MARCH 1 (legislative day, FEBRUARY 21). 1949.-Ordered to be printed

Mr. ANDERSON, from the Committee on Agriculture and Forestry, submitted the following

REPORT

[To accompany H. R. 2101]

The Committee on Agriculture and Forestry, to whom was referred the bill (H. R. 2101) to authorize the Regional Agricultural Credit Corporation of Washington, D. C., to make certain disaster or emergency loans, and for other purposes, having considered same, report thereon with a recommendation that it do pass with amendments.

STATEMENT

The committee amendment to the body of the bill is the language of S. 913, as amended, which was introduced in the Senate on February 10, 1949. A section-by-section analysis of a proposed bill identical to S. 913 in its original form is contained in a letter to the Honorable Harold D. Cooley, chairman of the House Committee on Agriculture, by Secretary of Agriculture Charles F. Brannan, a copy of which is attached below. However, in substituting the language of S. 913 for the House measure, the committee has omitted any reference to loans in cases of economic emergencies. While a production disaster is certainly an economic emergency, it is not intended to grant authority, in this instance, to make loans in emergencies caused by a drop in prices or other conditions. Thus, the committee believes the authority to make loans under this act should be restricted to natural disasters of widespread effect on agricultural production.

As stated by the House Committee on Agriculture in its report to the House on H. R. 2101 (H. Rept. 142), large sections of the country have suffered from the severest winter experienced in many years. Livestock and possible crop losses will undoubtedly create economic disorders yet to be felt by the entire country. The purpose of the pending legislation is twofold: First, to provide credit on such a scale as to guarantee production which otherwise would be lost and thus result in possible critical shortages in the Nation's food supply; and,

S. Repts., 81-1, vol. 1-67

second, to provide credit for those farmers and stockmen who because of their recent start in agricultural production or other circumstances, do not have the financial reserves or credit standing to finance themselves in getting back into production.

The committee believes that in adopting this program, it is following a general policy of helping prevent economic emergencies on a national scale caused by natural disasters affecting agricultural production. Therefore, it believes that caution should be taken in providing financial assistance which will be used not only in the present crisis in the West but in future storm catastrophes. Any program contemplating such continued operations must be administered as efficiently as possible and every care should be taken that the loans are made only in those cases whose circumstances correspond to the conditions prescribed in the law.

The bill H. R. 2101 would authorize the Regional Agricultural Credit Corporation to make disaster loans. This Corporation has been in the process of liquidation for a number of years. In order to carry out the program contemplated in the bill, the Corporation would have to expand greatly, thus incurring considerable administrative expense. It will be noted in Secretary Brannan's letter below, the Department of Agriculture estimates a fund of $750,000 would be needed for these expenses alone.

The committee amendment would abolish the Regional Agricultural Credit Corporation and transfer its functions and authority to the Secretary of Agriculture. Your committee is of the opinion that the Secretary, under the terms of the amendment, will be able to carry out the program through existing facilities of the Farm Credit Administration, the Farmers Home Administration, or other departmental agencies with less cost and with better control and scrutiny of these loans. It is felt that administration of the program under these conditions will result in a sounder, more economical loan program; therefore, the committee urges favorable action on the bill as amended. A copy of the letter addressed to the chairman of the House Committee on Agriculture by the Secretary of Agriculture, the Honorable Charles F. Brannan, with respect to this legislation under date of February 9, 1949, is attached hereto and made a part of said report: FEBRUARY 9, 1949.

Hon. HAROLD D. COOLEY,

Chairman, Committee on Agriculture,

House of Representatives.

DEAR MR. COOLEY: This is in response to your letter of February 5, 1949, requesting a report on House Joint Resolution 114, a joint resolution to permit the Regional Agricultural Credit Corporation of Washington, D. C., to make certain disaster loans, and for other purposes.

The joint resolution would empower the Secretary of Agriculture to authorize the Regional Agricultural Credit Corporation of Washington, D. C., to enter any area or region where the forces of nature have caused an agricultural production disaster and make loans or advances to farmers and stockmen in conformity with the provisions of section 201 (o) of the Emergency Relief and Construction Act of 1932, as amended (12 U. S. C. 1148); and it would authorize the Corporation to utilize, from the revolving fund created by section 84 of the Farm Credit Act of 1933 (12 U. S. C. 1148a), such sums as may be necessary to make such loans or advances and not to exceed $250,000 for administrative expenses of the Corporation and the Farm Credit Administration in connection with such loans or advances.

This joint resolution would enable the Secretary of Agriculture to make available, through the Regional Agricultural Credit Corporation, loans to farmers and

stockmen in areas stricken by natural disaster. The joint resolution was designed primarily to make credit available to farmers and stockmen in the western range area where the recent snowstorms and extreme cold have caused widespread disaster to livestock and farm production; and similarly to make credit available to farmers in California and other areas of the Southwest where the recent freeze caused great damage to fruit and other crops. It is anticipated that many farmers and stockmen in these areas have suffered such heavy losses that they will be unable to obtain the credit they will need for rehabilitation and operating purposes from the normal credit sources. Under the joint resolution the emergency credit needed by such farmers and stockmen could be supplied by the Regional Agricultural Credit Corporation.

The Regional Agricultural Credit Corporation has basic authority under its organic law (sec. 201 (c) of the Emergency Relief and Construction Act of 1932, as amended, title 12, U. S. C. 1148) to make loans and advances to farmers and stockmen for any agricultural purpose, under rules and regulations prescribed by the Farm Credit Administration. In recent years, however, the authority of the Corporation to make loans has been curtailed by limitations in the annual Department of Agriculture appropriation acts.

Thus, section 2 of the Department of Agriculture Appropriation Act for the current fiscal year (Public Law 712, 80th Cong.) provides in effect that the Corporation may make loans only (1) for the purpose of protecting the Secretary for or assisting in the collection of loans previously made, or (2) for use in and confined to a specific area or region in which the Secretary of Agriculture shall have found that such loans for specified agricultural purposes and for limited time periods are necessary because of economic emergencies or production disasters. The same section requires that all such loans shall carry the full personal liability of the borrower, shall be secured by crops or livestock and such additional collateral as is deemed necessary to afford reasonable assurance of repayment, and shall be accompanied by a certificate of refusal of the loan by a local bank or production credit association.

Section 2 of the Department of Agriculture Appropriation Act contains a further proviso under which the Secretary of Agriculture may authorize the Regional Agricultural Credit Corporation to reenter an area or region where an economic emergency or production disaster has occurred and make loans therein under the provisions of section 201 (e) of the Emergency Relief and Construction Act of 1932. The congressional proceedings indicate that this proviso was designed to enable the Corporation to establish a new loan program, if found necessary, in the Wenatchee, Wash., area where the Corporation had conducted a special loan program during the period 1941-46 for the rehabilitation of the fruitgrowing industry in that area.

In addition, the Government Corporations Appropriation Act, 1949 (Public Law 860, 80th Cong.), authorized the Regional Agricultural Credit Corporation to undertake a special program of loans to fur farmers during a period of 5 years, the aggregate principal amount of which loans is not to exceed $4,000,000 outstanding at any one time.

The Regional Agricultural Credit Corporation now has about $1,200,000 in current funds which can be supplemented by drawing on the revolving fund created by section 84 of the Farm Credit Act of 1933 (12 U. S. C. 1148a). The total sum in the revolving fund is $44,400,000, but the amount available to the Corporation from the revolving fund is presently limited to $25,000,000 by the Government Corporations Appropriation Act, 1949.

The amount of the Corporation's funds available for administrative expenses is limited by the Government Corporations Appropriation Act, 1949, to $146,800, plus $25,000 for the fur farm loan program. Of the $146,800, the sum of $100,000 is earmarked for administration of the loan program that might be established in the Wenatchee, Wash., area, and the remainder of $46,800 was authorized for use in connection with the liquidation of outstanding loans made under previous programs. Thus, any new loan program under the joint resolution would require action by Congress authorizing the use of additional funds for administrative expenses.

The joint resolution (H. J. Res. 114), would authorize the use of not to exceed $250,000 for administrative expenses in connection with loan programs thereunder. We believe this sum would be inadequate to carry out the loan programs contemplated. It is, of course, impossible at this time to estimate the number and volume of loans that may be needed. However, the stricken areas extend over some 14 States in five farm-credit districts. It is anticipated that in order to carry out the loan program effectively and expeditiously, the Regional Agricultural Credit Corporation would need to have a district office in each of the

farm-credit districts serving the affected area. Each district office would be operated under the direction of the farm-credit district general agent and would require a staff of several well-qualified employees to pass on loan applications, prepare loan documents, and close loans. A number of per diem employees familiar with local conditions would be needed in each State to take applications and make inspections, and considerable travel would be involved. The disbursement and accounting functions would be performed in the Washington office and would necessitate additional funds. The best estimate we can make at this time is that $750,000 would be needed for administrative expenses for the period March 1 to June 30, 1949. Accordingly, if this measure should be enacted, we recommend that the sum of $250,000 authorized in the joint resolution for administrative expenses be increased to $750,000.

While we are wholly sympathetic toward the objectives of House Joint Resolution 114, we recommend that it be not enacted. Instead we submit herewith for your favorable consideration proposed legislation which, while accomplishing the objectives of House Joint Resolution 114, would provide desirable legislation permitting the Secretary of Agriculture to meet emergency credit needs of farmers and stockmen throughout the country in cases of economic emergencies and production disasters.

In his message on the Federal budget for the fiscal year 1950 the President said (p. m51 of the printed budget) as follows:

"In order to simplify the Government-lending operations which assist agriculture, I recommend that the Regional Agricultural Credit Corporation be abolished and that its functions and the capital-stock revolving fund be transferred to the Secretary of Agriculture. Under the proposed change, the Secretary could direct existing farm-credit agencies to draw upon the revolving fund to extend emergency credit to farmers in the event of floods, droughts, or other natural disasters."

Section 1 (a) would transfer to the Secretary of Agriculture all the functions of the Regional Agricultural Credit Corporation of Washington, D. C. including loans to bona fide fur farmers as provided in title II of the Government Corporations Appropriations Act, 1949, loans occasioned by reentry into an area or region where an economic emergency or production disaster has occurred as provided for in the proviso in section 2 of the Department of Agriculture Appropriation Act, 1949, and the liquidation of all other loans heretofore made by the Corporation and all assets, contracts, property, claims, rights, and liabilities relating thereto. Section 1 (b) would transfer to the Secretary of Agriculture the functions of the Farm Credit Administration and the Governor thereof with respect to the Corporation.

Section 1 (c) would dissolve the Regional Agricultural Credit Corporation of Washington, D. C., and would direct the Secretary of the Treasury to cancel the outstanding certificates of stock of the Corporation. Under section 1 (d) all assets, funds, contracts, property, claims and rights, all records and all liabilities of the Corporation would be transferred to the Secretary. This subsection would also provide that the revolving fund created by section 64 of the Farm Credit Act of 1933, as amended, would be available to the Secretary for the performance of the functions specified in paragraphs (a) (1), (2), and (3) of this section including administrative expenses in connection therewith, provided that for the fiscal year 1949, the limitations on the administrative expenses of the Corporation with respect to the said functions shall be applicable to the Secretary. This means merely that the limitations on the Corporation's administrative expenses for the fiscal year 1949 as set forth in Government Corporations Appropriation Act, 1949, for loans to fur farmers for reentry into any area or region and for liquidation of outstanding loans shall be controlling on the Secretary in carrying out these functions.

Section 1 (e) of the proposed bill would provide that all personnel of the Corporation (excluding personnel of the Farm Credit Administration serving as directors or officers of the Corporation) and such of the personnel as are engaged principally in the work of the Corporation shall be transferred to the offices or agencies designated by the Secretary to carry out the functions transferred to the extent that he determines such personnel are qualified and necessary therefor. Under section 1 (f) the Secretary would be authorized to carry out the functions transferred and the authority conferred upon him by the proposed bill through such offices or agencies in or under the Department of Agriculture as he may designate.

Section 2 (a) of the proposed bill would authorize the Secretary to make loans to farmers and stockmen for any agricultural purpose in any area or region where

he finds that an economic emergency or a production disaster has caused a need for agricultural credit not readily available from other sources. These loans would be at such rates of interest and on such terms and conditions as the Secretary shall prescribe. This section would also provide that the Secretary may utilize the revolving fund created by section 84 of the Farm Credit Act of 1933, as amended, for making such loans and for administrative expenses in connection with such loans. Section 2 (b) would provide that the funds transferred to the Secretary under section 1 and all sums received by the Secretary from operations under the proposed bill shall be added to and become a part of the revolving fund and the revolving fund as so constituted shall remain available to the Secretary only for the purpose specified in sections 1 (d) and 2 (a) of the proposed bill.

Section 3 (a) of the proposed bill would provide that no suit or other judicial proceeding instituted by or against the Corporation shall abate by reason of the bill but that the Secretary may be substituted as a party in place of the Corporation upon motion or petition filed within 6 months after the effective date. Section 3 (b) merely provides for the effective date 10 days after enactment.

As stated earlier in this report, the Corporation now has current funds amounting to about $1,200,000 which would be transferred, and the revolving fund which would also be made available to the Secretary amounts to $44,400,000. While it is not possible at this time to estimate the volume of loans that would be required to meet the credit needs of farmers and stockmen who have suffered production losses from recent and current storms and from other natural disasters, it is possible that the sums made available to the Secretary under this proposed legislation would be sufficient to supply credit not available from other sources.

We urge early and favorable consideration of the proposed legislation by your committee and by both Houses of Congress in order that this Department may be enabled to relieve the financial distress of farmers and ranchers resulting from the disastrous storms which have sorely affected the western part of our country.

Sincerely,

CHARLES F. BRANNAN, Secretary.

A BILL To abolish the Regional Agricultural Credit Corporation of Washington, D. C., and transfer its functions to the Secretary of Agriculture, to authorize the Secretary of Agriculture to make certain emergency and disaster loans, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. (a) There are hereby transferred to the Secretary of Agriculture (hereinafter referred to as the Secretary) all the functions of the Regional Agricultural Credit Corporation of Washington, D. C., including but not limited to functions with respect to

(1) Loans to bona fide fur farmers as provided for in the last proviso in the paragraph headed "Regional Agricultural Credit Corporation of Washington, D. C." in title II of the Government Corporations Appropriation Act, 1949 (Public Law 860, 80th Congress).

(2) Loans under authorization by the Secretary for the Regional Agricultural Credit Corporation of Washington, D. C., to reenter an area or region where an economic emergency or production disaster has occurred, as provided for in the proviso in section 2 of the Department of Agriculture Appropriation Act, 1949 (Public Law 712, 80th Congress), and

(3) The liquidation of all other loans heretofore made by the Regional Agricultural Credit Corporation of Washington, D. C., and of all assets, contracts, property, claims, rights, and liabilities relating thereto.

(b) There are hereby transferred to the Secretary the functions of the Farm Credit Administration and the Governor thereof with respect to the Regional Agricultural Credit Corporation of Washington, D. C.

(c) The Regional Agricultural Credit Corporation of Washington, D. C., is hereby dissolved. The Secretary of the Treasury shall cancel the outstanding certificates of stock of the Corporation.

(d) All assets, funds, contracts, property, claims, and rights, all records, and all liabilities of the Corporation are hereby transferred to the Secretary. The revolving fund created by section 54 of the Farm Credit Act of 1933, as amended (12 U. S. C. 1148a), shall be available to the Secretary for the performance of the functions specified in paragraphs (a) (1), (2), and (3) of the section, including administrative expenses in connection therewith, provided that for the fiscal year 1949 the limitations on the administrative expenses of the Corporation with respect to the said functions shall be applicable to the Secretary.