which he said they had more concern about availability of dollars than the interest rate.

Here is one from Dairyland Co-op, one of the biggest in the United States, in which he says practically the same thing.

Another here from the Plains Electric Cooperative in New Mexico; the same thing.

A telegram from Andy Freeman, the same thing; another one from Cass County Electric in North Dakota. They say the same thing. Their main concern is the availability of money.

I would say this, that in the REA programs in our own State of Minnesota, years ago, we passed-and John Zwach was one of the authors-one of the finest tax bills that we have in the United States as far as rural electric power is concerned. We introduced a bill that was so good that we felt there was no chance to pass it. But at the same time, we introduced a bill that would give the power companies some tax advantage on rural distribution, feeling that what we were interested in was bringing power to the farmer. In our State of Minnesota, ever since that time, we have had the finest working relationship with utilities, and we started our interconnection system years ago. The power business cannot work without interconnection between private, public, and municipal companies, we started years ago on a partnership operation interconnection and it has reduced costs; it has created an attitude that is right. In the generation field most of these cooperatives are saying, "We are willing to pay the cost of money," and I would say competitive enterprises would have no right to complain under those circumstances, because that is what they pay.

I also want to say that if we are forced to go way down to 2 percent, generally speaking, on generation, we are on much too thin ice as far as feasibility is concerned and I am sure that the chairman is as aware of that as I am.

So I think the whole problem hinges on these considerations, that No. 1, we do not need the impounded funds if interest payments are included, and No. 2, if the rural development fund is used and if it is properly earmarked, we know we have available funds, I think the committee should support such a change in our bill.

As to criteria, I would lean toward giving the Administrator the authority based on economic factors so that he has a little elbow room and would not be panned by a committee for whatever decision he might make.

Mr. Chairman, I rambled around a little bit, but I did not have time to write a speech. If there are any questions, I would be glad to answer them.

The CHAIRMAN. The Chair is going to ask for unanimous consent to question out of order.

There is no objection. The Chair wants to make a few comments, I think, that will help in consideration of this matter.

The so-called Poage-Nelsen substitute has, as Mr. Nelsen pointed out, never been absolutely firm nor something that was handed down from Mount Sinai which could not be changed in any way. Nor has there been any complete agreement on the part of all parties involved. As Mr. Nelsen pointed out, he and I have worked a long time, and I want to thank him for the work he has put into this, and frankly, there have not been many people working hard on it. Frankly, some of the

people talking about compromising with us, as Mr. Nelsen has pointed out, obviously had not studied their lessons very well.

There are two or three matters of Mr. Nelsen's viewpoint that I cannot accept. I do not want to be in the position of condemning or criticizing, but I do not want this committee to feel that he is speaking for me, and I know he did not try to speak the mind of anyone other than himself. But I have tried to make it clear from the very beginning on two or three points.

The first point is that I am not going to be a party to saying that generation and transmission cooperatives cannot under any circumstances have the lower rates mentioned in the proposal. I know Mr. Nelsen feels the same way, but I do know that one of the proposals that I think he is referring to does say it in those words and I am not going to be a party to that. I have said that from the very beginning. I am not going to be a party to taking our rural electric moneys and putting them in somebody else's fund, such as the Rural Development Insurance Fund, commingling them there to an extent that nobody knows whether it is rural development or whether it is rural electrification. I am not going to have the tail wagging the dog. I would prevent it.

Now, in the course of our discussion, this was discussed with representatives of the Administration, whom we thought were empowered to speak, who suggested that you do not need the appropriated funds— that is, the money that Congress has herefore appropriated for fiscal 1973-you do not need to put that into any fund, because we are going to give you not only the principal repayments which Poage-Nelsen asks for, but also, we are going to give you the interest that comes in and that runs, over a period of years, into $6 billion. That is lots of money. But as one has said, why, the Bureau of Budget is willing to trade $1 today for $10 in the future. And of course, we are willing to accept it. But we raised the question at that time, how do you get this money available to take care of immediate needs? And for my part, I suggested that I am perfectly willing to go along with this if you provide the money that we need now, but we have got to keep the funds separated and we have got to have money available

now.

Now, I do not think that the proposal to put all of our moneys into a rural development fund is sound-we will lose the identity of the rural electric and telephone moneys if we do that.

If you keep the electric and telephone moneys separate as was just suggested and do not have any provision for transferring from one fund to the other, you do not have any cash. And we suggested, frankly, that the Secretary of Agriculture write the wording. We think if you can write that wording so that you can keep both the cash and the identity of the funds, fine. But that kind of language hasn't been forthcoming. It is not done in this draft that some of you have seen. I cannot, therefore, go along with the idea that I would be willing to have a commingling of these funds, nor can I go along with the idea that I will set up two funds and not give rural electrification immediate needed moneys. I think, however, that maybe it can be done.

But, it has not been done and nobody has yet brought up a draft that does it. And I cannot accept a proposal that does not meet those requirements.

Now, as to the criteria, I think there is some unclear thinking there. We took the criteria that were in the Teague bill. We took the criteria that our ranking minority member suggested, which were those borrowers that had less than three subscribers per mile and those that had less than $600 per mile revenues. But we find that nobody had apparently ever taken the trouble to find out what that does. When we finally found out, when we finally got the figures on that-I do not believe I have them here-but it appears that some 47 percent of the cooperatives would be getting 2-percent money. That is what it does. Now, the Administration has suggested that they wanted to keep this figure very low. That is far more than we asked for. Mr. Nelsen and I started our suggesting that such a fund might have a hundred million dollars for this purpose. It was pointed out that if you take any figure of that kind and freeze it, the Administrator has no legal way he can operate efficiently and we find out that is true. We suggested a corridor that would have given the Administrator the authority to provide not less than $80 million for this purpose or not more than $120 million, which gave the Administrator $40 million worth of discretion. We felt that he should have some discretion, but on the other hand, and I think one of the differences that we detect right now, it has been my feeling and it still is my feeling, and I want every member of this committee to understand it, that I do not propose to be a party to giving the Administrator, Secretary, or the Bureau of the Budget-because the Administrator and the Secretary have to be subject to the Bureau of the Budget-I do not propose to give anybody the discretion to say that just in my judgment, this group will have and this group will not have 2-percent money. I have felt that we must use a criterion, something written out, something that definitely requires that those who meet this criterion of need are going to get money on those terms. Because we have seem within the last few weeks, we have seen where the Congress said, Mr. Secretary, you have the right to make these loans and he says, yes, I have the right, but I do not have to and I am not going to. And they are not doing it. And simply to repeat that kind of language would, in my judgment, be to defeat everything that we are attempting to do. I do not know any reason why the Secretary should make loans in the future if we simply say that he may, any more than he should have in the past.

So, it seems to me, I cannot go along with those items. I certainly find no fault with my colleague from Minnesota in feeling that he could accept these things. I just want the members to know that there is no understanding that I am going to accept and ask you to accept proposals that, in my judgment, would not achieve anything. I certainly am ready to follow the idea, along with my colleague from Minnesota and many others, of suggesting that we will give the Administration the opportunity to make the budgetary saving that they would like to make; it can be done. It does not save the American taxpayer anything, but the budgetary saving can be made by substituting insured loans for direct Treasury loans. We have pretty well done that throughout the Farmers Home Administration. We have not found that it hurts anybody to do it. And as long as it hurts no one and as long as it gives a better appearance to the budget, I can see no reason for not giving that better appearance. I think our whole program will be better off if we can present a better appearance to the

public. I think that the REA borrowers will be better off if they can present a better appearance to the public. I think that we can do this and I think that is the great crux of what we have been told that the Administration wanted to do. And I am willing to help do it. And I think many others are willing to help do it. I think that is the base, that is the fundamental thing that we have been trying to do.

Mr. NELSON. Mr. Chairman?

The CHAIRMAN. Yes, sir.

Mr. NELSON. Mr. Chairman, I just want to comment that as far as the rural development fund is concerned, you and I are in total agreement. If the REA program is to funnel money into this pool, the REA funds must be identified. I think one of our problems that we have had all the way through this negotiation is that we have our counsel writing a bill, they have theirs, and then we have a wide difference of opinion as to whether or not the words mean what we are trying to say. I think that maybe we ought to say, in farmer language, now, here is what we want to do, period, and draft the language accordingly.

Now, I think the identification of the fund can be arranged and can be drafted, and I think certainly the use of impounded funds is no problem.

The criteria for loans at 2 percent are very difficult to write and I would say that I do not disagree with the chairman at all that some 2-percent money has to be made available in the generation field under certain circumstances, and he agrees with that. Again, we get into what we mean and the words that we use toward attaining an objective, I would say that the Administrator should have authority to do exactly that. But as a matter of policy, I think we all agree that wherever possible, he should move toward a higher rate. That will be done under the rural development act, and it would be done under the bill that Bob and I have drafted.

I want to be sure that the chairman and I are not interpreting our words to mean something that they do not mean, because I think we are in total agreement, Mr. Chairman, really basically, all the way acrossthe-board.

I want to say this, that I will use every influence I have with the administration if I have any at all-sometimes I wonder—but if I have any, I will use it to try to get those three things ironed out. I hope this committee will use the vehicle of the Poage-Nelsen amendment, not that I have the pride of authorship at all, but it is something that we have been talking about and I would like to do my best to get this thing really going.

I think it is tragic if we miss our opportunity. It is tragic when wẹ find there are those who wish for an issue rather than an answer and that is in evidence. It always has been in this program. I resent having my REA program-I was part of the organization group that built the system that serves my farm, I was vice president of my own association and have been in the program a long time and I know all about it-politically exploited and it has been. I would like to see this thing get on the road toward a solid base in the future.

I sometimes think, Bob, you and I had better write the language, because the attorneys cannot agree about what the other one means in his words and God bless both of them, they have done a good job. Mr. O'Neal, here, has worked hard and so have Hyde Murray and

Mr. Knebel in the Department of Agriculture. But to get it down so that it is acceptable language is not easy to do. I admit that, and it keeps us all stumped a little bit as we go down the road.

Are there any other questions, Mr. Chairman?

The CHAIRMAN. Thank you, Mr. Nelsen. To complete the thought, and the Chair feels it will expedite better understanding of the situation, I am going to yield to Mr. Teague.

Mr. TEAGUE. Thank you, Mr. Chairman.

Inasmuch as you mentioned my name, I made that criteria suggestion rather hastily and I confess without sufficient research. It kind of came off the top of my pointed head, I am afraid. In retrospect, I think it was overly generous, but I do remind the chairman of, at the time, his comment that I was trying to gut the bill. Anything but.

The CHAIRMAN. You did not say that on the formula, you said it on the bill. The formula was generous.

Thank you so much, Mr. Nelsen. You are familiar with our practice. We hope you can be with us. We know it is possible you must be elsewhere, but we hope you can be with us to hear our next witness. Mr. NELSEN. I will, thank you.

The CHAIRMAN. Our next witness is Mr. Robert D. Partridge, executive vice president, National Rural Electric Cooperative Association. We are glad to have you with us, glad to hear from you. Mr. Partridge will have his associates with him. We will be glad to hear from them.

STATEMENT OF ROBERT D. PARTRIDGE, EXECUTIVE VICE PRESIDENT, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, WASHINGTON, D.C., ACCOMPANIED BY CHARLES E. WYCKOFF, PRESIDENT OF NRECA, PIKETON, OHIO; JOHN DOLINGER, VICE PRESIDENT OF NRECA, CLARKSVILLE, TENN.; RICHARD A. DELL, DIRECTOR, LEGISLATION AND COMMUNICATIONS DEPARTMENT, NRECA; AND CHARLES A. ROBINSON, STAFF COUNSEL, NRECA Mr. PARTRIDGE. Thank you, Mr. Chairman, members of the committee. My name, for the record, is Robert D. Partridge. I am executive vice president and general manager of the National Rural Electric Cooperative Association. NRECA, as you know, is the national service association of nearly 1,000 rural electric systems which serve some 25 million consumers in 46 States.

I have with me on my left the president of the National Association, Mr. Charles Wyckoff of Ohio; to my immediate right is the staff counsel of NRECA, Mr. Charles Robinson; the next gentleman to the right is Mr. John Dolinger, the vice president of the association, from the State of Tennessee; and the gentleman at the extreme end of the table, a man well-known, I am sure, to most members of this committee, Mr. Richard Dell, the director of the legislation and communications department of the NRECA.

Here with me today in the back of the room are rural electric leaders from throughout the Nation-officers and other members of the NRECA board of directors, managers of various statewide associations, managers of rural electric systems and others, who have traveled to Washington for these hearings.