency, expand its operations to take care of delinquent installments such as these mentioned above?

Mr. Luther Signam, of Vanndale, Ark., wrote to me under date of January 15, 1958:

Took, to begin with, our crop was about 55 percent of normal for the county. There are a number of farmers that were washed out completely, and then those that made maybe 5, 10, or 20 percent of a crop, having had the full year's expense put into the crop. These people have put up as security everything that they have and in many cases have borrowed full value on their equipment. As you know, this places these people and their lending agencies in a position of difficulty for the coming crop year. All of this you no doubt are familiar with. The point is this: we are badly in need of extending the disaster-relief program that we now have in Cross County to a financing program for these hard-hit people, which will take up their principal on mortgage indebtedness and place it on a 3- to 5-year payback plan along with the current crop loan. This type of plan is not unreasonable for our good farmers who have been helpless victims. I join many others from your district in urging your serious and prompt efforts in getting a program of this sort available through our local FHA office. We understand that the Administrator of the FHA in Washington can authorize such a program.

Mr. Sigman was correct that the Farmers' Home Administration did and still does have full authority to expand their programs for