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With respect to point 3, I have served on various public boards and committees. I think my most successful experience of this type has been as a member of the National Advisory Committee under the Marketing and Research Act of 1946. This committee is advisory, not policy making nor administrative, but it has had great influence on the program carried out under the Marketing and Research Act.
The CHAIRMAN. You say that the program has been very helpful?
Mr. Davis. Yes; I think so. Not only do they have a National Advisory Committee, but they also have 23 commodity advisory committees; and if they have done nothing elese, I think they have changed the emphasis within the Department of Agriculture on marketing.
Senator AIKEN. May we go back to the Farmers Home Administration just a moment?' I know the agricultural organizations have recommended an over-all agency to handle the farm credit. However, these other agencies, Production Credit, Bank for Cooperatives, and so on, are getting away from obtaining Government funds all the time, whereas the Farmers Home Administration uses Federal funds. That entered into the picture to some extent as to whether in attempting to. get the Federal funds all out of the other Farm Credit agencies, where would we be left if we kept the smallest of them all, the Farmers Home Administration, that uses Federal funds in that agency?
It seems to me it would make it impossible for the others to get on their own feet.
Mr. Davis. I think it depends on the level at which you bring them together. Our hope is that it would be set up as an independent credit agency somewhat analogous to the Federal Reserve System with a board of governors at the top of it, a small board, probably a full-time board.
I think that that type of credit function lends itself to a full-time board, whereas in an operating program of the type considered in this bill perhaps there should have an advisory board.
The CHAIRMAN. Have you given this function any name here?
Mr. Davis. Well, I believe that bill 2 years gave it a name. I forget just what it was, but the cooperative Farm Credit part of it would be one unit entirely by itself, but under this Board, and it would have its governor or its administrator, whatever you want to call him. Now he is called Governor.
There would also be a separate administrator for the Farmers Home Administration so that actually the cooperative Farm Credit Agencies and the Farmers Home Administration would not be any closer together than they are now under the Department of Agriculture.
The CHAIRMAN. There would be no conflict in the activities of the two organizations?
Mr. Davis. I do not think so. I think if you left the Farmers Home Administration under the Department of Agriculture and put Cooperative Farm Credit under this new agency, that your direct credit might very easily drive the other out of existence.
If they were under a common board, which was responsible for both of them, such as you have in the Federal Reserve System for the banking system, we think that would be better.
Senator AIKEN. The Farmers Home Administration is costing about $7,000 per county now. Production and credit cannot begin to cost that much. While it is true that Farmers Home Administration
has a lot of outstanding money, a lot of that goes way back 15 years and will never be recovered.
Senator THYE. Mr. Davis, why could they not be consolidated and then left under the Department of Agriculture in the manner that they now are? By making the consolidations, where the organization is expanded, the administrative cost could be kept at a minimum.
Mr. Davis. Well, the whole argument for taking it out of the Department of Agriculture was to make it a little more immune to political pressures. Farm Credit at the present time, I think, is very well operated. I think the Governor of Farm Credit has been doing a very good job. There have been times in the past when there has been considerable political influence exerted on Farm Credit and we would like to see it worked so that it is a little harder for that to happen in the future.
Senator Lucas. You mean you would like to change the political control?
Mr. Davis. We would like this system to be as immune to political controls as is the Federal Reserve System.
Senator AIKEN. The Farmers Home Administration last year cost $7,000 per county for administration cost and collected $36,000 per county on loans. It cost 20 cents out of every dollar to run the business. In addition to the collection of funds, there was advice given, I believe, to the borrowers, but the county agent could probably give that same advice if he had the time to do it.
Mr. Davis. I am sure there can be improvements made on that. This bill that we had 2 years did not go that far, but it did direct the board at the top to have studies made of what could be done to minimize the cost.
The CHAIRMAN. What became of that bill 2 years ago?
Mr. Davis. It passed the House and died in the Senate. It was not passed.
Senator THYE. Mr. Davis, you think the Council could become the supervising body over these consolidated agencies?
Mr. Davis. Now you are talking about the ones in the bill?
Senator THYE. I am referring to your own remarks that the Council becomes the over-all general advisory body to the Department of Agriculture in all of its agricultural programs.
In other words, it assists in formulating programs of the Administrator.
Mr. Davis. That is right.
Senator THYE. If we lose the objective function of such a council in formulating a sound program, there would be no purpose in having such an advisory agency. You would lose it in the event you tied the Council down to be the administrators and supervisors over the credit agencies.
Mr. Davis. I am not proposing that this Council we are talking about in the bill be over the credit institutions at all. That would be entirely a different board.
In answer to Senator Aiken on the question of where we would put Farm Security, I went back to this bill that we had 2 years ago, which would have created a board somewhat analogous to the Federal Reserve Board and it would have been over all of the credit agencies of the Farm Credit Administration and the direct lending agencies.
I just merely referred to that to point out what we would do with the Farmers Home Administration, but that is an entirely separate board from the board that I am referring to now.
The CHAIRMAN. That program was not kept in at the time?
Mr. David. No.. Congress adjourned before it got through and it has never been up since.
Senator THYE. If you had this over-all council, why could it not give thought to the credit facilities of the act as well as to other phases of the agricultural program? That would seem to me to be preferable to expanding into a new division or board.
Mr. Davis. Well, as we see it, the credit part of it should not be too directly related to the pressures of the action programs. What we have in mind is that institutions like the Land Bank, the Production Credit Associations, and the Banks for Cooperatives, will be ultimately farmer owned and farmer controlled.
There needs to be a certain amount of coordination at the top and a certain amount of supervision in the public interest that needs to be done by the central group and we feel that ought to be done by a small board of approximately five people that is sitting in a capacity somewhat similar to the Federal Reserve Board. They would supervise the extension of credit, discounts, the sale of debentures, etc., but the units would be owned by the farmers.
With respect to the direct credit, we recognize when agriculture gets into an extremely difficult position these cooperative credit units cannot meet all the needs; you have to have direct credit to salvage some of the frozen paper of the farmers. That is true if you get in a condition like the 1930's.
Senator AIKEN. Of course this bill is designed to keep us from getting into such a condition as that again.
Mr. Davis. We feel if you have your direct credit units outside of this independent agency, that it would start competing with the farmer-owned units and cause them not to be used to the greatest extent possible and we think it is sound policy to have the farmer rely on his own credit institutions insofar as he can and have this direct credit. merely as a supplemental credit.
That is why we think they should be supervised jointly.
But to put them all under the same people that administer this act I think makes these credit institutions too sensitive to farm program pressures and may lead to unsound financing.
That is the way it looks to us, namely for the same reason that you have your Federal Reserve Board and System clear apart from the Treasury and from the Department of Commerce, and so forth.
Senator LUCAS. Will this require another bill?
Mr. DAVIS. You remember Farm Credit was separate when it was first set up and it was not until 1939 that it was put under the Department of Agriculture.
Senator Lucas. You would be creating a new bureau?
Senator Lucas. I know a lot of people who are against creating new bureaus.
Mr. Davis. The administration is opposed to taking them out of the Department of Agriculture.
Senator ELLENDER. Mr. Davis, the Senate is going to consider a long-range housing program in which the farm homes will play an important part and it may be that something will be worked out whereby this Farmers Home Administration can be tied into the longrange program.
Mr. Davis. I think that may be true.
Senator AIKEN. It is the next thing on the agenda after the Commodity Credit Corporation charter bill, but I do not know that you want to go into this over-all farm credit set-up too much this morning, but after these farm credit agencies become farmer-owned, they nat-urally could set up their own board of advisers or directors, whatever they want and they are rapidly becoming farmer-owned.
Every production credit association in my State has now paid back: its Government money.
What bothered me was whether we should leave this direct lending agency of the Government tied in with them because I do not see how you are going to get away from Government controls over the rest of them if they are all put together. Until the time comes that the credit agencies become farmer owned and set up their own board of advisers or any other board they want, it seems to me that if we have this agricultural council at all they could well consider the over-all farm situation, credit, soil, land use, and prices, because it is almost impossible to consider one of those factors in agriculture separately..
We may decide not to have it at all. We are seeking the advice of witnesses on that. That is why you are here this morning.
Mr. Davis. By making the proposed Council advisory rather than policy-making one can attract men who continue to be close to the day-to-day operations of the programs at the operation level. The members of such a council can speak freely since they are not com-' mitted from above to administration policies.
Nor does an advisory board gradually take on the complexion of bureaucracy as would a policy or administrative board. On any such committee it is very important to have majority representation from the producers.
It is our belief, therefore, that this committee should consider in lieu of the proposed National Council, the creation of a conservation: council, advisory to the Secretary, which would be charged by the Congress with the specific job of advising on the coordination of conservation programs and budgets applying to soil, water, and forest. resources.
Such an advisory council should appropriately be made up of producers and users.
Likewise with regard to the agricultural extension program of the country, we believe that more progress will be made by an advisory council on extension education in coordinating those parts of the De-partment and land-grant college programs, than by legislative finality.
Such an advisory group should include representatives of producers, marketers, and others concerned, with producer representatives in a majority
Senator Lucas. Let me ask you one question, Mr. Davis..
Senator LUCAS. With respect to the National Advisory Committee under the Marketing and Research Act of 1946, you said you were a member of that advisory committee. Did you receive full cooperation from the Department of Agriculture as a member of that advisory committee?
Mr. Davis. Yes, I think so, more than with any other committee on which I have ever sat.
Senator Lucas. One of the complaints has been, especially during the war, that these advisory committees were set up and thereafter the agency in control paid little or no attention to the advisory committee and proceeded to do what they thought should be done regardless of the advice given by the advisory committee, and I was wondering whether or not you had had the same experience with the Department of Agriculture.
Mr. Davis. I have had that experience on some other committees. That is why I say this one is the best one on which I have ever sat. With possibly one or two exceptions, the decisions that our marketing and research advisory committee have made have been carried through.
Senator Lucas. You could have been wrong in the decisions?
Senator Lucas. I am glad to get that information because it is a sourch of pleasure for me to hear you make that statement.
Mr. Davis. One provision that is in the marketing and research law is that the people who sit on the committees can have no alternate. You are there or your place is vacant. I think it is an important feature because you can get a continuity that way. If members can send alternates, then one person at one meeting will know nothing as to what happened at the other meetings.
Senator AIKEN. As far as you have gone you have not said anything about the proposed administration of the operating agency. Do you believe that should be done wholly from the national level or from the State and local levels? I have not seen any of your testimony relating to that.
Mr. Davis. We think that a lot of it can be done locally and in the case of conservation we are very strong for the conservation districts. We would like to see them with a reasonable amount of autonomy.
Senator AIKEN. As far as the districts themselves go, do you see anything in the bill that deprives them of their present autonomy?
Mr. Davis. No, I think not.
Senator ELLENDER. Mr. Davis, I thought on the first page of your testimony you criticized the advisability of spelling out what these committees should do. I though you intimated it should be more or less left to the Secretary of Agriculture. Am I correct in that?
Mr. Davis. These committees that I was referring to, as I understand it, would be committees that are elected part of them by farmers and part of them by virtue of the position that they hold in the Department of Agriculture. In addition to that, of course, you do have these soil conservation districts out there which are more or less entirely separate and have separate officers.
Senator AIKEN. They are set up wholly under State law.
Mr. Davis. That is right, they are set up wholly under State law. We think that is a very sound procedure.