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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 71/2 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-bit 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 Within the Farmers Home Administration you have virtually the same facilities. You have additional opportunities to use the insured route for refinancing this indebtedness.

In addition to that, under your area of responsibility comes emergency financing, under various legislative acts and by declaration of the appropriate officials.

Has it been a policy within the emergency legislation that you move in to assist in sustaining the farm operation until such time as it can recapture losses and enable the farmer to get back on his own feet? You do that under the feed program which is a program in which the Government substantially participates, and under emergency lending you extend loans for the production of crops. And you are going one step further right here to extend some assistance to those who are involved in the problem of carrying the indebtedness of this farmer over the period in which you are going to be of assistance in the current operations.

Am I correct in assuming that the step to which you referred here is essentially in the emergency area and that we step out of the farm operation aspect and the responsibility to assist and go over into the business community and pick up this farmer's obligation to the businessman? In that respect are we not dealing here outside of the general framework of agricultural credit policy in relation to both aspects!

Mr. Smith. Yes, sir; that is correct. The Congress recognized that same principle you have talked about when it enacted Public Law 727 in the 83d Congress, 2d session, I believe. This is a loan authorization made available to the Secretary, in areas where he finds that there is an economic need for emergency loans. This particular statute contains a positive prohibition against using the funds for the refinancing of debts, but loans are available merely to continue farmers in business.

That again is an indication of what the public policy has been on this question in the past.

Mr. MCINTIRE. The problem confronting this committee in considering this legislation is distinctly one in which we must explore what is the need—and I am not deprecating the need at all—for a different position on public policy. We must assume that within the framework of the emergency legislation dealing with farm folks and their problems, the public policy is one where there is a responsibility to refinance debt in order to sustain the business community thereby relieving the business community of bearing the brunt, so to speak, of the predicament which arises in relation to the emergency.

Mr. SMITH. Yes; that is the question.

Mr. MCINTIRE. And it is essentially a decision as to where the load will rest. Will it rest rather substantially on those who are in the business community? Or is there a public responsibility, by virtue of the disaster, to enter into agricultural loaning in the business community and take the risk off of the business element, thus converting it into a loan as between the Government and the farmer?

Mr. Smith. Yes; I would go one step further and say if it is decided that it is the responsibility of the Federal Government, then there is the additional question as to whether that responsibility should be vested in the Department of Agriculture or in the Small Business Administration because it is essentially a business problem.

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 414 percent. In other words, we figure we will lose about 442 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 requirements 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 covered, 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

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?

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