to discuss the REA programs. The REA programs, both the electrical and the telephone programs, are characterized by ideal relationships between the Government and farm people. Through these programs the Government helps people to help themselves by giving them the necessary long-term credit and technical assistance which would otherwise be unobtainable. The local people own and control their own facilities. They pay back the Government loans with interest. Through their efforts they add to the taxable income, not only of the community but of the entire Nation. Their programs help the farmer, laboring under adverse circumstances, to meet the Nation's everincreasing demands for more food and fiber.

Rural people should be and are most grateful to the Congress for providing the legislation and the funds which have made it possible for them to have such helpful and successful programs. Great credit must go to the farm people whose unselfish efforts and sound judgment have produced results so beneficial to their communities and to the entire Nation.

There are three basic principles or objectives in the program:

First, to make the service available to everyone-the principle of

area coverage.

Second, to have a sound financial operation, that is, to assure that the loans are self-liquidating.

Third, to give highest quality service at the lowest possible price. I should like to discuss these three principles briefly to indicate not only their importance but their very close interrelationship. Later I would like to present some statistical information to show what has been accomplished toward reaching these objectives.

Through legislation originating in this committee, Congress has given wise and definite directives for area coverage type of programs. refer to the 1944 amendments to the basic RE Act providing for a longer amortization period and lower interest rate to make it possible to have a complete area coverage program. I also refer to the preamble to the 1949 rural telephone amendment, which reads as follows:

* * * it is hereby declared to be the policy of the Congress that adequate telephone service be made generally available in rural areas through the improvement and expansion of existing telephone facilities and the construction and operation of such additional facilities as are required to assure the availability of adequate telephone service to the widest practicable number of rural users of such service.

I do not need to take the time of this committee to describe how electricity is needed in every rural home in America to make them happier and healthier places in which to live. I am sure that when this committee advocated the amendment to the RE Act to provide for telephone service it realized how helpful telephone service can be in times of emergency such as sickness or fire, in protecting the farm household.

But in times like these when we must recognize that food is as essential to the national security as military strength, it is the contributions electricity and telephone service can make to critical farm production that is of utmost significance. Therefore, I want to discuss what we know from experience electric power and the telephone can do to help farm people produce more and more of the things the Nation needs and to produce it with less manpower.

Thanks in considerable measure to programs that have been put forward by this committee, agriculture has already come a long way in increasing its productive efficiency. Take, for example, the research and scientific advancement encouraged by legislation you have sponsored and the contribution this work has made toward increased productivity. There have been price supports which have encouraged the farmer to keep up his productive efforts despite discouraging conditions. Another highly important factor, of course, is mechanization, first of the field operations, and now more recently the electrification of farmstead operations.

It is significant that from 1935 to 1948 the index of gross production per farm worker rose from 95 to 142 and that during the same period, the similar index in manufacturing and mining rose only from 93 to

121.

The increase in farms electrified from 10 to nearly 90 percent during the last 15 years has played an important part in increasing the efficiency of farm production. This big change has been so rapid and so unobstrusive that many people have little idea of the potential productive force that electricity injects into American agriculture.

I am convinced that the coming of low-cost electric power to the farm is as dramatic a revolution as that which took place in the development of the tractor and allied machinery. The shorter time required to do the farm chores with electricity enables the farmer to spend more time in the fields utilizing the improved field machinery. There are now a million and a quarter less workers on the farm than there were 10 years ago. Experience on electrified farms indicates that electricity is a most effective aid in helping farmers meet this manpower shortage problem and to increase the quantity and quality of many agricultural products.

We know that a 1-horsepower motor can do as much work in an hour as an average man can do in a day. We know 1 kilowatt-hour of electricity will pump 1,000 gallons of water from a farm well, milk 30 cows, heat 5 gallons of water, grind 200 bushels of grain, run a tool grinder for 4 hours, shell 30 bushels of corn, cool 10 gallons of milk, or cut 1 ton of silage and elevate it into a 30-foot silo.

The proper use of electricity may mean a 5- to 10-percent increase in milk production through the availability of drinking water at the proper temperature. It may mean an increase of as much as 30 percent in pork production through the use of electric brooders, substantial increases in poultry and egg production, and gains in truck-crop yields by means of supplemental sprinkler irrigation.

Hay drying, insect control, automatic food processing units, and on-the-farm processing of greater amounts of our farm production are only a few of the rapidly expanding uses of electric power on the farm. I can illustrate, through my own farming experience, how REA electricity helps to produce more and better farm products.

Electricity has enabled us to expand our hog production without sacrificing too much labor from the production of field crops. We have the pigs farrowed about the first of February. They are weaned and on self-feeders and automatic waterers by the time the busy field work starts in the spring. But this means that they often come in very cold weather. That was the case this year. Thanks to electric pig brooders our loss from the cold was negligible. We are very proud of the more than 800 spring pigs which came during this extremely

cold weather. They will soon be in a clean, alfalfa pasture field with water, from an automatic electric pump 1 mile away, piped to the field. They will remain in this field until they go to market. Electricity has helped us to solve the labor and sanitation problems incident to our hog production.

When my son-in-law took charge of the farm after World War II, we decided to go into dairy production despite the hard work involved, because, first, the dairy cow is one of the most efficient users of pasture and hay crops, and, second, there was a deficiency of grade A milk in the area. Only because we have electric lights, electric milking machines, electric milk coolers, electric water heaters, an electric ventilating fan and the like are we now able to send 150 gallons of grade A milk a day to a market 60 miles away.

We are proud of the fact that the herd we started less than 5 years ago averaged over 400 pounds of butterfat last year. We are hopeful of increasing this production per cow because we belong to an artificial insemination ring. Through this ring, we can, in a practical and economical way, have the use of proven sires. The point is that this would be impossible from a practical standpoint if we did not have telephone service. Even though the antiquated telephone system we now have gives rather uncertain service, it not only makes it possible for us to use the artificial insemination service, but it also saves us many hours of time and miles of travel by helping us to obtain supplies, veterinary service, repairs, market information, and many other things which are so necessary under present farming conditions.

People who know rural conditions realize that these modern utility services are a most influential factor in keeping our progressive and energetic farm boys and girls on the farm. This, too, I know from my own experience. I know that I would not have been able to get my daughter and her husband to take over the active management of my farm if these modern conveniences did not at least in some measure compensate for the long, hard hours of farm work. I also know that we would have a lot more difficulty than we are now having in getting hired help on the farm to keep up production. We are having to compete with manufacturers of television and automobile parts for the available labor in the community. We are paying comparable wages, but I do not think comparable wages would attract the kind of help we must have if we did not have electricity and running water in the tenant houses.

REA cooperatives are approaching the goal of making electric service available to every rural community in America. They are accomplishing this job without jeopardizing the excellent REA financial record. I am sure you will be interested and pleased to know that the delinquency on rural electrification loans today is only about three-tenths of 1 percent and that it is lower, percentagewise and dollarwise, than it has been for several years, despite the rapidly increasing amount of principal due.

The real security for the REA loans is the willingness and ability of rural people to pay for the services which are furnished to them under these programs. This matter of loan security leads us into the third basic objective of the program. That is seeing that the service is reliable and low enough in cost so that farmers cannot afford to be without it and will use it freely. This involves definite

responsibilities for REA and its borrowers: First, making surveys of the area to see that the borrowers start off with the proper organization and territory; second, seeing that the construction is of high standard and economical; third, seeing that the daily operations are sound and efficient; fourth, seeing that there is a proper maintenance program so that the facilities are capable of giving reliable service throughout the life of the loan; fifth, helping people to take advantage of the opportunities they have to obtain more benefits from their organization and from their service; sixth, seeing that the source of power is the most reliable and the lowest in price obtainable. This matter of cost of service takes on special significance when it is realized REA borrowers are extending service into territories which did not offer sufficient financial return for existing suppliers. Our borrowers must keep costs down, but it is even more important they make their service reliable.

We know that one of the chief reasons why the old rural telephone companies ran into financial difficulties is that farmers by the thousands discontinued the service because it was too uncertain and too unreliable. We must be certain that this does not happen in the REA programs.

With very few exceptions, no group of people have more need for reliable electric service than farmers. If a storm causes an outage or if the voltage is so irregular as to burn out the motors, farmers suffer irreparable losses due to inability to milk the cows, keep the brooders going, or preserve food already harvested or produced. A factory may work two shifts next week because there was insufficient power this week but farms cannot be operated on that kind of a basis.

Farmers are constantly finding new uses for electricity. They are constantly buying additional equipment and arranging their whole farming operations to take advantage of electric service so that they can step up the production of their farms in spite of the handicaps. Farmers must depend upon their power supplier to have the necessary power and to continue to deliver it to them in a reliable manner as their needs grow. Almost 8 billion kilowatt-hours of electric power were distributed over the lines of REA borrowers in 1950. That was nearly four times as much as in 1945 and 20 times the amount used in 1940. This tremendous expansion leads us into a consideration of the efforts that we have made to help the cooperatives obtain the most satisfactory sources of power and the policy we have followed in making loans for generating and transmission facilities.

In the making of generating and transmission loans, REA has followed one policy ever since the agency was established. A loan is made for this purpose only if it is necessary to insure an adequate and reliable power supply or if it will lower the cost of power delivered to the borrowers. In most of the generation-transmission loans we have made to date-practically all of them, I should say-not one but both of these objectives have been obtained.

When a cooperative or a group of cooperatives requests a loan for the installation of generating and transmission facilities, we ask them to estimate their wholesale power requirements for a number of years ahead. We ask them to ascertain the ability and the willingness of the suppliers in their area to furnish the needed service and the price at which the suppliers will furnish such service. We ask them to give us the estimates made by their own private engineers of the costs of

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generating and transmitting their own power. All this information is very carefully analyzed by our own staff. Our decision regarding the loan depends solely upon whether or not the borrowers' proposed facilities will give their consumers the most satisfactory service at the lowest cost.

We recognize that there are many opportunities for honest disagreement in evaluating the different factors involved in determining whether or not to make one of these loans. We have withheld approval of numerous generation-transmission loan applications, and the cooperative officials are often critical of us because they consider our policy too restrictive. They think that we do not give sufficient consideration to the security that farmers have when they can own, control, and enlarge their own wholesale power facilities. They point out that it is the same kind of security farmers have when they own their own farming equipment, so that they can plant or harvest their crops or make hay at the proper time and in the proper manner.

Here is another criticism of our policy often made by our borrowers. Frequently, when a generation-transmission loan is proposed, the power company in the area comes forward with a wholesale rate proposal which is much lower than its current rate. The borrowers believe that we do not give sufficient weight to the fact that such spectacular rate reductions are merely an effort by the utility company to prevent the farmers from serving themselves and are not backed up by a desire or even the ability to furnish power at the low rate proposed. The borrowers point out that in such cases the power contracts contain clauses which relieve the power company of its obligation to furnish service at the rate proposed if the State regulatory body finds that the rate is discriminatory as between farmers and other classes of users.

On the other hand, the power companies criticize us by saying we are financing the installation of duplicating facilities. They claim our generation and transmission loans are a needless waste of public funds. They also intimate that loaning money to farmers to install their own generation and transmission facilities is a step toward state socialism. Despite the fact that the cooperatives are buying several million dollars more power from them each year, they claim that the REA program is putting the power companies out of business. Fundamentally, they seem to feel that they should have the exclusive right to generate the power for our borrowers and transmit it to them. rather than permitting the borrowers to serve themselves, even if it is to the borrowers' advantage to serve themselves.

You can see that we never make a decision on a generation and transmission loan but what somebody feels that he has a justification for criticizing our decision. Looking back over the decisions that we have made, and viewing them in the light of subsequent events, I feel we are more subject to criticism because we have been too conservative rather than too liberal in evaluating advantages to our borrowers through owning their own wholesale power facilities. I do not believe that the criticisms by the power companies of our generation and transmission loans are valid or just. Under our generation and transmission policy we have been able to pursue the goal of complete area coverage without endangering the Government's security. We have improved service and lowered costs, thus helping to insure the financial soundness of our borrowers.