periods of the past 6 annual surveys prior to the one made this year. This tabulation is a comparison of the planned applications contrasted with the actual applications received by REA. The planned applications as shown by the survey were for $1,415,942,492, whereas the actual applications for the same periods were for a total of $1,994,391,407 an increase of 41 percent. This is the best proof we can give of the conservative nature of the answers in these surveys.

I would like to add that there is no significance to those total figures. The significance is in the fact that there was a 41 percent increase in actual applications over planned applications. You will note on table No. 1 the lowest increase shown is 18 percent, which is the last one made. The highest increase of actual applications over planned applications was 205 percent. I felt that those would be interesting to you.

On January 1, 1956, the REA had a backlog of electric loan applications in Washington of $99.5 million. Statements have been made to your committee by an REA official that they expect to reduce the backlog to $40 million by June 30, 1957. Then, by adding the $99.5 million backlog to the $270 million of planned applications, followed by subtracting the estimated June 1957 backlog of $40 million we arrive at a total loan fund need for the 18-month period of $335.5 million.

REA had on hand as of January 1, 1956, unallocated loan funds in the amount of $142 million. This does not include any of the $100 million contingency fund since no plan has been announced by REA for using any of these funds. In the 18-month period from January 1, 1956, through June 30, 1957. REA expects to make loan rescissions in the approximate amount of $8 5 million. By subtracting the $142 million of funds available and the rescission of about $8.5 million from the $335.5 million loan fund need, we get a final need of new loan funds in the amount of $185 million which we recommend be appropriated by the Congress. This compares with the Bureau of the Budget request of $145.3 million. This entire calculation is shown more specifically on table 2 attached.

We concur in the Bureau of the Budget request for a contingency fund of $25 million. However, this fund should be considered only as the name contingency implies-that is, to provide for unforeseen needs and not to be considered as a part of the regular loan program. Mr. Chairman, for the information of the committee and the Congress, I would like to include with my statement table 3 showing total loans advanced, repaid, and outstanding to all electric borrowers since the beginning of the program through fiscal 1955 together with table 4 and chart 4 showing total REA loans approved and advanced by years through fiscal 1955.

Gentlemen, I would like to express to you our sincere appreciation for your kind consideration in the past. Every effort was made in preparing this statement to give you as realistic a presentation as possible in order that we may merit your consideration of our request. I thank you for this opportunity to make presentation of our needs. Mr. MARSHALL. All of these charts to which you have referred, without objection, will be included in the record.

(The charts referred to follow :)

TABLE 1.-Applications for electrification loans as indicated by the National Rural Electric Cooperative Association annual survey contrasted with applications actually received by REA, by 18-month periods, from Jan. 1, 1949, through June 30, 1955

Each year in January MRECA makes an annual survey in which the electric systems are asked to estimate how much they plan to apply for (1) in the 1st 6 months of the current year and (2) in the following fiscal year. The figures under "Planned applications" are taken from the results of this survey.

TABLE 2.—Summary and analysis of electric loan fund data REA backlog of electric loan applications pending in Washington, Dec. 31, 1955_...

117, 916, 550

$99, 475, 000

Total electric loan applications planned by borrowers for submission
‣between Jan. 1, 1956, and June 30, 1956...
Total electric loan applications planned for submission by borrowers
between July 1, 1956, and June 30, 1956---

Total loan needs to be met between Jan. 1, 1956, and June 30,
1957--

Less REA electric loan funds available Dec. 31, 1956.
Also, less planned loan rescissions...

Also, less REA estimated backlog of loan applications pending at
end of fiscal year 1957----

158, 181, 150

375, 572, 700

1 142, 360, 778 2 8, 388, 394

40, 000, 000

Total appropriation required from Congress for fiscal 1957--- 184, 823, 528 F1 Does not include $100,000,000 in contingency funds as no plan has been announced by REA for drawing down any of these funds and their announced loan program does not indicate any such plan.

REA plans to rescind $4.5 million in old loans in fiscal 1956. $611,606 in old loans have already been rescinded, leaving the balance of $3,888,394 to become available during the fiscal year.

TABLE 3.-Total loans advanced, repaid, and outstanding to REA electric borrowers cumulative by years, fiscal years 1936–55 (as of June 30 each year)

Source: Rural Electrification Administration, Monthly Statistical Bulletin.

61, 328, 767 74,878, 890 96, 142, 122 118,783, 011 145, 525, 428 182, 472, 620 231,092, 188 279,889, 098 338, 884, 697

413, 277, 120

629, 826, 811 854, 799, 536 1. 153, 445, 515 1,413, 361, 750 1,644, 545, 216 1,823, 499, 677 1.982, 336, 703 2, 104, 869, 636 2, 187, 219, 148

TABLE 4.-REA electric loans approved and advanced, by fiscal years, 1936–55 1

1 REA approves loans for future needs and advances these funds as construction or other expenses are incurred.

Source: Rural Electrification Administration.

Mr. MARSHALL. Thank you, Mr. Jones.

Mr. ANDERSEN. Mr. Chairman, I feel a very good presentation has been made to us by Mr. Jones.

Mr. JONES. We have not presented that information to you before, but it was obvious that our surveys in the past were conservative, and we wanted to show you that, and I thank you for your statement. Mr. McWHORTER. I would now like to call on John Sargent, president of the Adams Electric Cooperative, Camp Point, Ill.

STATEMENT OF MR. JOHN SARGENT

Mr. SARGENT. Mr. Chairman and gentlemen of the committee, my name is John Sargent. I am a farmer living on and operating a general farm near Rushville, Ill. I am president of our local rural electric cooperative, the Adams Electric Cooperative, Camp Point, Ill. I am also a member of this committee representing region V, comprised of the States of Iowa, Illinois, and Wisconsin.

I have been delegated by our committee to discuss the REA telephone program with you. There is a great need for good telephone service in our country among the farmers.

In many areas of our country, there is no telephone service at all, and where there is service, some of it is very, very poor. Longdistance service cannot be used because one cannot hear due to the poor equipment the local telephone companies have.

The farmer is in need of good telephone service in getting in touch with the fire district if necessary, marketing produce, calling a doctor, and getting help on repairing machinery. In the areas served by the rural electric systems, good telephone service is essential to good electric service because it provides a means of reporting outages promptly.

According to the 1954 farm census, there were 4,782,393 farms in the United States. Of these, 2,331,709, or 48.8 percent, had some kind of telephone service. It must be remembered that not all of these had good, modern telephone service.

A news release from the United States Department of Agriculture had this to say in that connection:

Recent Department of Agriculture surveys have indicated that of the farms with telephones, only about half have dial service and more than one-fourth still have old-style magneto (hand-crank) service.

This means that more than three-fourths of our farms have either no service or service which is to a great extent unreliable. Today, more than 93 percent of the farms have electric service available. And we feel that modern telephone service should also be available to them at reasonable charges.

We are discouraged by the slow progress being made in making available to rural people one of today's necessities, good telephone service.

In 1949, when the Rural Electrification Act was amended to include lending for the extension and improvement of telephone service in rural areas, about 38 percent of the farms of the Nation had some kind of telephone service. Todav, nearly 7 years later, the percentage has climbed only 10 percent, and part of this percentage improvement is due to the fact that the number of farms in this period decreased by over a half a million.