For sale by the Superintendent of Documents, U.S. Government Printing Office REPORT OF THE ADMINISTRATOR OF THE RURAL ELECTRIFICATION ADMINISTRATION, 1964 UNITED STATES DEPARTMENT OF AGRICULTURE, Washington, D.C., December 31, 1964 HON. ORVILLE L. FREEMAN, Secretary of Agriculture. DEAR MR. SECRETARY: This report, covering the activities of the Rural Electrification Administration for the fiscal year 1964, is respectfully submitted. Sincerely yours, NORMAN M. CLAPP, Administrator. THE PURPOSE OF THE REA PROGRAMS From the privations of the early pioneers to the present day, rural people have labored under many handicaps. Always there has been the handicap of isolation-isolation from one another, from centers of information and culture, from centers of trade and opportunity, and from sources of capital for growth and advancement. As our modern industrial civilization has developed, bringing with it great increases in material wealth to our society as a whole and making possible higher living standards and greater comforts and conveniences of life, these handicaps have never been more dramatically demonstrated than in the struggle to bring the blessings of electricity and modern communication to rural people and their communities. When the Rural Electrification Act was passed in 1936, only one farm in ten had central station electric service. When Congress enacted the basic authorization of the present REA telephone program in 1949, only 38 percent of the Nation's farms had telephone service of any kind, most of which was totally inadequate and of very limited use. Although great progress has been made as the result of assistance provided by the Federal Government through the rural electrification and rural telephone programs, the handicaps of providing such vital services in areas of relatively sparse population are still with us. Among REA's electric borrowers, there was in 1962 an average of only 3.3 consumers (or meters) per mile of line, compared with 33.2 consumers per mile on the lines of Class A and B commercial utilities. The disparity in revenues was even sharper, averaging $460 per mile of line on REAfinanced electric systems versus $7,164 per mile on lines of commercial utilities. Comparable figures in the telephone program reveal 4.3 subscribers per mile on the lines of REA borrowers, versus 40 per mile for Bell System companies. The initial phase of REA's task, that of reaching rural people with the physical facilities of service, is being successfully accomplished through the distinctive cooperation of rural people and their Federal Government in the REA program. Today more than 98 percent of America's farms have central station electric service. About 79 percent of farms now have telephones and an estimated 93 percent of this service is dial. But there still remains the continuing challenge of making electric and telephone service available to rural people on terms comparable with urban service. The successful achievement of this goal is an essential and inescapable requirement if parity of opportunity is to be achieved for and by the people of rural America. Many rural residents still lack modern telephones, or any telephone service at all, and the availability of singleparty service still is severely limited in rural areas. In the electric program, consumers on REA-financed lines still pay 19 percent more, on the average, for 500 kilowatt-hours of electricity than do consumers in adjacent towns and cities. Much remains to be accomplished. REA financing and technical assistance have been indispensable in bringing parity of electric and telephone service within the reach of rural people, but its permanent achievement depends upon the development of basic equalizers such as rural areas development, territorial protection for rural systems, efficient management, and nonprofit operation where it has been available through cooperative organization. REA during fiscal 1964 intensified its efforts to encourage borrower systems to seek and apply these basic equalizers in overcoming the handicaps of serving rural areas. These efforts are consistent with the agency's guiding policy of moving "as far and as fast as is feasible toward a situation in which every borrower possesses the internal strength and soundness to guarantee its permanent success as an independent local enterprise." It is our conviction that the encouragement of the strength and permanence of borrowers, which will permit them to depend less and less on the special assistance provided by REA, represents the proper road to Government economy in the REA programs and to the ultimate success of REA borrowers as local business enterprises. THE ELECTRIC LOAN PROGRAM Loans, Advances, and Repayments During fiscal year 1964, REA approved 285 loans for $261.5 million to electrification borrowers, bringing the agency's 29-year loan total to $5.3 billion by June 30, 1964 (table 1). Loans for distribution purposes accounted for 60.8 percent of the year's loans; generation and transmission, 39.0 percent; and consumer type loans, 0.2 percent (table 2). Of the loans for distribution purposes, about 44.3 percent will be used for |