consumer-owners. In Wisconsin, as in other areas of the country, the area coverage policy has become increasingly vital to the development of the rural electrification system. Under this policy, the final decision for establishing or expanding a system is not made on the criteria of whether an individual line or section will be self-supporting, but whether the entire system is feasible as a whole.

Following this guideline, the overall job is harder for the cooperatives than for private power companies due to the extreme difference in the amount of consumer density and revenue per mile. For example, REA cooperatives in Wisconsin serve only 3.2 consumers per mile and average $538 in revenue per mile, compared with 23.1 consumers and $4,828 per mile for Class A and B commercial utilities. The national figures are even more striking-with the commercial utilities enjoying a national consumer density of 34 per mile and average revenues of $7,820 per mile of line.

As our rural areas have changed and developed with agriculture, business and industry expanding their operations, the use of electricity has increased at a tremendous rate. Over the past ten years, the average monthly consumption per consumer has nearly doubled. On the farm alone, more than 400 different uses of electricity have developed, with at least 250 of them leading to increased production and more profitable farming.

This mounting demand on our rural electric and telephone cooperatives for electrical power and communications makes it imperative that the existing transmission lines be strengthened, new lines established and substations improved to carry increased power to the rural consumer.

While the demands of the past three decades have proven the worth of the rural electric and telephone cooperatives, the rural power requirements of the next two decades will triple in comparison to today's needs. Even at the presnt time, our cooperatives are being called upon to serve some 150,000 additional consumers each year.

These needs, plus those of rural telephone cooperatives, will require an estimated $11 billion in new capital during the next 15 years. This is more than double the amount provided in Congressional appropriations over the past 15 years. Despite the favorable attitude of Congress to the needs and welfare of rural electric and telephone cooperatives, it seems doubtful that this full capital outlay of $11 billion would be met over the next decade and a half.

Thus, if the cooperatives are going to maintain and improve their electrical and telephone service to meet the expanding needs of rural America, there must be a new source of revenue developed to finance the changes required by the increasing demand for power.

This revenue source can best be provided by establishing rural electric and telephone credit systems to be administered by a Rural Electric Bank and a Rural Telephone Bank.

These banks, operated separately, would be funded initially with stock subscriptions from the Federal government and with electric and telephone cooperative funds. This capitalization would allow the banks to borrow funds on the open market for re-lending to the rural electric and telephone cooperatives. As the individual cooperatives repaid their loans, the Federal funds would then be repaid, and eventually control of the credit systems would go entirely to the borrowers.

This plan would permit the cooperatives to progress from their present almost complete reliance on the Federal government's 2% loan program to private financing at regular market rates. This procedure would enable the cooperatives to obtain financing more closely associated to the needs and capabilities of the individual borrowers and the differing areas that they serve.

However, there are still many rural electric and telephone cooperatives which service extremely low-populated areas, and their revenues do not permit them to go above the 2% loan rate. Here, in these sparsely populated areas, the original REA concept still meets its greatest test as the cooperatives demonstrate their continuing commitment of providing light, power and communication to the remotest areas of our country. These cooperatives could not exist without the present 2% financing available through the REA. In establishing a supplemental financing program, the Congress should restate its commitment to provide 2% financing to these unique and vital cooperatives as long as they require it.

The Rural Electrification Administration programs for electric and telephone cooperatives have improved living conditions for rural citizens, increased yields

in agricultural production, established new jobs in farming communities, furnished the power necessary for the expansion of business enterprises, and have made a significant contribution to close the gap between the level of life, business and recreation in rural America as compared with urban areas.

The turning point has now been reached for the rural electric and telephone cooperatives. Their vitality and strength must not be allowed to weaken during the coming years because of inadequate capital for renewal and expansion of their activities.

Our rural citizens must have the assurance that the electric and telephone systems which have served them faithfully and capably for three decades will continue to be sound, stable and able to develop with the growth of the communities that they serve.

Through the rural electric and telephone credit systems established by the supplement financing legislation, this assurance will be provided. The future of rural America will be secure with the knowledge that the sources of power and communication that have sparked the growth of the nation's heartland will continue to supply these vital elements to every possible location in the country at the lowest possible cost.

STATEMENT OF HON. WILLIAM PROX MIRE, A UNITED STATES SENATOR FROM THE STATE OF WISCONSIN

Mr. Chairman and members of the Committee, I welcome this opportunity to register my wholehearted support for H.R. 1400 and its identical companion bills. Enactment of this legislation would enable rural electric and rural telephone systems to obtain a portion of their growing capital needs from sources other than the Federal Treasury.

The credit systems outlined in H.R. 1400 are structured to meet the supplementary financing needs of the rural electric and rural telephone systems while relieving the Federal government of the necessity of providing all the loan funds which will be required by these systems in the years to come. In addition, this proposed legislation provides for the eventual ownership and control of the Rural Electric and Rural Telephone Banks by their borrowers--which is a laudatory objective that has been achieved by many of the banks of our existing Farm Credit System.

As a member of the Senate Agricultural Appropriations Subcommittee, I am familiar with the need for increasing amounts of growth capital being experienced by our rural electric systems. These are valid and legitimate requirements, for our rural electric cooperatives must constantly improve and expand their facilities in order to keep pace with the growing use of electric power by their consumer-members.

In my home state of Wisconsin, the 107,456 consumer-members of the state's 30 rural electric cooperatives have nearly doubled their average monthly use of electricity in the past 10 years. This same trend is apparent in all of rural America. It will accelerate as farming continues to become increasingly mechanized and as our rural areas development program succeeds in attracting more small businesses and industries to rural America.

In America's Dairyland, as Wisconsin is deservedly called, electricity is being utilized increasingly to improve efficiency and insure sanitary, high-quality fluid milk and dairy products. Back in the 1930's, the coming of the rural electric co-ops and central station electricity virtually eliminated the backbreaking and tedious chore of hand milking cows. About the only time you see a cow being milked by hand in Wisconsin these days is at a cow-milking contest at the county fair.

Today, our dairy farms have gone all-electric, for the benefit of both dairymen and consumers. Much of the milk has been handled by the sanitary and efficient pipeline milking process, which-I might add-was developed by researchers at the University of Wisconsin, long noted for its work in developing improvements in the dairy field.

The margin between profit and loss in dairying today is a slim one. If it were not for the economies in time and labor achieved through the use of electrical equipment on our dairy farms, that margin would be even slimmer . . . or nonexistent.

It is a sad fact that our American dairy farmers are receiving on the average of $1.00 or less per hour for their own labor. If they had to hire workers to do the chores presently being done by electric milking machines, barn cleaners and the like, most dairymen would have to go out of business.

Adequate, low-cost electric service is equally important to the businesses, small industries and recreational developments which are being encouraged in rural America. But industry will not locate-nor will tourist dollars be spent-in rural areas that are lacking in good electric and telephone service.

As I mentioned earlier, the capital needs of the rural electric and rural telephone systems are legitimate ones which must be met in the interest of improving the rural economy. This, in turn, will strengthen the national economy. At the same time, we must endeavor to make the most prudent use of our Federal tax dollars.

H.R. 1400 would accomplish these objectives. It has the support of those who are involved the rural electric and rural telephone systems which are currently borrowing all of their capital under the REA loan programs. There is no logical reason why it should not be enacted into law.

In conclusion, I would like to submit for the hearing record two significant resolutions that I have received in support of supplemental financing for rural electric and rural telephone systems. One of these resolutions, adopted by the Chamber of Commerce of Rice Lake, Wisconsin, details the many contributions made by Barron County Electric Cooperative, which serves in the rural area around Rice Lake, to the economic and social well-being of both rural and urban residents in this section of Wisconsin.

The second resolution was adopted unanimously by representatives of Wisconsin's 30 rural electric co-ops at the 1967 annual meeting of their statewide association, Wisconsin Electric Cooperative, held March 29-31 at Madison, Wisconsin. The resolutions follows:

RESOLUTION OF THE RICE LAKE CHAMBER OF COMMERCE, O. G. GRAVEN, PRESIDENT "Whereas, Barron County Electric Cooperative since its organization in 1936 has provided the necessary and beneficial service of electric power to those rural citizens who could not obtain this service in any other economically feasible manner, and

"Whereas, today nearly 7,300 families living in rural sections of eight northern Wisconsin counties depend upon Barron County Electric Cooperative as their source of electric power and share in the ownership and control of their cooperative, and

"Whereas, about 2,000 urban residents from such cities as Minneapolis, Green Bay, Madison, Milwaukee and Chicago, enjoy our community vacation areas and own summer homes and cottages served electrically by the Barron County Electric Cooperative system, and

"Whereas the availability of dependable electric service in the remote and wooded lake areas has greatly contributed to making the tourist industry our state's third most important business, and

"Whereas, the electricity for the home, farm and business has dramatic importance both to the social and the economic life within our total area, and

"Whereas, projections clearly show that the use of electricity will immediately increase in the years ahead, requiring large amounts of the growth capital to enable electric utilities to meet these increased demands, and

"Whereas, the Barron County Electric Cooperative has contributed to the tax base in its service area through its annual tax payments approaching $40,000 with almost all this amount returned by the State of Wisconsin to those communities within the cooperative's service area, and

"Whereas, salaries and wages paid by this cooperative to its 33 regular employees in the amount of $234,000 annually, with the money being used to purchase those goods and services provided by various businesses and enterprises within this area, and

"Whereas, the members, directors and employees of the Barron County Electric Cooperative have accepted their civic and community responsibility and played an important role in various community and civic programs,

"Now, therefore be it resolved by the Rice Lake Chamber of Commerce, Rice Lake, Wisconsin, that we support the intent of bill H.R. 1400 in the United States House of Representatives and bill S. 696 in the United States Senate to provide for the establishment of a rural electric credit system allowing for supplemental financing for the rural electrification and rural telephone programs of our State and Nation."

RESOLUTION OF WISCONSIN ELECTRIC COOPERATIVE, ADOPTED MARCH 31, 1967 "Whereas, it is evident that rural America must have access to adequate supplies of fully available, reasonably priced electricity if it is to continue as this nation's major source of food, fiber and recreational opportunity, and as an important source of jobs and income and tax revenue they generate, and

"Whereas, the consumer owned electric cooperative of Wisconsin and the Nation will continue to supply this necessary electric service on an efficient and nonprofit basis, if they can have access to sufficient growth capital to keep their systems abreast of the increasing demands of the areas they serve,

"Now, therefore, be it resolved that we urge the Congress to enact legislation along the lines of the Mondale-Cooper bill authorizing early establishment of a rural electric credit system, including a bank for electric cooperatives which will pool cooperative funds, open market borrowings and federal loan funds to provide this essential growth capital, and

"Be it further resolved, that we also request the Congress to assist the development of an efficient communications network for these rural areas by authorizing a similar credit system for the Nation's rural telephone cooperatives.

"Be it further resolved, that we hereby reaffirm the action of NRECA delegates, meeting in San Francisco in February 1967, in which they specified that an acceptable proposal for a rural electric credit system must provide for continuation of the 2% loan program for both distribution and generation and transmission cooperatives under these terms and must not provide for judicial review of any loan decision made by the REA Administrator."

The CHAIRMAN. I also have received a letter from the Agralite Cooperative, through Mr. Zwach, a member of our committee, who presented it to me, asking that it be included in the record. This letter is dated March 31, 1967.

It will be made a part of the record at this point. (The letter referred to follows:)

Hon. W. R. POAGE,

Chairman, House Agriculture Committee,
House of Representatives, Washington, D.C.

AGRALITE COOPERATIVE, Benson, Minn., March 31, 1967.

DEAR MR. POAGE: Agralite Cooperative of Benson, Minnesota, serving the rural area in four west central counties in Minnesota has borrowed $4,565,164 from the REA since 1939. It is conservatively estimated we will need one to one and one-half million dollars more loan funds in the next ten years to meet our member's need for more power. Our members increased their use of electricity in 1966 by 11% and we expect this to continue in the future. Our members are just starting to install more and more corn driers each year. We will need to heavy up most of our distribution lines in order to meet this need.

In order for our rural areas to develop to their fullest potential, adequate low cost electric power will be essential and in order for us to do our part, we must have the ability to secure adequate capital and at a cost we can afford because our electric system has less than two service installations per mile of line.

Our cooperative has not built up excessive reserves and we have reduced rates to provide power at reasonable cost to our members. We believe in working with the private power companies in our area to make maximum use of existing transmission lines. We are members of the Cooperative Power Association of Minneapolis, Minnesota, and will continue in efforts to work with the private power groups.

We urge the passage of H.R. 1400, or similar bills before Congress, that provide for continuation of the present REA 2% loans and also provide for the means to secure supplemental financing without violating legal and equitable rights of all parties concerned.

We urge passage of such legislation as soon as possible so that we and our associated transmission and generating cooperatives can plan for the future. We also urge that provisions be also made to supply adequate financing for the rural telephone system, as they serve the same areas, generally, as we do.

Although we are not desirous of making an oral statement at the hearings of your committee, we shall be grateful if you will consider having our views put into the hearing record.

I am going to again follow the practice that we followed rather successfully yesterday of asking each of them to present their statements in 6 minutes. After we get through with all the five witnesses, then we will call them back in order and ask questions in the remaining time. It worked out very well yesterday. I think it worked out about the fairest way that we could do this.

The first witness listed is Mr. L. C. Carpenter, of the Midcontinent Farmers Association.

STATEMENT OF FRED V. HEINKEL, PRESIDENT, MIDCONTINENT FARMERS ASSOCIATION, COLUMBIA, MO.; PRESENTED BY L. C. CARPENTER, VICE PRESIDENT, MIDCONTINENT FARMERS ASSOCIATION, COLUMBIA, MO.

Mr. CARPENTER. Mr. Chairman and members of the committee, my name is L. C. Carpenter, vice president of Midcontinent Farmers Association, with headquarters in Columbia, Mo. Mr. Chairman, with your permission, I would like to present this statement for Fred V. Heinkel, president of Midcontinent Farmers Association.

Midcontinent Farmers Association, which was incorporated January 1, 1966, includes all of the members belonging to Missouri Farmers Association, as well as substantial numbers of members in surrounding States. Total membership today is approximately 153,000 members.

We are pleased to appear here today in support of H.R. 1400 authored by the distinguished chairman of this committee, the Honorable William R. (Bob) Poage. This is not our first time to appear in support of the Rural Electric Administration program, as our initial appearance began in the mid-1930's when REA was first established by Executive order of President Roosevelt, and later when the Rural Electrification Act was enacted into law in 1936.

I am a member of my rural electric association in Franklin County, Mo., today. I look back to those days prior to REA when there was no electrical power on our farms, and at the same time large power companies had huge transmission lines transversing rural areas but were not serving farmers at a cost we could afford to pay. There were no electric lights, no milking machines, no power water systems— none of the labor-saving devices which we now consider so essential for both the farmer and the housewife.

We truly believe that the Rural Electrification Administration established by the Rural Electrification Act of 1936 is rightly regarded by farmers as one of the greatest acts of legislation ever passed by Congress to bring improved standards of living to millions of rural