On October 30 the committee met and reaffirmed its previous estimate of 19 million hundredweight.

On November 12, immediately following the issuance of the November crop report, the Supply Estimates group met to consider the new production estimates in connection with our supply determinations. At that time the committee received instructions to limit its estimate of exports of rice for the 1958-59 marketing year to 16 million hundredweight.

Of course, we understood this limitation was a policy decision of the Commodity Credit Board. This is how we came up with the 16 million hundredweight estimate.

Mr. GATHINGS. Mr. Satterfield, that would give us what acreage in 1959 provided there is no freeze enacted?

Mr. SATTERFIELD. In 1959?

Mr. GATHINGS. Yes.

Mr. SATTERFIELD. If the estimate August 1, 1958, carryover of 174 million hundredweight stands up and the 1959 crop is as large as currently estimated, we will have a total supply of around 61.5 million hundredweight. By deducting this total supply our domestic requirements of 272 million hundredweight and estimated exports of 16 million we would have a carryover on August 1, 1959, of 17 million hundredweight, which is only slightly less than a year earlier. Mr. GATHINGS. Then what would the figure on acreage be?

Mr. SATTERFIELD. If we assume that these figures will stand up, we would have to export in 1959-60 approximately 33 million hundredweight to sustain our present acreage.

Mr. GATHINGS. And the estimate is for about 16?

Mr. SATTERFIELD. Yes. If we do not export any more than 16 million, it will result in a 37-percent reduction in the present acreage level.

Mr. GATHINGS. Thirty-seven percent under the acreage at the present time-1958?

Mr. SATTERFIELD. For 1959.

Mr. GATHINGS. And a 37-percent cutback in 1959?

Mr. THOMPSON. That is a brutal cutback.

Mr. SATTERFIELD. Yes, in view of the fact that we have already had approximately a 40 percent reduction from our base acreage of rice we started out with in 1955.

Mr. GATHINGS. Let me ask you what these various promotion schemes in this country have done with regard to increasing consumption of rice.

Mr. SATTERFIELD. There has been some slight increase. It is hardly noticeable, but it is gradually moving up.

Mr. GATHINGS. With the increased population that we have in this country, it is estimated at some 173 million people, or 172 million plus, we have fallen behind on per capita consumption, have we not? Mr. SATTERFIELD. We had a period in the early 50's in which there was a decline in the per capita consumption of rice, but during the last 2 or 3 years, due to efforts of the various promotional associations, we have been able to increase it slightly. It dropped down to a low of about 5.3 per capita. The current estimate for this past year, I believe, was 5.9 pounds per capita.

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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

have at least an opportunity, and I think a good opportunity to collect, because ordinarily we have pretty fair crops there, and they will pay off, but if we do not let them have this money, many of these people will be on relief and the Government will actually be spending more money on that individual than they will possibly spend through this program here. At the same time the fellow will have the satisfaction and will retain some of his pride to think that he is making an effort to pay this debt himself and not be forced on relief. Most of these people, the large majority of them—in fact, a very small percentage of them only are in the category of where they are trying to be dishonest to evade the debts-they want to pay them. And this just offers an opportunity to give some extended credit where they can pay it. That is all we are trying to do here.

Mr. HAGEN. The best opportunity to give them would be to enable them to produce a crop and pay their debts out of that crop.

Mr. JONES. That is true. We are, also, trying to maintain the economy in the area.

Mr. HAGEN. Here you are paying his debts first. On the average, I do not say "always," but I am sure that in many instances this fellow, the landlord could drop him tomorrow.

Mr. JONES. The landlords themselves are in this.

Mr. HAGEN. I think we ought to pick out that class. The Government could very well be holding the bag on this thing through the action of the landlord.

Mr. JONES. What, do you think the Government is holding in the bag on all of this relief? They are emptying the bag. They are not just holding the bag. We are trying to keep something in the bag. Mr. HAGEN. That is true. In that instance it goes to the ultimate beneficiary.

Mr. JONES. It is going to them. This money would go to a beneficiary who would be helped, in helping maintain the economy in that area because some of these small businesses need help. Eventually they will be out of business anyway, but so long as he wants to try to make his own living through a business no matter how small it is, I think we ought to try to help him do it.

Mr. GATHINGS. These gentlemen from the Department are very busy men. They have more applications that have poured into the Washington office for the emergency loans than they have ever had before. That is about right; isn't it?

Mr. SMITH. Yes, sir; it is.

Mr. GATHINGS. We could talk in executive session here among ourselves, and if you want to make an amendment to this bill you can do it when they go into executive session.

Mr. SMITH. The question was raised here this morning about the provision on page 3 of Congressman Jones' bill, that is H. R. 10954, with respect to the requirement for personal liabilities of stockholders in the event loans are made to corporations. If paragraph subsection (5) is eliminated from the bill, it would seem to be appropriate to insert on page 2, after "stockmen" in line 2, the words "except corporations," because if the Government did make loans to farming corporations, we have found from experience that it is much better to require the stockholders of the corporation to become personally liable on the notes. That is the purpose of the paragraph on page 3.

Mr. POAGE. Do you think there is any purpose of making loans to corporations?

Mr. SMITH. You will find in some of these areas there are families that have incorporated and are conducting farming operations in that manner.

Mr. POAGE. We know that is true. My idea was that they were not crying for help.

Mr. SMITH. I would suggest that we except them from it.

Mr. GATHINGS. I have another idea. I am of the opinion that irrespective of the fact that there might be a little corporation farm among family interests, that these people are engaged in farming should be given consideration, and we are not talking about the General Motors Corp. and such corporations-that is not being considered here.

Mr. POAGE. I never saw a family incorporate unless they had enough money to help them get into a substantial tax bracket. I never saw a fellow who had 80 acres or the fellow who was just the small farmer that we have been talking about this morning incorporate; have you? Mr. GATHINGS. A tenant is not going to incorporate.

Mr. POAGE. I know that.

Mr. GATHINGS. But there are people who started out in a small way. Mr. POAGE. Yes; I know that.

Mr. GATHINGS. They moved up and acquired 1 or 2 pieces of land, and they have a gin corporation and they are farming a piece of land. Mr. POAGE. The King Ranch has the biggest combination of ranches in the United States. It started in a small way. I agree with that. The King Ranch is incorporated today. No one wants to lend any money to the King Ranch.

Mr. GATHINGS. Let us put that in "except the King Ranch."
Mr. POAGE. They started in a small way.

Mr. GATHINGS. That is right.

Mr. POAGE. But they didn't incorporate while they were still small. Mr. GATHINGS. Let me say this disaster hit all alike-all sizes of operations alike.

Mr. SMITH. We have no opinion either way. We would suggest that if one paragraph is taken out that corporations be excepted in the other?

Mr. POAGE. Surely. There ought to be a correction over here on page 2 as well as page 3.

Mr. JONES. As I stated to the committee earlier, that was not in my mind. As I said, this bill was drafted and I think they gave a lot of time to it, and they were trying to anticipate everything that came up, and that was put in. I did not have in mind that. I, certainly, would not want that to be the thing that would hold up getting this bill out.

Mr. McINTIRE. I would like to ask Mr. Smith this question. You have indicated through a couple of references here that this legislation takes us out of the general area of the credit to farm folks that has been laid down somewhat in the general policy. The farm credit unions have the facilities for extending financing for current needs. We also have the facilities for the extending of finance for some capital needs on short term basis, equipment and things of that sort. Within that framework we have, also, the facilities for the refinanc ing indebtedness or extending credit on a long term basis.

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.