effect, greatly decreasing the operating credit available to low-income farmers. We recommend and urge that the annual limitation be not less than $175,000,000.

If there is a desire to tap the unemployed resources of our small farmers so that they will be able to contribute their maximum potential production to meet our growing war food needs, the loan investment should be many times higher-perhaps even as much as the money cost of the war for 4 days.

These are our recommendations. I hope the committee will agree that nothing we have recommended mars the design or intent of this historic piece of legislation.

Mr. Chairman, the little people of rural America the farm families on the back roads and up at the forks of the creek--are looking to this committee and to this session of the Congress for a sign, an omen of hope, a positive proof, that now and after the war family-type farming can survive. They will realize that with the aid of this legislation, amended along the lines we have suggested, family farming can be made the basic pattern of American agriculture.

I know, and you know, that there will be opposition to this legislation, and to the proposals for amending it which I have made. I know something about this opposition. I have seen it work out at the grass roots, as well as around Capitol Hill.

I want to tell you very frankly that some of this opposition stems from the simple fact that certain "big farm" interests want to control and dictate every single piece of legislation affecting the farmers of this country.

The committee will do well to be on its guard against these influences. They do not, in my opinion, represent, and do not speak in the interest of, the majority of the farm people-the 4,000,000 familyfarm operators whose average net cash incomes even in 1942 were below $2,140 a year.

In closing, may I plead with you not to allow the future fate of family farming to be left to interpretations of lawyers and budget officers. These are responsibilities which the legislative, not the executive, branch of government should assume.

In the consideration, in the amendment, in the debate, and in the vote upon this bill, you, the Members of this Congress, hold in your hands, in a very vital sense, the preservation of rural democracy and therefore of all democracy.

Thank you, Mr. Chairman.

Mr. COOLEY. Mr. Chairman?

Mr. FLANNAGAN. Mr. Cooley?

Mr. COOLEY. In the opening paragraph or second paragraph of your statement, you say this: "Strong efforts have been made to abolish this splendid agency by cutting off its funds or by splitting its lending and supervisory functions between the Farm Credit Administration and 48 State extension services."

I assume from that statement that you believe that the supervisory functions should be performed by the Farmers' Home Corporation, which is charged with the responsibility of making the loan. Mr. PATTON. Very definitely.

Mr. COOLEY. To have the supervisory function separated from the agency responsible for making the loan, would in effect defeat the purpose which you have in mind.

Mr. PATTON. I believe that completely.

Mr. FLANNAGAN. If there are no further questions, we thank you, Mr. Patton.

Mr. COOLEY. Just one more point, Mr. Chairman.

Mr. FLANNAGAN. All right.

Mr. COOLEY. It was called to my attention some time ago that the law permits contributions to the support of the Extension Service. Do you think funds of any farm organization should be used to influence the Extension Service and I frankly say I have in mind the American Farm Bureau Federation? As I understand, they do annually make contributions to the support of the Extension Service, and they have integrated their activities.

You made some statement heretofore before some Senate committee. I wonder if you have some information you could submit to this committee bearing upon this important matter?

Mr. PATTON. Yes; I have.

Mr. COOLEY. Will you leave that with me or the clerk of this committee so that the committee may look it over?

Mr. PATTON. Yes, sir.

Mr. FLANNAGAN. We thank you for your appearance, Mr. Patton. You have sufficient copies of your statement to pass around to the members?

Mr. PATTON. Yes. Thank you very much, Chairman Flannagan. Mr. FLANNAGAN. Mr. O'Neal, the president of the American Farm Bureau Federation, is here. We would like to hear from you.

STATEMENT OF EDWARD A. O'NEAL, PRESIDENT OF THE AMERICAN FARM BUREAU FEDERATION, WASHINGTON, D. C.

Mr. O'NEAL. Mr. Chairman and gentleman I have a statement here I would like to read.

Mr. FLANNAGAN. We will be very glad to hear from you.

Mr. O'NEAL. Experience has demonstrated the need for overhauling the entire farm credit system, to the end that the functions and operations of the various agencies may be integrated and coordinated so that, as a group, they may serve American farmers efficiently by supplying them with the various types of credit at the lowest possible

cost.

Mr. ANDRESEN. Mr. Chairman?

Mr. FLANNAGAN. Mr. Andresen?

Mr. ANDRESEN. Will you permit an interruption for the record? Mr. FLANNAGAN. Yes, sir.

Mr. ANDRESEN. You are president of the American Farm Bureau Federation?

Mr. O'NEAL. Yes, sir.

Mr. ANDRESEN. How many members do you have?

Mr. O'NEAL. The membership list last year was 687,000 farm families. In order to arrive at the number of individuals that represents, down home you can multiply that by 10, and up in the eastern areas probably by 8, and out in other areas by 4; 4% is the Government record of the average-sized family.

Mr. ANDRESEN. How many States?

Mr. O'NEAL. Forty-three States and Puerto Rico. Excuse me for not putting that in.

Mr. FLANNAGAN. Thank you.

Mr. PACE. Mr. O'Neal, will you permit an interruption?

Mr. O'NEAL. Yes, sir.

Mr. PACE. I would also like to call attention that in the hearings before the Agricultural Subcommittee on Appropriations, you inserted a complete financial statement of the American Farm Bureau Federation. I believe every member of the committee not only appreciates the fact you put that in the record but would be interested in reviewing that financial statement.

Mr. O'NEAL. Thank you, Congressman. I have insisted for years all organizations on a voluntary basis should file their reports with Congress and I appreciate what you have to say, and, if you wish that, I would be glad to put it in. I hope you will ask the other groups to do the same thing.

The resolution adopted at our recent annual convention outlines the Farm Bureau position on the entire subject of farm credit. In this resolution we said:

The American Farm Bureau Federation has always considered a cooperative system of farm credit essential to the well-being of American agriculture. Our confidence in the ability of farmers to build and maintain such a system is not shaken by experience. Time has proved that properly directed and properly administered cooperative credit institutions can weather the storms of adversity. The need for Government capital and Government direction is recognized in the early stages of developing a cooperative system in a Nation-wide basis, but gradually cooperative capital should supplant Government capital and cooperative control should supplant Government direction. Cooperative ownership and cooperative administration, and not Government ownership and Government administration should be the ultimate goal.

We believe that it was the intention of those who framed the original Farm Credit Act to lay the foundation for the farmer-owned and controlled cooperative farm credit system. The purpose of later acts was not only to broaden the foundations of this system but to strengthen its cooperative features. Our responsibility now is to further improve the system. To that end we recommend(a) That control of the farm credit system be vested in its farmer owners, and that its administration be vested in a bipartisan board.

(b) That initiative and responsibility in the local associations as the basic units in a sound cooperative system be encouraged and preserved.

(c) The funds now available be used in establishing permanent revolving funds to be made available to all units of the system when needed to maintain their service to farmers.

(d) That Government capital, when advanced to the system for any purpose be retired in an orderly way through mandatory annual payments in amounts that would not disturb the necessary functions of the institutions.

(e) That immediate steps be taken to consolidate relief and emergency types of credit into one agency under the supervision of the Farm Credit Administration. Separate and independent administration of these different types of credit can only lend to the development of competing systems.

The job of reorganizing our credit agencies represents a major task and one that cannot be accomplished overnight. A Farm Credit committee of the American Farm Bureau Federation has been studying the problem for more than a year in collaboration with other farm organizations and has reached some definite conclusions on the subject. I have asked a member of that committee, Mr. R. E. Short, of Arkansas, a member of our board of directors, to testify at this hearing. And I have asked Mr. J. S. Jones executive secretary of the Minnesota Farm Bureau Federation, to make a supplementary statement. Therefore, with your permission, Mr. Chairman, I will ask Mr. Short to make the first presentation on behalf of the American Farm Bureau Federation.

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Mr. COOLEY. Mr. Chairman, I would like to be recognized.

Mr. FLANNAGAN. Mr. Cooley?

Mr. COOLEY. Mr. O'Neal, I would like to say that the special or select committee appreciates your interest in the American agriculture and welfare of farmers generally, but the resolution under which the committee is now acting confines official action to the investigation of and recommendations as to the Farm Security Administration only. The investigation conducted by this selected committee clearly indicates the urgent need of some investigation and study of the cooperative lending agencies now being administered by the Farm Security Administration.

The committee believes that House Resolution 119 should be amended so that the scope of the investigation may be broadened and to the end that the committee be authorized to make a thorough study and investigation of all functions now being administered by the Farm Credit Administration.

The committee does not believe that Congress can intelligently appraise the activities of such agency until such investigation and study has been made.

The statement I have just made represents the view of the select committee, and we do not feel we could be justified in broadening the scope of our investigation so as to go into the activities of all the cooperative lending agencies, but in trying to determine the feasibility of further loans by Farm Security Administration, we did make inquiries concerning the activities of the Regional Agricultural Credit Corporation and emergency crop and feed loan offices.

In this legislation we have provided for the elimination of those three agencies and substituted in lieu thereof the Farmers' Home Corporation which we have sought to clothe with authority and upon which we have placed certain definite limitations.

In this legislation we think we have spelled out the authority and responsibilities of the Farmers' Home Corporation.

I would like to ask you if you are not in favor of at least that section of this bill which abolishes the agencies which I have just mentioned, and which will provide for the elimination of the three competing agencies, making analogous or comparable loans to low-income farmers?

Mr. O'NEAL. At least you have taken that first primary step, but I read your resolution and I might say we did consider your bill in detail in our board of directors, and we wired you asking that we be heard. That is the reason I prefer not to go into details. I do not see anything in the language you read there, the authority given you by Congress if I caught the language you used to prevent the committee from going into the whole subject. You really have broader powers, when you study the so-called rule, the words that are used in there, and the whole Farm Credit field as a part of it.

Mr. COOLEY. I have not considered the resolution to be broad enough to authorize going into the land-bank set-up, but we do appreciate your interest and your study and I want to be sure that I understand you correctly. Do you favor that part of the bill which seeks to abolish or eliminate all overlapping agencies?

Mr. O'NEAL. I agree to it to the extent that it seeks to abolish that part of it.

I would like for my distinguished associate and a member of our committee to present our recommendations in detail. Farmers also through their organizations have been studying this whole field, too, as well as you gentlemen in Congress, and I compliment you for your zealous work you have done, but I must disagree with you.

Mr. COOLEY. To what extent are we in disagreement? Do you disagree with the objective sought to be accomplished by the abolishment of these three agencies?

Mr. O'NEAL. I agree with the suggestion to abolish the three agencies because we have enough. Your objective is to coordinate the agencies. You want to take a little sup of milk and the milk is liable to give you the bellyache unless you take the whole bottle.

Mr. COOLEY. I am afraid you are trying to clothe this committee with authority which Congress has not clothed it with. The committee does not believe that it has that authority.

Mr. O'NEAL. I just wish, Mr. Chairman, to digress a moment. Are you limited as the Agricultural Committee of the House to consider the broad field of farm credit or any other agricultural matter?

Mr. COOLEY. I emphasized in my statement the activities of the special select committee authorized to investigate the F. S. A. Do I understand you to say you are not in favor of the abolishment of the R. A. C. C?

Mr. O'NEAL. I am for unity of action, but it is a dangerous thing to do it in the manner proposed in this bill. I just want to ask you a question. You say a subcommittee. This is a whole Committee of Agriculture of the House. You had a duty as a subcommittee to report to the whole committee. Is that right?

Mr. COOLEY. That is right. And to the Congress.

Mr. O'NEAL. I am talking of the whole committee of the House which I think has contact with the Congress.

Mr. COOLEY. But you want to obtain

Mr. FLANNAGAN (interposing). May I ask a question, Mr. Cooley? Mr. COOLEY. Let me finish; I do not want to be left up in the air. You want the full committee to broaden the scope of the investigation.

I want to call your attention to this: Congress has served notice on this committee that unless in the current fiscal year basic legislation is provided, that no more funds will be provided for operating loans to farmers of any

Mr. ANDRESEN (interposing). You say Congress served that notice on you? I will tell you, or rather, you tell me, who is Congress?

Mr. COOLEY. The Appropriations Committee of the House of Representatives, and they have positively refused to provide a dollar notwithstanding the fact Mr. O'Neal and his organization went before the committee.

Mr. ANDRESEN. That committee is not Congress.

Mr. HOPE. Is it not a fact there is no legislative authority whereby the House Appropriations Committee can bring in

Mr. ANDRESEN (interposing). Has there ever been legislative authority?

Mr. COOLEY. No.

Mr. HOPE. Do you not think if anything is going to be done, there should be legislation?