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Mr. Jones. I might say for the record that Congressman Everett is comparatively new. He was elected to succeed our late friend, Hon. Jere Cooper, and he comes just from across the river from me in Tennessee, and he represents an area which is very much like that which I represent and has been hit by about the same type of disaster. Mr. Everett is not new to Washington. He has been in Washington in various capacities, and he is a well-qualified man and I know he is going to render a high type of service to the people in that area of west Tennessee. I am personally glad that he is here this morning to appear for this bill.
Mr. Poage. We are delighted to have you and delighted to hear from you.
Please proceed, sir.
STATEMENT OF HON. ROBERT A. EVERETT, A REPRESENTATIVE
IN CONGRESS OF THE EIGHTH DISTRICT OF THE STATE OF TENNESSEE
Mr. EVERETT. Thank you, Mr. Chairman and you, Mr. Jones. My district is east of Congressmen Gathings' and Jones' district. The only thing that separates us is the Mississippi River.
Mr. Poage. That is a pretty good sized thing to separate you.
Mr. EVERETT. From approximately December 22 until the night of January 31, when I was elected on February 1, I had an opportunity to observe these conditions at first hand. I made every country store and every hamlet and every town in nine countries of northwest Tennessee.
Frankly, I have never seen the economic situation, since the great depression of 1930, what it is today. When you go into town and you see empty store buildings and you see the people that you have known for many years and talk to them and see their outlook on life for making a new crop, it is certainly appalling. I contacted several wholesale grocers, several insurance agencies, and others, and asked them about the economic conditions there. They tell me that their accounts are delinquent this year anywhere from 65 to 75 percent.
As the Chairman stated a while ago it is not so much that they realize the disaster is there, something has got to be done in a very short time, in which time is of the essence in this matter. I would say, for the next 4 to 6 weeks we either have to pass some kind of legislation or there will be a world of these people that will not be able to make a crop there.
I think the $200 million that has been suggested, I would like to recommend that and I would like to recommend that these farmers be given a clean bill of credit and that it be amortized over a period of, say, 4 to 6 years, and I want to say that, as Dr. Long did, that over in northwest Tennessee in the district that I represent, several farmers had to replant 2 or 3 times.
Of course, that incurred additional expense, and also that after they got the crop in, why I have seen hundreds of acres of soybeans as they stated, I have also seen hundreds of acres of crops that they planted late after it was too late to plant cotton or corn to try to make a corn crop there, and water would be, or, say half way up to the head and of course rains came and then the head dropped down in the water, and they completely lost the crop. .
This is simply as a leadoff statement.
Between 1945 and 1953, world supplies of rice were scarce and prices rose steadily. Shortages were caused by wartime and postwar disruptions which had reduced output in important rice producing countries. Although United States rice production before World War II was less than 25 million hundredweight of rough rice, during and after the war it increased rapidly up to 1954, when it reached a peak 64 million hundredweight.
The world rice shortage began to ease in 1953 as supplies from exporting countries became more abundant. Unusually favorable growing conditions and expanding acreage planted to rice, both in importing and exporting countries, improved the supply situation. By the fall of 1953, prices of rice in world trade began to move downward from record peaks.
In view of heavy accumulations of rice in the United States beginning in 1954–55, acreage allotments and marketing quotas were proclaimed for the 1955 crop. Although this action resulted in about 28 percent less acreage harvested in 1955, an increase of about 22 percent in yield per harvested acre boosted the production to the second largest crop on record. The increase of 4 percent in domestic disappearance and about 31 percent in exports during the 1955–56 marketing year was not sufficient to offset the continuing accumulation of rice, and carryout stocks on August 1, 1956, reached the record high peak of 34.6 million hundredweight.
The rice carryover on August 1, 1957, of 20.1 million hundredweight, in terms of rough rice, was 42 percent less than the record of 34.6 million hundredweight, a year earlier.
This sharp cut in rice stocks during 1956–57 reflected record exports of 37.7 million hundredweight, largely CCC stocks moved under Government foreign aid programs.
These exports were 50 percent larger than the previous record of 25.1 million hundredweight in 1952–53. The reduction in carryover also reflected a 12 percent smaller crop in 1956 resulting from acreage reductions due to the allotment and quota programs. Some further reduction in carryover is expected during the 1957–58 marketing year.
The supply of rice in 1957–58 is estimated at 63.5 million hundredweight, the smallest in the past 3 years. This total consists of the carryover on August 1 of 20.1 million hundredweight, the reduced 1957 crop of 43.2 million hundredweight and imports of about 0.2 million hundredweight, mostly of broken rice.
Use of rice in the United States during 1957–58 is estimated at about 27.2 million hundredweight and exports are expected to total about 19 million hundredweight, again largely from CCC stocks under Government financing. This disappearance would leave about 17.3 million hundredweight, in terms of rough rice, as the carryover on August 1, 1958.
Statistical data on the supply and disposition of United States rice (rough) for the period 1953–54 through 1957–58 are shown in table 1. Data on United States rice production and exports (milled rice) including cash sales and exports under Government programs are shown in table 2.
(The Department's report referred to is as follows:)
DEPARTMENT OF AGRICULTURE,
OFFICE OF THE SECRETARY,
Washington, March 11, 1958. Hon. HAROLD D. COOLEY, Chairman, Committee on Agriculture,
House of Representatives. DEAR CONGRESSMAN COOLEY: This is in reply to your request of January 31, 1958, for a report on H. R. 10317, a bill to authorize emergency refinancing loans to farmers in disaster areas.
The Department of Agriculture does not recommend the enactment of the proposed legislation.
H. R. 10317 would expand the emergency loan program of the Department, administered through the Farmers' Home Administration, to include the refinancing of existing debts, both secured and unsecured, owed by farmers and stockmen in any area heretofore or hereafter covered by a major disaster determined by the President under Public Law 875, 81st Congress, or in any area covered by a production disaster determination of the Secretary of Agriculture under section 2 (a) of Public Law 38, 81st Congress. Loans to refinance debts would be repayable in not to exceed 5 years. Interest rates would be determined by the Secretary of Agriculture at not less than 1 percent per annum above the rate determined by the Secretary of the Treasury at the beginning of the fiscal year in which the loan is made which, under the provisions of the bill, would be the current average yield of outstanding marketable obligations of the United States having maturities of 5 years.
The bill would establish a separate revolving fund to carry out its purposes. The fund would be composed of not more than $200 million, such additional amounts as Congress might from time to time approve, and collections from repayments and liquidations of loans made for refinancing. The bill further provides that such sums shall be borrowed by the Secretary of Agriculture from the Secretary of the Treasury on such terms as may be determined by the Secretary of Agriculture, with interest at the rate determined by the Secretary of the Treasury to be equal to the current average market yield of outstanding marketable obligations of the l'nited States having maturities comparable to such advances. There is no provision for additional administrative and other expenses that would be involved in administering the proposed program.
We believe the word "debt" was probably intended to be inserted between "public" and “transaction” at the beginning of line 12, page 3, of the bill.
The changes proposed would constitute a major revision of policy and use of public funds compared with the type of emergency loan program that has been administered by the Department since the enactment of Public Law 38 in April 1949. It feels that the expansion of its present emergency loan program into the field of debt refinancing on a large scale is not warranted. It feels, also, that the present program of the Department, coupled with the credit facilities available to business firms through the Small Business Administration, can and will satisfactorily meet the credit needs of farmers and business firms, respectively, in designated emergency areas.
The Department of Agriculture, acting through the Farmers' Home Adminis. tration, has rather broad lending authorities under Public Law 38 to make loans in areas where a shortage of credit exists because of losses of farm income resulting from natural disasters. Under this statutory authority, the Department is now making emergency loans in approximately 600 counties of 30 States. These loans are made from a revolving fund established by the Congress.
The present program consists of making loans primarily for farm operating expenses, family subsistence, and the replacement of needed equipment and livestock. We realize that in some areas farmers and stockmen may have difficulty in obtaining nondisturbance agreements from other creditors that would enable them to continue their operations with the assistance of an emergency loan. For this reason, loans may include funds for the payment of a year's interest on debts secured by liens on real estate and chattel property and recently authority was granted to include funds, when justified and necessary, for the payment of an amount representing a year's depreciation on essential farm equipment, but not to exceed 15 percent of the value of such equipment or the amount owed thereon, whichever is the smaller.
The purpose of emergency loans is to enable farmers and stockmen to continue their normal operations and thereby improve their financial position as soon as possible to the extent that they can return to regular sources of credit. This program is administered in compliance with the generally accepted public policy that Federal credit programs should be used only to supplement private sources of credit. For this reason, existing creditors of farmers and stockmen receiving these loans are requested to continue with them during the term of the loan. The program generally has been serving its purpose and operating in a satisfactory manner. Since the enactment of Public Law 38 in 1949, about $400 million of emergency loans of all kinds have been made to farmers and stockmen.
The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours,
E. T. BENSON, Secretary. Mr. Smith. The reason given in the Department's letter, Mr. Chairman, is that the Department of Agriculture at the present time is administering an emergency loan program in these designated areas, approximately 600 counties on the basis of making credit available to farmers and ranchers to stay in business in 1958 that is, to meet their production costs, and are making those loans available to farmers and ranchers who cannot obtain loans of that character from private cooperative sources.
Mr. Poate. Don't you think that is a rather unrealistic proposition to assume that that man can stay in business in a small community when he owes everybody in that community and when he is not paying them a dime?
Mr. SMITH. The emergency loans that we are making in the areas represented by the Congressmen that have testified this morning, do include budgeted amounts for depreciation on machinery where creditors have mortgages on the farms and farmers machinery, they do include interest on land and cattle debts, they do include taxes that fall due during the year and they include substisance and operating needs.
Mr. PoAGE. Yes.
Mr. Smith. The only void or the only type of credit that possibly is not included in the budgeted loans we are now making are advances for the paying of unsecured accounts resulting from last year's operation.
Mr. Poage. That is what this bill proposes to take up?
Mr. Poate. I come back to the proposition, I have lived in a small community and I think maybe you have.
Mr. SMITH. Yes.
Mr. Poage. I think I would find it extremely unpleasant to say the least to live in a community where I owe two of the three local garages or filling stations, so I have to move over to the other one.
I have paid off some of these secured loans, I have paid this implement dealer over here, who lives up at the county seat from whom I bought my equipment, but I have not paid a dime locally in the community where I am living. Well, now, I do not think you encourage much staying on the farm with that sort of a deal. I think you have a deal on which the farmer just cannot be expected to be a good citizen under that sort of a setup and in which he cannot be expected to operate a farm. I have to have this extra money to work my crop, I have to catch your man, he lives in another county, and I have to go and hunt him up, and he is always gone, has to be, it is his duty-I am not complaining, but I have to spend 2 days and gasoline that you
do not give me any budget to buy. I must get gasoline from somebody to find that man or else I cannot get the money to make the crop. Isn't that a fact?
Mr. SMITH. I hope not, sir, but
Mr. Smith. We can include in our budget all of the crop and expense that will be required, and except for the larger items
Mr. Poage. You get the man and the wife in there, I know you do. Your office is right across the hall from mine in the post office in Waco, and I think you do a good job of it. You figure what you expect them to need. “You expect that they will need so much, and you will advance what you expect them to need. But that tractor tire that you didn't expect me to blow out, and the tractor cannot move until I get it fixed—you didn't expect it to blow out-you didn't expect something else. You will advance me some more money if I can catch your man. In Waco he has an office, but in many places he has not. In many places, unfortunately, and again I don't blame you, he has to cover two or three counties. What do I do? I have to get a car to hunt him.
Isn't that the only way I can do it? You have not budgeted me any money to hunt him with. How am I to catch him? How do I get something for just the little daily operations? The inability to operate at the right time has as much to do with the failure to make a good crop as an overall squeeze on the limitation.
I think you have been reasonably generous on your overall esti.mates. I am not condemning that. I am not condemning the organization. I am merely saying, Aren't you faced with a situation that is so difficult, that I do not see how we make it work unless we keep these people in some sort of standing where they can have some sort of credit at home.
Even those little banks when they financed these people ofttimes they had no rule, of course, but for practical purposes the man who was advancing a little gasoline and little repair and so on, knew that the bank in town would take care of them, under normal conditions. The bank will not take it up now. You are the financing agency and you will not take it up. How can the man get these things done that have to ho done?
Mr. SMITH. Mr. Chairman, I don't think this problem you are explaining was just created this year.
Mr. PoAGE. No; it was not.
Mr. PoAGE. I know it has. That is very true, but the man who had a normal crop yield was getting along and these things did not become excessive to him as they are to the man who didn't make any crop at all. They did not get so critical until you got the disaster.
Mr. Smith. I assume that you called us over here to try to be helpful to the committee in considering these various items of legislation.
While, as Mr. Hansen said, we have had the Jones bill just a very few days, there are some features in the bill about which we have made a study in the past. I believe we know something about the matter of the insuring loans that is a feature in that bill. We have also made some study of the provision in the bill with respect to the Government making funds available to lending institutions, for them in turn to make loans to farmers for refinancing purposes.