stayed in the Army. It had nothing in the world to do with Public Health. The same folks ran it, but they built up the biggest backfire. They said if you sent the bill for cost to the packing companies after the fact, the companies might jeopardize Public Health, which, of course, was not true in my opinion. We were unable to hold it, and I would seriously question whether we could bring that about now. At any rate, you agree that would require legislation, do you not? Secretary FREEMAN. Yes, sir.

REDUCTION IN MARKETING RESEARCH

Mr. WHITTEN. Now you also made substantial reductions in the funds for the Transportation and Facilities Research Division, Agricultural Marketing Service. You mentioned that. There are several things there that I would like to point out.

The first is that you, yourself, show the concentration of business with a handful of firms and the relatively tight situation with regard to some of the markups on commodities. There is a constant need to cut down the amount of retail price that is absorbed between the producer and the consumer. We on this committee have gone along and you to a degree, but our colleagues on the other side have just increased this utilization research without end, and the first step in utilization research is to find out where the probable markets are.

If I understand this, this reduction applies to the division which has been trying to improve the markets and marketing procedures. Now you have cut out the research. What is the basis for that?

Secretary FREEMAN. Well, I think these programs have been very useful. There have been a number of them that it seems to me might properly be carried forward by the private trade itself rather than by the Government, and when priorities had to be established, these particular programs simply didn't have as high priority as others.

Mr. WHITTEN. Well, I am a strong believer in the attention given to the small farmer, who must make adjustments in his operation and various other aspects which you raised in your opening statement yesterday. But I would have to say that those involved probably represent about one-tenth of 1 percent of commercial production in this country which provides food and clothing. I can't say that some of the things that you are very proud of in the Department, such as section 5 loans and various other things, are not as important to the 180 million consumers in this country as some of these items that are reduced.

CROPLAND CONVERSION PROGRAM

What success have you had in getting lands into new use? Have you seen any sizable reduction in production of these basic commodities from it, or do you have to charge most of the benefits up to an improved land situation after you enter into these contracts?

Secretary FREEMAN. I am not sure I understand the question. If I understand it properly, the chairman is asking what our experience has been with the very small cropland conversion program.

And in that instance I would refer to my formal statement, on page 12, which points out that agreements have been entered into with 2,800 farmers, running from 5 to 10 years, for conversion of about 130,000 acres into grass or trees or recreation, on farms scattered around the country.

This has been a very small pilot program but a very promising one. These permanent conversions have been made at very low cost, compared with the acreage reserve and certainly much less than we would have to pay under the feed grain or wheat program.

The matter of further authority, increasing that amount, is pending before the House Agriculture Committee. The Senate passed legislation to extend the conservation reserve and to increase to $20 million the authorization for the cropland conversion program. But so far it has not been acted on by the House committee.

ADMINISTRATIVE PROCEDURES ON RURAL ELECTRIFICATION LOANS

Mr. WHITTEN. Mr. Secretary, turning now to the actions of the Congress in our bill last year we made a number of recommendations. I talked to Mr. Clapp of the REA and he will be before us later, but could you discuss at this point for the record what steps have been taken to carry out the directive of the committee directed to the Rural Electrification Administration? I recognize that the Senate report and the House report are somewhat different. We would like you to tell us briefly about it and include any announcements in the record. Secretary FREEMAN. Very shortly there will be put in the Federal Register the procedures which are being instituted to comply with the mandate of both committees. There is a difference between the report of this committee and that of the Senate and we are seeking to comply in all good faith with both. In brief, the administrative machinery to make the surveys has been established.

We will, pursuant to the directives of the House and Senate committees, be making certifications on any transmission or generation loans to the committees and to the General Accounting Office.

And the Secretary will be advised in connection with both the surveys and the reports and also those instances in which the section 5 route is followed. All of this is now in process of being formalized. I think Mr. Clapp has reviewed it with the chairman of this committee and perhaps other members and with the chairman of the Senate committee. The specific details will be published in the Federal Register, I think, within a week or two.

(The announcement of power supply surveys is as follows:)

[Press release]

U.S. DEPARTMENT OF AGRICULTURE,
Washington, February 25, 1964.

REA ISSUES POWER SUPPLY SURVEY POLICY ON GENERATION OR TRANSMISSION LOANS

REA policy and procedures for the conduct of power supply surveys in connection with loans for generation or transmission purposes are spelled out in a new bulletin soon to be released by that agency, the U.S. Department of Agriculture announced today.

The policy requires completion by the Rural Electrification Administration of a power supply survey before making any loan for generation or transmission facilities. The purpose of the surveys, according to the REA bulletin, is "to assure adequate review of existing and proposed power supply alternatives and to encourage closer cooperation between REA borrowers and other electric power suppliers."

Describing power supply arrangements as major and critical factors in the ability of REA borrowers to carry forward the rural electrification program, the bulletin, signed by REA Administrator Norman M. Clapp, states that "REA has 30-080-64-pt. 1-11

the responsibility to assist its borrowers in achieving power supply arrangements most advantageous to accomplishing the objectives of the Rural Electrification Act and, without prejudice to the accomplishment of these objectives, to conserve REA loan funds."

According to the bulletin, any REA borrower or potential borrower may request REA to make a survey of its specific power supply problem or needs. If REA decides to undertake the survey, it will be conducted in a manner that will provide a full review of the existing or proposed power supply arrangement, if any, and potential arrangements which may contribute to a solution of the problems and needs upon which the request was based.

If existing or proposed power contracts are found to be "unreasonable" for purposes of the Rural Electrification Act, the power supplier involved will be advised of the findings and REA will endeavor to have the contracts or proposals made "reasonable" through negotiations with the supplier. The REA borrower or potential borrower concerned will be made a party to any such negotiations between REA and the power supplier, and when necessary, REA will set a time limit for the negotiations to avoid unnecessary delays.

The REA power supply survey requirement applies to all loans for generation or transmission facilities, regardless of amount. In addition, the bulletin specifies that application for loans of more than $2 million for either generation or transmission facilities, or both, will not be accepted for consideration by REA unless (1) a power supply survey has been completed, or (2) the REA Administrator determines that completion of the survey requires a full review of the facilities proposed in the application.

All loans for generation or transmission purposes will continue to be made in compliance with REA's established criteria (Bulletin 20-6, dated May 31, 1961) and, hence forth, upon certification by the REA Administrator to the Secretary of Agriculture that the loan was approved to meet needs determined by the power supply survey. The certification will state that the survey has been completed and that it shows the loan is (a) needed to construct facilities to implement an existing or proposed contract with the existing supplier; or (b) needed to provide facilities or service for which there is no existing or proposed contract from any other power supplier; or (c) needed because existing and proposed contracts for facilities or service were found to be "unreasonable." that each supplier involved was so advised, that REA attempted to have such contracts made "reasonable," and that the existing or other proposed suppliers had failed or refused to make them "reasonable" within the time set by the Administrator.

REA loans of more than $2 million for generation or tnsmission facilities will be similarly certified to the Comptroller General of the United States, and to the U.S. Senate and House of Representatives as directed by those bodies. This certification is to be accompanied by 11 items of information on each loan as listed in the new bulletin.

The conditions under which REA makes loans for generation or transmission facilities, or both, and as set forth in the 1961 bulletin, are: (1) Where no adequate and dependable source of power is available to meet the consumers' needs, or (2) where the rates offered by existing power sources would result in a higher cost of power for the consumers than the cost from facilities financed by REA, or (3) where generation and transmission facilities are necessary to protect the security and effectiveness of REA-financed systems.

Mr. WHITTEN. Mr. Secretary, I think that pretty much covers the things I have in mind at the present time, together with the information which I asked that the record show.

Mr. Grant, as budget officer, I am sure will review the budget in detail with us later, as he has heretofore. I believe that is all of the questions I have at this time.

Mr. Natcher?

RESEARCH ON TOBACCO AND HEALTH

Mr. NATCHER. Mr. Secretary, I believe that we must immediately expand the program of research into plant breeding, culture, production, and handling of tobacco. We must include studies of the factors which may be detrimental to health, and ascertain as soon as possible

those quality factors and other characteristics which will preserve the desirable characteristics of tobacco and eliminate any factors which might be detrimental to health. As you well know, when tobacco is in trouble, my home State is in trouble. Forty-six percent of the total farm income from agricultural commodities in Kentucky is received from tobacco. The production of tobacco involves over 700,000 farm families and approximately 100,000 factory workers.

Tobacco is produced in 21 States and produces the fifth largest amount to our farmer of all agricultural commodities. This is an $8 billion industry with the growers receiving about $1.2 billion per year.

This commodity, Mr. Secretary, as you well know, produces some $3.3 billion in taxes to our Federal, State, and local governments. As far as I know, the taxes from tobacco pay in more than all of the other agricultual commodities combined. Now I believe we must have an expanded program of study, of chemical constituents of tobacco, of all types. Because of the implications to the health of the consumer from the use of tobacco, with insecticidal residues, there is a continuing and urgent need for safer and yet more effective methods of control of insect pests of tobacco. Additional studies must be made on the effect of methods of application of insecticides.

Now that the report of the Surgeon General has been released, we must give added thought, I believe, to the problem of smoking and health, and planning future research in tobacco.

In testifying before the Tobacco Subcommittee of the House Committee on Agriculture on January 29, 1964, Dr. Luther L. Terry, Surgeon General of the Public Health Service of the Department of Health, Education, and Welfare, stated in part as follows:

Under research: The second major category in our program is research. Three kinds of research are called for. First, we need to know much more about the relationship of smoking to certain diseases, as well as to overall mortality. Coronary artery disease, now the leading cause of death in this country, is a good example.

The committee was unable to reach a firm conclusion to the role smoking plays in causing or precipitating death from this disease. We need to find out for sure whether smoking is a factor in this disease or whether it should be exonerated.

2. Social and behavioral research is another important field. We need much more knowledge about why people start smoking, why they maintain this habit, how they can stop once started. We need to know more about the alleged beneficial effects of smoking. If such exists, we need to know how to measure them so that the benefit can be balanced against the hazard. This is one of our dilemmas in the smoking problem. In other areas, automobile and traffic accidents, pesticides and insecticides, we can at least approximate a balance of benefit against risk. We cannot do this with smoking because we can't measure the benefit.

3. The third research category is how to make smoking safer. There are a number of approaches which are feasible and definitely need increased support. We need to know much more about the substance in tobacco smoke which produced the health hazards. Until we know more in this area, we will be handicapped in our efforts to remove the hazard. It is difficult to design a method of removing something if you don't know what it is. For example, you know substances in tobacco smoke can account for only a small portion of its cancerproducing power. We have no real clues as to what it is in tobacco smoke that influences coronary artery disease; if indeed it does. This would seem to be a fertile field for research, such as that proposed in the resolution now before this committee. In this specific context, I am sure the committee will realize that I must speak with some caution and reservations, since I am not an agricultural

or horticultural expert. I still feel, nevertheless, that I can wholeheartedly support additional research of the types which the resolution would authorize and direct.

I believe you are acquainted with the resolution, Mr. Secretary, that was introduced not only by the chairman of the Committee on Agriculture, Mr. Cooley, but by myself and other members from tobacco-producing States.

Secretary FREEMAN. Yes, sir.

Mr. NATCHER. Mr. Secretary, continuing on with Dr. Terry's statement:

It is well known that strains of tobacco differ quite widely in various constituents. It is well known the levels of some of these constituents influence the amount of hazard dose or potentiality hazard dose substance in tobacco smoke. I would give a great deal to know whether the types of tobacco used for pipes and cigars have anything to do with the lesser hazards associated with these modes of tobacco use. If tobacco behaves as other vegetables, I am sure that the amount of some of its constituents will vary with the conditions of the culture, soil, climate, fertilizer, and other agricultural practices. This suggests, however, another area of research. Any vegetable material, when burned under the conditions prevailing when tobacco is smoked will produce hazardous substances. Coal, oil, paper, even spinach, all produce benzopyrene, a potent cancer-producing substance when burned.

The efficiency of the combustion process makes a marked difference in the amount of this chemical in the smoke. As a matter of fact, most of the cancerproducing compounds identified in cigarette smoke are not present in the native tobacco leaf, but are formed during the burning process. These facts suggest that it will not be enough simply to develop better strains of tobacco and better methods of cultivation; we must also develop better methods of preventing the formation of these substances during the burning of tobacco, as well as of removing by filtration or other means the hazard dose substances that are formed. Both of these areas are promising after news for further development and have the potential of making smoking safer. It is well known that cigarettes can now be produced which yield quite low amounts of tars and nicotine, either by selection of the types of tobacco, by filters, or other means. It is relatively easy to measure this quantatively. What isn't so well known or so easy to measure is the biological significance to man of the substances which do come through. Tobacco smoke is an exceedingly complex mixture of many different substances. It is not the amount of tars and nicotine produced that counts, it is the type and amount of hazard dose substances that get into a man that is important.

In summary, gentlemen, the action which I have outlined has the common purpose of avoiding or minimizing the intake of hazard dose substances by the American people. Action on many fronts is urgently needed. The Public Health Service intends to do what it can. This important and complex problem also calls for appropriate action by other Federal agencies, by State and local agencies, by nongovernmental organizations, and by the tobacco industry.

Mr. Secretary, I wanted to read this portion of the testimony of Dr. Terry into the record to give you some idea as to just what he said at the time he appeared before the Subcommittee on Tobacco of the House Committee on Agriculture. This is an important matter and one that, as I have pointed out to you, affects an industry that amounts to some $8 billion a year.

Now, as our chairman has discussed this matter with you briefly, what do you have in mind, Mr. Secretary, from the standpoint of future action in regard to an expanded research program for tobacco.

Secretary FREEMAN. Well, Dr. Brady, who is the Director of Science and Education of the Department, has outlined a specific program of research which would be directed toward better identifying harmful elements and then seeking to produce the kind of tobacco which would minimize the existence of those elements.