Mr. WEITZEL. That is entirely correct.

Mr. DODD. I see nothing wrong with the proviso that the Commodity Credit Corporation loan to the Secretary for use in the other program whatever advance money is needed. The money is paid back as soon as the appropriation is made.

Senator AIKEN. You still have the same limitation on obligation? Mr. DODD. We still have the same limitation on obligations.

Up in your country, Senator Aiken, your farmers found the best way to apply fertilizer in the field is to mix the phosphate in the barn in the wintertime in the lime and put it in the drain and mix it with the manure so they could haul it out. We could not make advances, come January 1. We could not make any advances against the program whatever. If that is what is wanted, and you do not want a conservation program for the first 6 months of the year, that is all right and good; or, if you want to change the law to say this program will run for 18 months' period to begin with, and after that it is on a calendar-year basis, that would be something else.

I see nothing wrong. It has been a long time. There has been no abuse of it that I have ever heard of, and I do not think that the General Accounting Office can point out any abuse of the purpose.

Mr. WEITZEL. We have no recommendation as to the continuance or discontinuance of such a program, but we feel that a convenient arrangement_could be very readily worked out providing for these programs from appropriated funds.

In the Agriculture Department Appropriation Act for recent years there has been an appropriation for obligating funds appropriated to December 31 of the year in which the fiscal year ended, for which the appropriation was made.

Now, if there should not be sufficient funds in the appropriation, then it would be a question of justifying and obtaining the amount of additional funds needed; or, if it is found that the Secretary has to have the money to be advanced for a local purpose before July 1 of the fiscal year for which the appropriation is made and it is desirable to have an advance made to the Secretary, we see no reason why that should not come directly from the Secretary of the Treasury rather than through Commodity Credit Corporation. That seems to have been the policy of the Congress in the Agricultural Appropriation Act for 1948 on REA loans and on farm tenant loans, which had previously been financed through advances from Reconstruction Finance Corporation.

In other words, it would eliminate one of a number of different ways of advancing money from the Treasury.

Senator YOUNG. It would seem to me that your recommendation should rather go to the Appropriations Committee making these authorizations, and, if the Appropriations Committee saw fit to make the authorization to borrow directly from the Treasury, there would be no need of this.

Mr. BLAKEMORE. We just cited this as an example of the use which may be made of the Corporation or has been made pursuant to law, naturally, in the event that the type of loan and the nature of loan or character of the loan is not specified, and that is our essential purpose at this point. If you just say, "may make loans-"

Mr. DODD. It says for this particular purpose, for making advances of conservation material to farmers in that 6 months' period.

Mr. WEITZEL. That is under the Agricultural Adjustment Act of 1938. It would be proper for this committee to consider whether they desire to amend that provision to provide that the Secretary of the Treasury rather than Commodity Credit Corporation should make these advances.

Mr. BLAKEMORE. There is one peculiar thing about that provision. The key to it actually is that such loans can be repaid by the Secretary of Agriculture from the appropriation available for that year or from any unobligated balance of the appropriation for any other year, which means, of course, that on a numer of occasions these loans have been made and repaid the very next day because that opens up appropriations that the Congress had made earlier which otherwise would have lapsed; that by the device of borrowing, say $10,000,000 from Commodity Credit Corporation, the next day that $10,000,000 can be repaid from an appropriation otherwise lapsed and unavailable to the Department.

Senator YOUNG. But you accomplished your objective last session through the appropriation to REA and two or three other governmental agencies.

Could it not be accomplished that same way now with respect to soil conservation?

Mr. BLAKEMORE. As I said earlier, our basic purpose here is examination of the charter proposed for the Corporation. As we said yesterday, we think it is highly desirable that charters of all corporations contain some description of the type of loans and the activities that the Congress intends for the Corporation to carry out, not only, in this case, loans, but all the other activities that the Congress wants the Corporation to carry out.

Mr. DODD. May I answer that just a minute, Mr. Chairman?

Your Corporation Control Act makes it necessary that the Commodity Credit Corporation come before the committee and tell them what our anticipated program is for the coming year and what the cost will be, the types of programs, and the amount of money. We cannot carry out any type of program that the committee does not approve. We now have five types of programs which we are carrying out. We estimate what the costs are going to be or the amount of money necessary to carry those out, and the committee either approves it or changes it to suit themselves. We are bound entirely by what Congress wants to do in that field without regard to what is in the charter.

Mr. WEITZEL. One difficulty in that regard is a little provision in the 1948 Agricultural Appropriation Act which says:

Nothing in this act shall be so construed as to prevent the Commodity Credit Corporation from carrying out any activity or any program authorized by law.

In our opinion, that just about nullifies any approval of the budget by the Appropriations Committees of Congress, since, notwithstanding any provision in this act, if the Commodity Credit Corporation wishes during the year to do anything which otherwise is authorized by law, this provides the authority for it.

Senator THYE. Now, are you meeting the problem insofar as your program of 1948 is concerned? Is there an agreement between the two departments insofar as the manner in which you obligate yourself now for the program you have planned for 1948 and for which Congress has appropriated money beginning July 1?

Mr. DODD. They are recommending to your committee that you do it in a different way than we have this year or other years. The Congress authorized a program of $150,000,000 for soil conservation for the fiscal year 1948, but our farming year begins on January 1, as you well know. In almost every section of the country we have to make advances to farmers or to dealers who supply farmers for fertilizer, for seeds, and for equipment, and for large operations like dams and terracing and those things during this period between January 1 and July 1 when there is no money available unless we have this proviso. The way it is written into the law the Secretary has the right to borrow from the Commodity Credit Corporation any money he needs to make advances for that period when money is not available.

I believe these gentlemen are recommending that those laws be changed and that the Secretary borrow directly from the Treasury for that purpose. Is that not correct?

Mr. WEITZEL. Substantially; yes.

The CHAIRMAN. How do you feel about that, Mr. Dodd?

Mr. DODD. I think it is much better to leave it as it is because it gives the Secretary the right to coordinate his agricultural programs. There is hardly any one leg of the agricultural program that stands by itself. It is a coordinated, well-rounded program, or else you do not have it.

Senator AIKEN. Do you have to get the approval of the Treasury before financing the agricultural conservation program? Mr. DODD. No.

Senator AIKEN. You do not need the approval?

Mr. DODD. No; because the law itself authorizes the loan for that purpose.

Mr. WEITZEL. Mr. Chairman, the same argument could apply to authorizing Commodity Credit Corporation to make advances to the Secretary for all other programs of the Department which require advances, such as REA loans or farm tenant loans.

Our point is that this is a financial problem and there is no need for having additional steps or that Commodity Credit Corporation should go to the Secretary of the Treasury and the Commodity Credit Corporation advance the money to the Secretary of Agriculture.

We feel it would be entirely appropriate and just as convenient and more businesslike to have the advance made by the Secretary of the Treasury. Of course, as Mr. Blakemore has pointed out, it is also a device for enabling the use of prior-year appropriations which would have elapsed otherwise to finance present-year programs. To that extent it augments the appropriation for the fiscal year in question.

Mr. DODD. I would like to speak to that point for just a minute. I do not believe any administrator, no matter how wise he is, or 3,000 county committees, regardless of how wise they are, can tell to the dollar how many practices the farmers are going to carry out.

At best it is an estimate. When you scatter all the money allowed among 3,000 counties and 6,000,000 farmers, you have almost an impossible situation in arriving at a conclusion that you are going to spend only $150,000,000 or $197,000,000, or whatever the figure is.

In 1939 we had the experience of farmers carrying out more practices than we had the money available to pay for, and we had to come to the Congress for a deficiency appropriation or ask them if we should or should we take it out of the next year's appropriation. We were

instructed to build up reserves, any leavings from any year's appropriation, until we got to as high as $50,000,000 to carry over as reserves to take care of that very situation. I believe it was 1943 when we had again that same experience, and only one area of the countrythat is, the southeast area-where farmers had not been carrying out any great volume of conservation practices and the program got to rolling and they carried out about $20,000,000 more than we had funds available, so we used up our little reserve.

What Mr. Weitzel says is entirely right. If we had $9,000,000 left over on the 30th of June out of the 1948 appropriation and we would have had to borrow, let us say, $20,000,000 from the Commodity Credit Corporation to finance the 1949 program, on the day after the appropriation was made and the money was turned over to us we could then, of course, cancel out the note and we could have paid it out of the old appropriation. That $9,000,000 would have been money that Congress said should be used for carrying out the practices on the farms of America but which you did not get to carry out June 30 but which was carried out July and August.

I think when Congress decided they wanted certain programs, of whatever size they are to be, to be made available to farmers for conservation practices, I think they figured on that much money being spent. I do not believe there is any administrator smart enough to define those programs so fine that he would not have any overrun or underrun.

It is impossible when you figure dividing the money up among 6,000,000 farmers.

There is a difference between this loan which is only a very short term loan, sometimes 30 days, sometimes 60 days and sometimes 90 days, and the loans that are involved in REA or your tenant purchase program, because thye are long-time loans, they run a long time.

I would not recommend that REA loans be financed in Commodity Credit Corporation because that would tie up the borrowing power for another purpose for which it was not intended.

I agree with you wholeheartedly that that is different. There is no reason why this short-time loan should not be made available through the Corporation. But, if Congress wants to change the laws and says it should be done some other way, that is agreeable to us. I do not want to jeopardize the conservation program by not having money available to farmers. We are having a hard enough time to keep up with the conservation of our soil with this great drive you are making for excess food production the way it is, without any hindrances.

Mr. WEITZEL. Let me assure the committee and Mr. Dodd that is not the purpose of the General Accounting Office, to put any road blocks out or hinder any programs in any way.

We do feel though that the expenditure of $60,000,000 up to June 30, 1945, out of prior years' unobligated balance, shows that the Department does have a source of funds which are not available under current appropriation and not presented to the Appropriations Committee as part of the program for that year.

Senator THYE. Those are unencumbered balances with the funds. carried over from last fall?

Mr. WEITZEL. That is correct.

Senator THYE. That would be funds carried from the year 1947, unencumbered funds January 1. As a matter of fact, in the general operation of the soil conservation program the county committee may have developed many a project. Either inclement weather, the inability of the producer or the operator to obtain the help or other conditions beyond his control may prevent him from carrying out the practices he had intended and which had been approved. If he did not accomplish it in the fall of 1947, he is going to proceed with it in the early part of 1948 or as soon as he can reach the project. These are conditions the Department cannot foresee or control. Therefore, if you have the unencumbered funds, through no one's particular error, I think it was the intent of Congress that those funds would be used for the purpose of soil conservation or the protection of the soil in general. If it was completed in the year 1948, it would be much better than if those funds could not be encumbered and thereby the project fall by the wayside after all the administrative expense in launching and approving the project had been incurred.

Mr. BLAKEMORE. In that connection there is not the nicety of relationship between the source of the funds from the unobligated appropriation brought forward. As a matter of fact the law says any unobligated balance.

So what you say is perfectly true and there should be some reasonable provision to permit them to pay from unobligated balances of last year's appropriation, and that seems to be what you have in mind, these carry-over projects.

However, it is not only repaid from just last year's unobligated balance; they can go back for a couple of years or 3 years, you might say, and reawaken that appropriation.

In other words, it is not related just to those proposed but uncompleted conservation projects.

The CHAIRMAN. Mr. Dodd, this hearing has developed some complications that are rather difficult to work out. I wonder if you could not suggest a program here that will eliminate some of the controversy and get us on a fair basis all around that would accomplish something. Mr. DODD. Mr. Chairman, I tried to do that when we presented our testimony the first day. I agree wholeheartedly with the folks from General Accounting Office that our records were not kept just like they would like to have them kept.

One of the Senators asked why it had taken from 1945 until 1948 and there still was not a report, and the answer was they did not have competent personnel and were unable to procure them to do the job. I would like to submit for your consideration that it took 3 years in the postwar period and they are still unable to find competent accountants. How in the world could we do it during the war period when these new programs were being thrown at us at a rapid rate, programs we did not anticipate at all. We could not find competent help to set up a set of books, no matter how hard we tried. We had no place to even quarter them if we had been able to find them. Most of our own people who are now working in the Commodity Credit Corporation were in the armed services at the time. We did not have them available. I would like to submit that to you so that you will get a grasp of the overall programs and some of the problems facing us.

The CHAIRMAN. We shall be glad to have your suggestions because this committee has a great deal of confidence in you.