This job of completing rural electrification in terms of getting the power to those who do not have it is still a gigantic job in this country. There are still upward of half a million farm homes without electricity in America. That is rather a sad situation. We hear from those

people, and I am sure you do, in areas where that situation exists, who do not have electricity and who want it. Imagine the state of mind they must be in when they are pleading for something most of America has had for half a century and cannot get it. They are frustrated and mad and want electricity. If the unelectrified farm survey is eliminated nobody will be able to say that funds are needed to continue serving unelectrified farms because at the given time there are still a certain number of unelectrified farms in America.

I have before me the REA figures which show that, for instance, in Mississippi on June 30, 1954, 25 percent of the farms were still unelectrified; that in Maine 12 percent of the farms were unelectrified; in Florida, 14 percent; in Arkansas, 15 percent; in Alabama, 12 percent; in Nevada, 31 percent; in Montana, 12 percent; and various other percentages running through the States. Sure, REA cannot tell exactly what the percentage of unelectrified farms is each year, but REA's estimate would be better than nothing. It is REA's estimate or nothing that we can rely on, because, I mention again, the power companies dwell upon and emphasize their general statement that the program is completed. It is far from completed. We do not think this unelectrified farm survey costs much, and we would like to see it left in the law.

That is our statement.

Mr. POAGE. Thank you very much, Mr. Ellis.

If I may, I will recess the committee just a moment.

(Brief recess.)

Mr. POAGE. The committee will come to order and we will now hear from Mr. John Lynn of the American Farm Bureau Federation. STATEMENT OF JOHN C. LYNN, LEGISLATIVE REPRESENTATIVE, AMERICAN FARM BUREAU FEDERATION

Mr. LYNN. My name is John C. Lynn. I am the legislative representative of the American Farm Bureau Federation. In the interest of time I would like to file this brief statement for the record. Mr. POAGE. Without objection it will be included in the record. (The statement referred to is as follows:)

STATEMENT OF JOHN C. LYNN, LEGISLATIVE DIRECTOR, AMERICAN FARM BUREAU FEDERATION

At the most recent annual meeting of the American Farm Bureau Federation the voting delegates of the member State farm bureaus recommended that the formula for allocating REA funds be modernized.

The formula in the present law served a desirable purpose at the time the REA Act was approved. Since a very large percentage of the farms of the United States were not electrified there was need for the use of a formula to insure that all areas of the United States were given comparable consideration.

At the present time, however, about 93 percent of the farms in the United States have electric service. Since the primary need is no longer for developing new distribution systems in areas not served, but rather to heavy up existing systems, the old method of allocating funds on the basis of the number of farms not provided with electric service is no longer a correct measure of need.

In order to provide funds to meet loan requirements in all areas the Congress has found it desirable to appropriate relatively large amounts for contingency funds. The only purpose of these funds was to get around the obsolete formula of the basic legislation. The appropriation of money for these contingency funds distorted the budgetary situation and created quite erroneous impressions as to the actual amount of money provided for REA loans. The elimination of the old formula would contribute to realistic budgetary practice.

We understand that, as a matter of fact it has been the practice of the REA Administrators, and we are sure this has been in accordance with the intent of the Congress, that by one means or another all economic and feasible applications for loans by rural electrification cooperatives would be approved. This being the case it appears clear that no real purpose is accomplished by the retention of the present formula.

For these reasons we respectfully recommend the enactment of S. 153.

It

The present language of S. 153 involves one perhaps unintended change, in that it would strike from section 3 (c) of the act the provision that the Administrator shall make an annual survey of the number of farms in each State not receiving electric service. We would recommend that this provision be retained. would seem to us that it is desirable for the Congress and the public to have current factual data with respect to the extent to which electrification has been accomplished in each State, as the basis for intelligent understanding of the situation. Since the Census Bureau makes estimates of the number of farms electrified at 5-year intervals, it would appear to be a simple and inexpensive statistical operation to project these figures each year.

The opportunity of presenting the viewpoints of the American Farm Bureau Federation on this matter is appreciated.

Mr. LYNN. I will make just one or two brief comments. We support this bill, but we, like the NRECA, feel that the annual survey should be continued. Based on the information we have, the cost for making this survey is very small in relation to the value that it will be to the Congress and to organizations such as ours in trying to keep some idea as to the progress being made in extending rural electricity to the rural areas.

Therefore, we would like to support this bill but would recommend that the committee not strike section 3 (c) of the act, which provides for this annual survey.

We are gratified with the progress that has been made in the extension of electricity to rural areas. We have always supported enthusiastically the REA and will continue to do so.

That concludes my statement, Mr. Chairman.

Mr. POAGE. Thank you very much, Mr. Lynn. Any questions? Mr. HOPE. I understand from your statement it is your impression H. R. 5376 strikes out the provision for the annual survey. I do not understand that to be the fact.

Mr. LYNN. That may be an error on my part. If it leaves it in, then we are very much for the bill.

Mr. POAGE. I think you are referring to the earlier bill.

Mr. LYNN. If that is true we are in full accord with the bill.

Mr. POAGE. It changes (d) and (e)

Mr. HILL. It strikes it out and rewrites it.

Mr. POAGE. It strikes out that portion that related to apportionment of the funds but rewrites the portion that relates to the sections on the estimate of service.

Any further questions of Mr. Lynn? If not, we are very much obliged to you, Mr. Lynn, for the statement.

Mr. MacDonald is here for the National Farmers Union.

STATEMENT OF ANGUS MacDONALD, ASSISTANT LEGISLATIVE REPRESENTATIVE, NATIONAL FARMERS UNION

Mr. MACDONALD. Mr. Chairman and members of the committee, I am Angus MacDonald, assistant legislative representative of the National Farmers Union.

I have a brief prepared statement which I have given Mr. Reid and to save time I will not read the statement.

Mr. POAGE. You would like to insert the statement in the record? Mr. MACDONALD. Please, sir.

Mr. POAGE. Without objection it will be included as a part of the record.

(The statement referred to is as follows:)

STATEMENT OF JAMES G. PATTON, PRESIDENT OF THE NATIONAL FARMERS UNION, IN SUPPORT OF H. R. 4572

Only

Mr. Chairman and members of the committee, we are presenting this statement in support of H. R. 4572, sponsored by Congressman Johnson of Wisconsin. We believe that the formula which requires half of the total funds appropriated for rural electrification in any 1 year to be distributed in proportion to population and unelectrified farms has outlived its usefulness. The job of connecting American farms with central electric service stations is almost completed. About 93 percent of the Nation's farms now enjoy the benefits of electricity. farms in the most sparsely settled and remote areas are unable to get electricity. We wish to pay tribute to the magnificent job which has been accomplished in the last 20 years. When the program started in 1935, only 10 percent of the Nation's farms were electrified. Over the bitter opposition of private power companies loan funds have been secured which enabled millions of farmers to pool their efforts in the distribution of electric power. Although this fact is well known, we do not think it can be mentioned too often that the rural electrification program is self-liquidating and that it actually brings funds into the United States Treasury. Contrary to a recent advertisement in the March 4, 1955, issue of Collier's magazine and March 1955 issue of American magazine, people living in urban areas are not subsidizing the rural electrification program. On the contrary, the rural electrification program has indirectly enabled people living in cities and towns to enjoy a higher standard of living. It has indirectly furnished customers for those selling electrical appliances and thereby has resulted in the employment of hundreds of thousands of workers in the electrical industries. The primary need in the future is a vertical expansion of REA. There are shortages appearing in various areas in the United States. Farmers are running out of power; they need new generators, new transmission lines and other facilities because demand has grown so fast that existing facilities are unable to supply and to transmit energy needed on American farms. Installation of new generating and transmission facilities will necessitate loaning a disproportionate amount of money in areas suffering these shortages. Two notable examples are the States of Colorado and Illinois, which are unable to obtain needed funds for generating and transmission purposes even though Congress has appropriated the money. The formula acts, at the present time, as a bottleneck which prevents vertical expansion. This is the principal reason we are urging it be eliminated by enactment of this legislation.

According to our information, the elimination of this formula under the provisions of this bill will eliminate also the certain statistical work which heretofore has been done by the Rural Electrification Administration. We urge therefore that the bill be amended to provide that the annual survey as to the number of electrified and unelectrified farms be carried on in the future as it has in the past. We do not feel that the census figures are sufficient. It is reported that takers of the census do not reach some remote areas. In any event census figures are from a year to a year and a half late. American farmers should not have to depend on figures of the Edison Electric Institute in regard to unelectrified farms. Since this group is opposed and has always been opposed to the rural electrification program, we feel that it would be a great mistake to take this annual survey out of the hands of the Department of Agriculture.

We urge therefore that the bill be amended in this respect.

Mr. MACDONALD. I will merely say that the National Farmers Union is in complete support of the position taken by the Rural Electrification Administration. I was under the illusion, as was Mr. Lynn, that the bill that this statement is directed to eliminated the survey. I will amend that by saying it is our understanding that H. R. 4572 and H. R. 5376 would continue the survey. Therefore, we are in complete support of these bills.

I believe that is all, Mr. Chairman.

Mr. POAGE. We thank you very much, Mr. MacDonald. Any questions of Mr. MacDonald?

Mr. HOPE. You want the survey continued?

Mr. MACDONALD. Yes.

Mr. HOPE. And you will correct your statement to that effect? Mr. POAGE. I do not believe he mentions that in his statement. Mr. HILL. Yes, he does in the next to the last paragraph.

Mr. HOPE. That will be corrected?

Mr. MACDONALD. Yes.

Mr. POAGE. Thank you very much.

Mr. Newsom was expected to be here for the National Grange, but he was not able to be here and he has submitted a statement. Mr. Newsom has asked us to include in the record a statement by Mr. Halverson, of the National Grange, and without objection that statement will made a part of the record.

(The statement referred to is as follows:)

STATEMENT OF LLOYD C. HALVORSON, THE NATIONAL GRANGE

The National Grange supports the objective of H. R. 5376 and similar bills. Recent experience with the formula set up to allocate REA loan funds to the States shows that it is inadequate and even a hindrance to the present situation. Present experience with the formula is that it gives more than the amount of money which can be profitably used to some States and not enough to other States.

The National Grange has been a strong supporter of the REA program for many years. We think it is very important to recognize the fact that rural electrification needs in the present program can no longer be measured on the basis of unelectrified farms in any given State or area. Allocations of funds to States must take into full account the fact that many of the present REA systems are inadequate for the present uses which farmers are making and will make of electricity.

We believe that enough money should be available for the REA programs so that all worthy projects can be carried out. Because of this we favor eliminating the present formula for the allocation of REA funds to the States based on the degree of unelectrified farms, and instead leaving the allocation up to administrative determination. We are confident that this administrative flexibility will be exercised in the best interest of the rural electrification program.

Mr. POAGE. Mr. Wallace Campbell is present and we will be glad to hear from you, Mr. Campbell.

STATEMENT OF WALLACE J. CAMPBELL, DIRECTOR, WASHINGTON OFFICE, COOPERATIVE LEAGUE OF THE UNITED STATES

Mr. CAMPBELL. To save time I would be very glad to have you insert my statement in the record.

Mr. POAGE. Without objection the statement will be included as a part of the record.

(The statement referred to is as follows:)

STATEMENT OF THE COOPERATIVE LEAGUE OF UNITED STATES OF AMERICA IN SUPPORT OF ELIMINATION OF THE STATE ALLOTMENT FORMULA IN THE RURAL ELECTRIFICATION ACT

My name is Wallace J. Campbell. I am director of the Washington office of the Cooperative League of the United States of America, a national federation of consumer, service, and purchasing cooperatives. We have in direct membership about 2 million families, the majority of whom are farm families.

The Cooperative League has been greatly interested in the rural electric program since its inception, and is happy to have an opportunity to present its views on the proposed elimination of the State allotment formula in the Rural Electrification Act.

As the farm homes of America have become electrified, the need which was inherent in the situation in the midthirties for protecting the distribution of loan funds from State to State is no longer essential. In the early days, as this committee will remember very well, the pressure for bringing central electric power to the farms was so great and the availability of funds so limited, relatively, that there was great pressure to see that no State received an undue amount of loan funds while another State might suffer in its program of electrification.

Today the need for rural electrification loans is quite different. In many States the problem is less to bring power to new and unelectrified farms than it is to "heavyup" the existing transmission lines or to provide generation loans to assure adequate low-cost power. In some other States there have been no loans made in recent years, and no indication that there will be such a need.

The State allotment formula, as a result, leads to a carryover from year to year of funds which are not put into use, while other States suffer in their electrification programs simply because of the existence of an outdated and outmoded formula. The electric cooperatives concerned, and the Rural Electrification Administration and the major farm organizations are all supporting such a change. The cooperative league is happy to add its voice to this support.

The needs in any given State may well follow cycles rather than coming in constant patterns. The REA needs a flexibility which is not feasible under the existing formula. The Congress, at the same time, is caught with an unrealistic financial situation where it must continue to appropriate more funds that it knows will be loaned in any given year because a certain amount of those funds will inevitably be held in an unnecessary reserve for States which will not use them, and will go into a carryover. This carryover gives the public the impression that more funds are being appropriated than are actually needed and that the program itself could be cut substantially, where that is not the case.

There was a legitimate fear in the early days of the REA program that some States would not secure their adequate or reasonable proportion of the available funds. It is our sincere belief that removal of the formulas would not constitute a hardship in any given State, since there should be adequate funds to meet legitimate needs in all areas.

URGE CONTINUATION OF UNELECTRIFIED FARM SURVEY

While the Cooperative_League is wholeheartedly in favor of eliminating the formulas, we believe the Rural Electrification Administration should continue its unelectrified farm survey. This information is essential at all points in the operation of the program and is not contingent solely on continuation of the formulas. Today the only other source of information about unelectrified farms is in the census. Such information is usually a year or 2 years out of date before it is finally compiled. Effective and intelligent administration of the program calls for up-to-date continuing sources of information which should not be dependent upon outside sources which are so late as to destroy their usefulness.

We believe it is in the interests of the REA itself to continue the survey. And the Congress, which must have all of the facts available in this program when it enacts legislation in this field, should not give up this essential source of information.

Mr. CAMPBELL. For the record, my name is Wallace J. Campbell, and I am head of the Washington office of the Cooperative League. More than half of our 2 million members are farmers and we have always been in favor of the REA program and are now, and we wish to go on record in favor of the elimination of the formula.