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H. R. 2138. A bill to amend the Rural Electrification Act of 1936, as

amended..

H. R. 4572. A bill to amend the Rural Electrification Act of 1936 so as to

provide greater flexibility in making rural electrification loans, by

eliminating the requirement that half of the funds for such loans be

allotted among the States, and removing the limit on the amount of

unallotted funds which may be loaned in any State or in the Territories.

H. R. 5376. A bill to amend the Rural Electrification Act of 1936, as

amended.---

Statement of-

Campbell, Wallace J., director, Washington office, Cooperative

League of the United States.---

Ellis, Clyde T., general manager, National Rural Electric Coopera-

tive Association --------

Halvorson, Lloyd C., representing the National Grange..

Johnson, Hon. Lester R., a Representative in Congress from the

State of Wisconsin.---

Lynn, John C., legislative representative, American Farm Bureau

Federation.----------

-----------------------------

MacDonald, Angus, assistant legislative representative, National

Farmers Union --

Metcalf, Hon. Lee, a Representative in Congress from the State of

Montana-----

Partridge, Robert, program analyst, Rural Electrification Adminis-

tration.---------

Patton, James G., president, National Farmers Union

Strong, Fred H., Deputy Administrator, Rural Electrification Ad-

ministration.-----

Additional data submitted to the subcommittee by-

Johnson, Hon. Lester R.:

Chippewa Valley Electric Cooperative, Cornell, Wis., letter of

April 7, 1955.-

Dairyland Power Cooperative, La Crosse, Wis., letter of April 12,

1955.--

Eau Claire Electric Cooperative, Eau Claire, Wis., letter of April

7, 1955_-

Wisconsin Electric Cooperative, Madison, Wis., letter of April 13,

1955..

National Rural Electric Cooperative Association:

Number and percentage of farms electrified with central station

service, by States, 1935, 1940, 1950, and 1954.--

III

RURAL ELECTRIFICATION ACT OF 1936—AMENDMENT

THURSDAY, APRIL 14, 1955

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON CONSERVATION AND CREDIT
OF THE COMMITTEE ON AGRICULTURE,

Washington, D. C. The subcommittee met, pursuant to notice, at 10 a. m. in room 1310, House Office Building, Hon. W. R. Poage (chairman) presiding.

Mr. Poage. The committee will please come to order. We have under consideration today H. R. 5376 and several other similar bills, to amend the Rural Electrification Act of 1936. (The bills referred to follow :)

[H. R. 2138, 84th Cong., 1st sess.) A BILL To amend the Rural Electrification Act of 1936, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 3 of the Rural Electrification Act of 1936, as amended, is further amended by striking out all of subsections (c) and (d).

SEC. 2. Subsection (e) of section 3 is amended by striking out the following words: "without allotment: Provided, however, That not more than 10 per centum of said sums for rural electrification loans may be employed in any one State or in all of the Territories” and by relettering said subsection "(c)”, so that it will read as follows:

"(c) If any part of the annual sums made available for the purposes of this Act shall not be loaned or obligated during the fiscal year for which such sums are made available, such unexpended or unobligated sums shall be available for loans by the Administrator in the following year or years.

SEC. 3. Subsection (f) of section 3 is amended by relettering it “(d)”.

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A BILL To amend the Rural Electrification Act of 1936 so as to provide greater flexibility in making rural

electrification loans, by eliminating the requirement that half of the funds for such loans be allotted among the States, and removing the limit on the amount of any State or in the Territories

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (c) of section 3 of the Rural Électrification Act of 1936 is amended by striking out the first sentence (which provides that 50 per centum of the sums made available each year for rural electrification loans shall be allotted among the States according to the number of farms receiving central station electric service) and by striking out "such service" in the second sentence and inserting "central station electric service”, so that the subsection as amended reads as follows:

"(c) The Administrator shall, within ninety days after the beginning of each fiscal year, determine for each State and for the United States the number of farms not then receiving central station electric service.”

Sec. 2. Subsection (d) of section 3 of such Act, which provides that not more than 10 per centum of the unallotted funds available in any year for rural electrification loans may be employed in any State, or in all the Territories, is hereby repealed.

SEC. 3. Subsection (e) of section 3 of such Act is redesignated as subsection “(d)”, and is further amended by striking out "without allotment: Provided, however, That not more than 10 per centum of said sums for rural electrification loans may be employed in any one State or in all of the Territories”, so that the subsection as amended reads as follows:

(d) If any part of the annual sums made available for the purposes of this Act shall not be loaned or obligated during the fiscal year for which such sums are made available, such unexpended or unobligated sums shall be available for loans by the Administrator in the following year or years."

Sec. 4. Subsection (f) of section 3 of such Act is redesignated as subsection (e)”.

SEC. 5. Section 4 of such Act is amended by striking out", from funds available under the provisions of sections 3 (d) and 3 (e) but without regard to the 10 per centum limitation therein contained,”.

(H. R. 5376, 84th Cong., 1st sess.) A BILL To amend the Rural Electrification Act of 1936, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 3 of the Rural Electrification Act of 1936, as amended (7 U. S. C. 903), is amended by striking out subsections (c), (d), and (e) and inserting in lieu thereof the following:

"(c) The Administrator shall, within ninety days after the beginning of each fiscal year, determine for each State and for the United States the number of farms not then receiving central station electric service.

“(d) If any part of the annual funds made available for the purposes of this Act shall not be loaned or obligated during the fiscal year for which such sums are made available, such unexpended and unobligated funds shall be available for loans by the Administrator in the following year or years." . (b) Subsection (f) of section 3 of such Act is redesignated as section (e).

SEC. 2. Section 4 of the Rural Electrification Act of 1936, as amended (7 U. S. C. 904), is amended by striking out “the provisions of section 3 (d) and 3 (e), but without regard to the 10 per centum limitation therein contained” and inserting in lieu thereof "Section 3”.

· Mr. PoAGE. The Deputy Administrator of the Rural Electrification Administration, Mr. Fred H. Strong, is with us. I wonder if we might hear from you at this time, Mr. Strong.

STATEMENT OF FRED H. STRONG, DEPUTY ADMINISTRATOR,

RURAL ELECTRIFICATION ADMINISTRATION Mr. STRONG. With your permission, Mr. Chairman, I would like to have distributed copies of a prepared statement. · I am substituting for Ancher Nelsen, Administrator of the Rural Electrification Administration, who is out of the city. He has asked me to convey to you his respects and his regret that he cannot be here himself.

The matter before the committee, of course, is the proposed amendment of the Rural Electrification Act to remove the so-called State allotment formula. There have been a number of bills introduced both in the Senate and in the House by Senators Aiken, Thye, Young, and Carlson; and by Congressmen Hope, Johnson, Metcalf, and Poage. All are aimed at the same result. There are minor differences in the bills.

A prepared statement has been made available to the clerk for distribution among the committee members, and in the interest of economy of time, if the committee approves, I will omit reading the full text of the prepared statement and will discuss the proposed amendment in general terms off the cuff.

Mr. Poage. Surely. And would you like to have the statement included in the record?

Mr. STRONG. Yes, sir. Mr. POAGE. Without objection it will be included in the record. (The statement referred to is as follows:)

STATEMENT OF FRED H. STRONG, ACTING ADMINISTRATOR OF REA, RELATIVE TO

H. R. 2138 AND H. R. 5376 H. R. 2138 and 5376 which are before your committee today are substantially the same as S. 153 on which Administrator Nelsen recently testified before the Senate Committee on Agriculture and Forestry. These bills which are identical save in one minor respect, would repeal the so-called State allotment formula in the Rural Electrification Act. We believe that enactment of any one of these bills will enable us to administer the program more efficiently and to be more responsive to the needs of the people served by the program.

I shall present substantially the same background data as appears in the statement made by Mr. Nelsen, covering some aspects of the rural electrification program and taking stock of where we are in rural electrification today.

UNIVERSAL RURAL ELECTRIC SERVICE-AREA COVERAGE The estimate of unelectrified farms made by REA as of June 30, 1954 indicates approximately 4,966,000 farms were then receiving central station service, slightly over 92 percent of the total farms shown in the 1950 census. While there is doubt as to the accuracy of this estimate, a matter which will be discussed further, it points out the tremendous progress which has been made in rural electrification. New farm connections are being made at a rate estimated to be sufficient to bring the number of electrified farms today to just over 5 million, about 93 percent of the total. The rate of farm connections is much slower than it has been in past years. This is to be expected at this stage. What is left consists largely of the farms whose operators do not wish or feel they cannot afford electric service even though it may be available to them right at their door; farms which are so remote from power lines that service to them poses as yet unsolved problems of economic feasibility; and farms occupied by families which are not able to afford electric service. It is not possible to distribute the 416,000 farms estimated to be without electric service on June 30, 1954 among these groups with any assurance of accuracy. REA borrowers are being encouraged to bring service to those who want it. . While it would seem that the job of farm electrification is approaching substantial completion, I must caution you that this is not necessarily so. American agriculture is like everything else American; it is dynamic, not static. New farms are being added while old ones are being retired from active production or are being merged into others. The job of electrifying our farms will never be 100 percent completed for the same reason the job of building automobiles or better mousetraps will never be done. But we are well on our way to making rural electric service universally available.

FINANCIAL SOUNDNESS REA electrification loans total almost $3 billion, about $300 million of which were made since April 1953 when Ancher Nelsen became Administrator. We firmly believe that the REA loans with very few exceptions are sound and will be repaid within the time agreed with interest.

It is a matter of great satisfaction to report that since April 1953 the number of delinquent borrowers has been reduced from 35 to 13 and the number of borrowers which have made advance payments increased from 704 to 745. Dollarwise, delinquencies have been cut more than half from $626,557 to $307,341; advance payments increased about 45 percent, from $54,350,853 to $78,647,457.

We are not complacent about the record, particularly when we reflect upon the effort required to achieve it and then look ahead to the precipitate increases in debt payment load which the next few years bring. But we are constantly preparing to meet the challenge of helping our borrowers to maintain their record. We are improving our techniques for helping our borrowers which appear to be in danger of financial difficulties and devising new ones for avoiding and during defaults.

Perhaps one of the most important contributions toward assuring financial stability of our borrowers has been the power use promotion work carried on in

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