Mr. WILLIAMS. I understand that several of them produced six and seven hundred pounds.

Mr. WATTS. Per acre?

Mr. WILLIAMS. Yes.

Mr. WATTS. And sell it for around 45 and 60 cents a pound?

Mr. WILLIAMS. Some sold up in the 50 cents. I would say that probably it averaged 30 cents.

Mr. WATTS. And it is your opinion that if this practice is permitted to continue to be indulged in and becomes widespread as some of us are fearful that it will, that the ultimate result is that it probably will be the destruction of the tobacco program; will it not?

Mr. WILLIAMS. I think it would have a harmful effect on the tobacco program because I think it is encouraging the production of an inferior type of tobacco at the expense of those growers that are producing the original crop.

Mr. WATTS. Not only that, but it is putting a premium on quantity, for those who are wealthy enough to be able to provide irrigating systems.

Mr. WILLIAMS. Not only wealthy enough but a lot of small farmers adjacent to a stream, where they rig up a very cheap irrigation system can do so, also; and then in some sections they will take a dipper out and irrigate it.

Mr. WATTS. I know we have some large farmers in my section that built irrigation systems; they are irrigating corn and pasture. If they are permitted to cut their crop early and turn the full force of their irrigation on they could raise a second crop every year, could they not, sir?

Mr. WILLIAMS. Where you have irrigation, I think in most years you could produce a pretty good sucker crop.

Mr. WATTS. You think then that the practice, if permitted to continue, would have 2 detrimental effects; 1 is that it would add to our supply of tobacco and prevent the general farmer who is not engaged in this practice from raising more tobacco than he might be entitled to, if the sucker tobacco was kept off the market?

Mr. WILLIAMS. Yes.

Mr. WATTS. And furthermore you think the inferior quality might get into European countries and be labeled "burley tobacco," and give our burley tobacco a black eye in export trade?

Mr. WILLIAMS. That is true, because it does not have the quality of the original burley tobacco.

Mr. WATTS. And, personally, I feel like it was never the intention of the law that any farmer who has an allotted crop be permitted to raise 2 crops on the same land in any 1 year. My good friend Billy Matthews down there, he might raise four crops of tobacco.

Mr. MATTHEWS. I just came in, but I really am shocked to think this is happening.

Mr. WATTS. It is happening and it will spread into flue-cured unless we nip it in the bud by the legislation introduced. I reckon the reason that the Department cannot give us an exact figure as to the amount that was sold is that it was difficult to distinguish suckers from the other; is that right?

Mr. WILLIAMS. There was no attempt here to segregate it officially, really.

Mr. SMITH. Thank you.

Mr. POAGE. I am going to ask Mr. Jones, the author of one of the pending bills, if he cares to make a statement at this time.

STATEMENT OF HON. PAUL C. JONES, A REPRESENTATIVE IN CONGRESS OF THE 10TH DISTRICT OF THE STATE OF MISSOURI

Mr. JONES. I would like to speak, Mr. Chairman, directly to H. R. 10954, which is a bill that sets out in specific detail how I think the funds which are needed to take care of emergency credit could be administered.

Recently the Farmers' Home Administration sent an investigator down into southeast Missouri. And prior to the time that he went down there, Senator Symington of Missouri sent telegrams to 31 different people in that area whose names had been given to the representative from the Farmers' Home Administration and whom they contacted on this problem of credit.

Here is the situation at the present time, at least, in southeast Missouri, and I think this might be typical of other sections of the country: We have a good agricultural area and, ordinarily, are not in trouble.

Last year we had approximately 100 inches of rain. The normal rainfall in that area is around 50 inches. That rain came in the spring and interfered with the planting of the crop. It, also, came in the fall and interfered with the harvesting of the crop, particularly cotton.

It is estimated in that immediate area that the agricultural income is approximately 45 percent of a normal year. The Farmers Home Administration has recognized the fact that we need credit there. They have been most cooperative in sending people to that area. I want to say that they have been responsive to our requests for more liberal credit terms.

We held some meetings in southeast Missouri last year that were attended by Mr. Henry Smith, from the Washington office, and by Mr. Schwabe, the State administrator of the Farmers Home Administration, and at this meeting which was attended by representatives of banks, gins, implement dealers, oil distributors, and other businessmen, it was pointed out that there was a need for more credit through Farmers Home Administration and a change in the regulations that had been used in the past.

The Farmers Home Administration has done this, for which we are very appreciative.

In setting up the budget for their clients this year they included money to take care of taxes, interest, a payment on the chattel notes, to the extent of up to 15 percent of the present valuation of the equipment on which mortgages were held. That item of depreciation was put in there to try to forestall the foreclosure of farm equipment. While the Farmers Home Administration was reluctant to take that step, they did take it, and it worked out even better than most of us anticipated, because in many instances the farm-equipment dealer and the bank, knowing that the money was available, did not exercise their right to foreclose and in many instances continued to carry those people.

There is another area of credit which is being partially taken care of through the Small Business Administration. The Congress, as you

recall, passed an amendment to the Small Business Administration Act here a few weeks ago, and that bill was signed by the President about 2 weeks ago, I don't recall the exact date.

I had arranged to hold a series of conferences in southeast Missouri and had asked the regional director of the Small Business Administration to come to that area to explain the new regulation and the qualifications necessary to obtain loans from the Small Business Administration.

Those meetings were held this week on Tuesday and Wednesday. There is a tremendous amount of interest in that type of loan for small businesses that have been caught in a squeeze due to the fact that the credit, which they extended last year to farmers to help make their crops, the farmer just did not get any money, he could not pay off.

If all of these businesses were eligible for small-business loans and with the Farmers Home Administration adopting the policy that they have, we could get along very well, but, unfortunately, many of these small businesses are not large enough to qualify for a smallbusiness loan. I am thinking, particularly, of the crossroads grocery, the blacksmith and repair shop, the fellow who distributes bottled gas, the fellow who sells fertilizer, the business which has extended credit in a small way but for the most essential operations of anyone engaged in farming.

Mr. POAGE. May I break in there? Those business people are not able to make the application required by the Small Business Administration, are they?

Mr. JONES. They do not have the facilities to do that. They are small business.

Mr. POAGE. What do you estimate the cost of making application to the Small Business Administration is?

Mr. JONES. Well, I had experience with one business down there. A fellow started in more than a year ago to try to get a small-business loan, and during the Christmast holidays he had been turned down in the regional office; he had been turned down in the Washington office. Then he had reapplied and they were going to take his application, but they were requiring another audit. And he told me, he said:

Well, the thing about it is I have spent over $700 already with having audits, for legal services in getting this application prepared.

And he said:

I don't know whether I want to put another $200 or $300 into this application without any more assurance of getting a loan, than I have at present.

He did go ahead, he spent the other $200. So he had close to $1,000 in the expense of getting this small-business loan.

The type of business I am talking about is the fellow where he might have outstanding accounts of $2,500 or $3,000 or $4,000, which means that that is the thing that determines whether he is going to stay in business or whether he will be out of business. He may be the fellow at the crossroads that runs a little blacksmith and welding outfit. He welds machinery. He makes adjustments on tractors and things liks that, but he has to get somebody to give him some credit to buy these parts. Last year he got all of the credit he could from every place he could, but he has exhausted his credit.

for its recommendation to go through the policy staff committee. As I appraise the thinking of the leadership in every State, I think all of them recognize the problem that we have here.

Mr. BASS. I agree with you.

Mr. WILLIAMS. You might want to check it with your farm organizations.

Mr. BASS. I think that it is a problem and we should have a policy on it. The thing that strikes me is this: We encourage, and have over a period of years, our farmers to produce all that they can on the land that they have and to produce available commodities. And then this legislation is one more method of restricting an individual farmer, restricting his income.

The end may be good. I am not saying that it is not. I am not saying that one farmer should be allowed to produce two crops of tobacco and another farmer is not in a position to do so. But at the same time, it is further reducing somebody's income on the farm. And I don't know whose it might be my neighbor's, or it might be your neighbor's or somebody in Kentucky or somebody in Tennessee or Virginia, but it seems to me that so many times when we come in here that the legislation that we are considering is legislation which further reduces the possibility of somebody making some dollars off of the land that they are farming and are operating. That is the thing that enters my mind.

I do not believe that any one man should be given a privilege of doing something that all of the people are not allowed to do, in our program; but, Mr. Chairman, I think this is legislation that before I would be able to make a final conclusion on it I believe I would rather have time to talk with the people in the field, with the farmers, and to get some reaction because it is just this, I have made up my mind to quit voting for anything that cuts income.

Mr. MATTHEWs. I think my remarks might come in well here because I think I disagree with my good friend, Congressman Bass. I have been on this committee as my colleagues know only a little over 3 years and there is no doubt that all of us want all of our farmers to make all of the money that they can, and to produce all that they can to make that money. I don't think there is any question at all about it. But the problem that we are faced with as I see it from year to year is to get a program that will be fair to the great majority of the farmers insofar as we can with the legislative handicaps that we have in getting any kind of farm legislation. I am concerned in this matter with the overall tobacco program. We all know the problems. The Secretary of Agriculture has suggested that the price support program be flexible from 60 to 90 percent. I would like to ask several questions that would give me more information.

In the first place, is the quality of this tobacco that would be produced as a second crop inferior to the quality that would be produced on just the one crop?

Mr. WILLIAMS. In most instances, yes.

Mr. MATTHEWS. What effect would a continuation of this practice have on the overall tobacco program and, particularly, I have in mind the reduction of the allotment?

Mr. WILLIAMS. Well, any amount that is grown in a second crop of tobacco enters into the supply of it. And then the Secretary in proclaiming the next year's program must take into account the

supply level. So this 10 or 5 or 15 million it enters into the supply level and enters into the calculation of the 1959 quota.

Mr. MATTHEWS. In your opinion if this practice is continued it might result in a reduction in acreage allotments and, of course, it would be in the flue-cured belts if the practice is pursued there?

Mr. WILLIAMS. They had a disappearance on burley tobacco this year of about 510 million pounds. They had a production of 490 million pounds. Had it not been for these suckers the production would have been 480 million pounds which would have meant that the total production would have been 30 million pounds under disappearance.

Mr. MATTHEWs. And then in other words, the picture might be a little bit brighter for an increase in allotment if it had not been for this particular production about which we are talking?

Mr. WILLIAMS. Yes. Two percent of the total is suckers and when you eliminate that 2 percent it will mean ultimately whatever that production is can go to all of the growers.

Mr. MATTHEWs. Let me ask you this question. Would the production of these suckers have any effect on the markets to the extent that perhaps the price of burley might be lowered as a result of this production if this practice continues?

Mr. WILLIAMS. At the present time, I don't think it would, due to the fact that the supply level now is below your disappearance. And the farmers have made adjustments to get the supply in line with demand. But if you let that supply get out of line and let the production get up equally, actually in that way it would have an effect. That is true, the overall average goes into the calculation of your price supports. So that it would. Fourteen million pounds of tobacco could, or 10 million at 30 cents, goes into the overall average of 480 million at 60 cents a pound. So it would have an effect. Mr. MATTHEWS. It would have an effect?

Mr. WILLIAMS. Yes, sir.

Mr. MATTHEWS. It looks to me like a bad effect.

Mr. WILLIAMS. Yes.

Mr. MATTHEWS. Specifically, as you know-and I always like to take the occasion to thank Mr. Williams for his interest in this program and especially in my district-as you know we have flue-cured tobacco. We don't have a great amount of it compared to the great State of North Carolina, but it is of tremendous value, as you know. If my flue-cured tobacco farmers find out that burley producers are producing two crops a year, do you have a feeling that they might start that same practice in the flue-cured area in north Florida?

Mr. WILLIAMS. Well, not only north Florida but all the way up the

coast.

Mr. BASS. Will you yield?

Mr. MATTHEWS. I yield to my friend from Tennessee.

Mr. BASS. You are familiar with the method of harvesting fluecured tobacco, and methods of growing, and so forth. Would it not be almost impossible to raise two crops of flue-cured tobacco under the same circumstances?

Mr. WILLIAMS. No; it would not for the simple reason that in certain sections they have proceeded to harvest and by June 10 they have completed it.