Mr. WHITTEN. We turn then to the Rural Electrification Administration, and we are glad to have with us Mr. Wickard and his associates. I understand there is some revision in your figures, and I would like to ask that pages 223, 224, 225, 226, 227, and 228 of volume II of the justifications, as corrected, be inserted in the record at this point. (The material referred to follows:) PURPOSE STATEMENT The Rural Electrification Administration was established by Executive Order 7037 of May 11, 1935, to make loans for the extension of central station electric service to unserved rural people. The agency was continued by the Rural Electrification Act approved May 20, 1936, and became a part of the Department of Agriculture, effective July 1, 1939, under Reorganization Plan II. By June 30, 1950, REA borrowers had extended central station electric service to 3,251,787 farms and other rural consumers. As of the same date, the annual electrified farm survey indicated that REA borrowers, commercial power companies, municipalities, and other distributors had extended service to 5,053,676 or 86.3 percent of all farms in the United States. The remaining farms and the rural nonfarm establishments that are still unserved represent an increasingly difficult job ahead. In addition, the provision of adequate low-cost power supplies and technical and operating guidance to more than 1,000 borrowers involves numerous expanding responsibilities. Loans for construction of electric facilities are self-liquidating within a period of not to exceed 35 years, and they bear interest at the rate of 2 percent. Loans for consumer facilities are also at 2 percent interest but for shorter periods. The principal borrowers of this Administration are cooperative associations formed solely for the purpose of making electricity available in rural areas. The Administration gives technical review and approval to construction plans and approves the completed construction of the electric systems. Selective guidance and assistance on business management matters are rendered to borrowers where necessary. Periodic audits are made of the records of all borrowers except those which have attained a certain financial status. These latter are required to engage public accountants for this purpose. On October 28, 1949, the Administration was authorized to make loans for the purpose of the improvement and expansion of telephone facilities in rural areas. These loans are authorized to be made on the same terms as the electrification loans. When the telephone program was initiated, only about 40 percent of the farms in the United States had telephone service, and much of this service was of very unsatisfactory quality. During the 6 months' period after application forms were available, REA received a total of 486 applications, principally from existing companies, representing 41 States and Alaska, in the amount of $57,458,110. These would provide service to an estimated 143,290 new rural subscribers and improve service to 116,144 present rural subscribers. Loan applications in the telephone program are received from many types of organizations operating under all conditions, ranging from family enterprises to sizable business corporations. Analysis of an application usually requires field appraisal to determine the physical value of the existing plant, and an analysis of the operating efficiency of the system, past and prospective. Experience indicates that appraisal of telephone loan applications is therefore usually more complex than the appraisal of electrification loan applications. Summary of appropriations, 1951 and estimates, 1952 Due to carry-over balances to be utilized in 1951 and 1952, a $281,000,000 loan program is planned in 1951 and a $220,000,000 loan program is planned in 1952; therefore there will be a decrease of only $64,000,000 on an available funds basis in the loan program for 1952. 3 Due to carry-over balances to be utilized in 1951 ani 1952, a $10,000,000 loan program is planned in 1951 and a $23.079.500 loan program is planned in 1952; therefore there will be a decrease of $16,926,500 on an available funds basis in the loan program for 1952, The Rural Electrification Administration has no field offices. Relations with borrowers are maintained primarily through regional offices in Washington and a staff of full-time field employees working directly with the borrowers. The Rural Electrification Administration on November 30, 1950, had 1,312 fulltime employees, 964 of whom were in Washington departmental service and the balance in the field service. Appropriation act, 1951. Salaries and expenses Reduction pursuant to sec. 1214 Activities transferred in 1952 estimates to "Salaries and expenses, Base for 1952. Budget estimate, 1952 Increase.. $8,550,000 128, 250 -400 8, 421, 350 8, 500, 000 +78, 650 Summary of increases and decreases, 1952 (on basis of planned loan program) Electrification program: Loans: Reduction in level of loan program__ Decrease in loan analysis and system development and For management advisory activities in order to give For loan auditing, collecting, and accounting to provide Telephone program: Loans: Reduction in level of loan program.. Decrease in loan analysis and system development made A net increase resulting from a decrease of $32,733 for For loan auditing, collecting and accounting services for -$64, 000, 000 - 188, 292 +83, 509 +87, 233 -4, 200 -16, 926, 500 -202, 562 +117, 267 +77, 091 +109, 404 -800 Project statement (on basis of planned loan program) REVISED STATUS OF LOAN PROGRAM Mr. ROBERTS. Mr. Chairman, if it is agreeable with you I would like to explain the amendment just referred to. I have furnished to each member of the committee a small table headed "Revised status of loan program." The amendment comes about through an adjustment which has been made in the current year's program, and which has just been agreed to by the Budget Bureau. They advised us by telephone this morning they had approved a proposal for a modification in the amount of money set up under the section 1214 which represents a reduction in loan funds for the electrification and telephone loan programs. When the Budget Bureau set up $85,500,000 in the section 1214 reserve against the REA loan authorizations, the Department had an understanding with the Budget Bureau that the distribution of the total reserve against loan funds might be adjusted, during the course of the year, between the programs as the needs of anyone particular program became more apparent. That agreement was that the adjustment might be made within the total of the reserve; the total amount of the reserve was not affected. In the column headed "Fiscal year 1951, original basis," you will notice the section 1214 reserve set up against the electrification program was $66,426,500. Down in the same column, under "Telephone program," the section 1214 reserve was set up at $19,073,500. About a week ago we had a discussion with Mr. Wickard and his staff, indicating that if that reserve were to remain as the Bureau of the Budget had originally established it, the REA would very probably run out of loan funds for the telephone program before the end of the current year, and that the carry-over of $5,000,000 which, together with the new authorization carried in this bill of $9,000,000, or a total of $14,000,000, would be wholly inadequate to take care of the most urgent needs in 1952. Accordingly, we requested the Bureau of the Budget to make the adjustment shown in the revised column for the fiscal year 1951. Under the amendment, the section 1214 reserve is established to the extent of $85,500,000 against the electrification program, and the reserve against the telephone program is released. It has the effect of increasing the telephone program in the current fiscal year from $30,000,000 to $40,000,000, and of reducing the amounts available for the electrification loan program, outside the contingent authorization, from $300,000,000 to $284,000,000. It has no effect on the amount of funds available for the electrification program in 1952. You will observe that in both columns the loan figure is $220,000,000. It does increase the amount available in 1952 for the telephone program from a total of $14,000,000, made up of $9,000,000 of new authorization and $5,000,000 of carry-over, to a total of $23,000,000, made up of $9,000,000 new authorization and a carry-over of $14,000,000. We have also provided the committee with revised pages 225 through 228, inclusive, of the justification notes and I would suggest that these be used in the discussion. Again, the only changes that are made in these pages are the amounts affecting the two loan programs. No changes have been made in the administrative expense appropriation or in the distribution of increases and decreases in that appropriation. Mr. WHITTEN. Mr. Wickard, we will be glad to have your general statement now. GENERAL STATEMENT Mr. WICKARD. Mr. Chairman and members of the committee, I do not have a formal statement, but I do have some statistical notes here which I would like to discuss with the committee and which will give a little more background and a little different kind of information. than what you now have. I would like to say as we go through these notes that I would be happy to have any comments or questions, or criticisms, which the members of the committee may wish to make. You will note that the amount of applications on hand and in preparation is practically the same as it was a year ago, when we appeared before the committee. The applications being received per month are a little higher at the present time than they were a year ago. The total amount of loans on hand or in preparation now is $352,396,500. |