Mr. KIMBRELL. I firmly think that the farmer was called on to produce these items during the war. I think that actually he deserves maybe a bonus for his performance under rather trying circumstances.

The CHAIRMAN. Concede that the farmers of Georgia and the farmers of Louisiana cannot possibly grow cotton as cheaply as they can in Mexico; is that not true?

Mr. KIMBRELL. I accept that.

The CHAIRMAN. The same thing prevails in Brazil?

Mr. KIMBRELL. Yes, sir.

The CHAIRMAN. Other countries in South America that produce the same products as we do.

What device would you use in order to sell cotton produced by our people in competition with cotton that is produced under circumstances such as I have described in Mexico and Brazil where they use peon labor that are paid much less than our people and their standard of living may be 50 percent under ours; how would you meet that situation? You say you do not want to use the word "subsidy." Let us say a little payment by the Government for purchase of the cotton and let the Government pay the difference. Do you have any plan to submit on that?

Mr. KIMBRELL. Yes.

The CHAIRMAN. You are a banker and you look like a man who could give us that information.

Mr. KIMBRELL. I would think that the Government, of course, has every right today-I doubt if we will be able to sell to those countries but as I intimated a moment ago we would be very much in favor of the Government even giving the cotton if it were necessary to certain areas that are not producing cotton today, particularly for low-grade cottons; that is, also offering that total number of bales we declare surplus and get it out of our stocks.

In this operation that the farmer has carried on in recent years to build up our huge supply and also to win two world wars, there has been an awful lot of mining of the soil. It is our feeling still that the No. 1 problem is that of markets, disposing of these in such ways as we think can be accomplished.

On the other hand, for the use of some of the land that is left we feel that there has been a rapid deterioration of the soil and water resources of our country. We feel that a tremendous amount of effort might be made in that direction. It seems to make sense that we give a lot of thought to maintaining the fertility of the major portion of

our soil.

The CHAIRMAN. In carrying out your suggestion, would you do it by way of soil-conservation payments as we now do it?

Mr. KIMBRELL. Yes, sir: I think that actually we are just sort of scratching the surface in that regard, though. For instance, along the borders of our own State at the Clark Hill project, at the Hartwell Dam, Buford, Fort Gaines, expenditures of from fifty to a hundred million dollars in each of those locations, it would seem that that is on the dam itself. It also seems that if it is good business to make those investments, which I think it is, that upstream where the water is reaching the farmer's soil it would be very good if we continued to make some upstream investments for improvement.

The CHAIRMAN. I am glad to note Congress has done that and in fact both Senators from Georgia, particularly the junior Senator who

has, I believe, fostered some legislation along that line. The evidence produced before the committee that handled this indicated that to build these dams upstream as you suggest would cost many billions of dollars, but I believe it is a safe investment and a good investment, and I presume you think so, also.

Mr. KIMBRELL. Yes. We think the legislation was intelligently conceived and enacted and that a boost to that for additional work on the watersheds for additional pastures, for additional farm ponds, maintenance of that water at the source, reforestation in many of those areas that are not suitable for other purposes, is indeed one of the fine investments in improvement that can be made.

I would like to inject one other point we think deserving. That is additional research. Frankly, with the farm industry today, the amount of money that is being spent for research, much is very, very small in comparison to that being spent by industry. We would like very much to urge and encourage expansion of the amount of funds that can be spent for research of various kinds in the utilization of farm products and actually new techniques and new procedures that the farmer may be able to use on his own operation.

The CHAIRMAN. You spoke of rigid price supports and commodities. Would you limit that to the basics as is now the case or would you add any others to the program?

Mr. KIMBRELL. Quite frankly, Mr. Chairman

The CHAIRMAN. You are a businessman and a banker. I don't suppose you till the soil; you do not have a farm of your own?

Mr. KIMBRELL. Yes; I have some farm interests.

The CHAIRMAN. Have you any suggestions along that line? We have a lot of other farmers throughout the country who grow things other than wheat and corn and cotton and who would also like to get the same relief you are now asking for. What is your view on that? Mr. KIMBRELL. My view on that, Mr. Chairman, would be that we are pressed so at this moment with the basics that I should think that we should try to take one problem at a time and try to work out a better arrangement with the basics and maybe we can take care of the fringes.

One other point I should like to make and that is the actual technical assistance, if you want to call it that, to the farmer today. We have referred several times this morning to that small farmer and he is still a very vital part of our economy. He must either make for himself a living or he must become one of the members of the breadline. We must support him in some other socialistic way. It is our thought that this small farmer might be given more technical assistance on his own farm in a field-by-field basis, given some of the advantages of any research or any new techniques that are developed and he himself would become more proficient in the use of the acres that are available to him.

The CHAIRMAN. Is that not done through your extension service in Georgia?

Mr. KIMBRELL. Yes, and to a fine degree. We think it needs tremendous expansion. There are some pilot counties now in this State and I think the representatives of the extension service, or even those individuals from those counties where the efforts are maybe 5 or 6 times that in the normal county-the results have been tremendous.

They are giving very concrete evidence of what could be accomplished if our efforts in that field were expanded.

The CHAIRMAN. How would you accomplish that expansion? Would you want more Extension Service in the field in Georgia?

Mr. KIMBRELL. Yes, sir. I would not necessarily specify that they go the Extension Service. I would leave that to the good judgment of the Congress to determine whether the Extension Service or where, just so long as the technical service is provided.

The CHAIRMAN. I think we have done a pretty good job up to now in trying to show the farmer the way.

Mr. KIMBRELL. Indeed you have.

The CHAIRMAN. The increased production in the past 10 years on the same acreage is 42 percent and I think we have done a good job. Mr. KIMBRELL. That increased production, I hope with this technical assistance we might be shifting to some of the other soil-building crops, some items not now being used that maybe our research would develop.

Mr. Chairman, the bankers of Georgia are exceedingly interested in your hearings and in what you are trying to do. We have a very vital stake in this farm picture. It has been historically true with the banks in Georgia, particularly, that they have attempted to serve the needs of the farmer. Even in the early 1930's the bankers continued to finance them to the extent of their ability. Today the banks of Georgia are proud of the fact that they are still by far the largest lenders of production or operating credit. For us to be able to continue that we have no less interest, of course, if anything the banks of Georgia are more interested in the farmer today than at any time. in the history.

There is, however, an obligation that the banks have to their depositors, to invest wisely and soundly the funds placed with them in trust by other fine citizens. To continue to make these investments in the farm operations in our territory there are so many variable factors over which we have no control that it is asking a tremendous amount of the banks or any lenders to continue investing other people's funds in the farm operation without at least an assurance of some reasonable price that they will get for the commodities, livestock products, when they are produced.

It is for that reason we are anxious to see price supports maintained and the other items we have suggested for further study of work with markets, research, the technical assistance and, of course, this public cost assistance which we think is justified in so much that investments the farmers have to make are not immediately returnable to him and they also serve a public good. We think they are justified in being at least shared in their cost by the Government.

The CHAIRMAN. Would you be able to state to the committee the comparative status of farmers in 1954 to what they are now so far as income is concerned? Are they better off or worse off?

Mr. KIMBRELL. Frankly, it would be simply a guess, Mr. Chairman, from 1954 up to now. Actually some of the crops in some areas have been very good and others have been almost disastrous. There is a reduced acreage this year, some reduced prices, but the likelihood is that the total farm income of Georgia will be slightly less than a year ago. The CHAIRMAN. How about your collections on the loans you made this year in contrast to last year?

Mr. KIMBRELL. We have compared notes with some of our bank friends as we gathered here last night. So far as the bank loans. themselves are concerned our collections will be relatively good. How

ever

The CHAIRMAN. Are they as good or better than last year?

Mr. KIMBRELL. Our collections are probably better than they were a year ago insofar as the banks are concerned. I should like to add this: The fertilizer dealers, implement dealers, seed dealers and many of those who have supplied farmers supplies and other items during the year are having a very hard time with their collections. You can readily recognize the banks usually have a first claim and are paid among the first.

The CHAIRMAN. You mean because they produce the money to make the crop?

Mr. KIMBRELL. Yes, sir.

The CHAIRMAN. Under Georgia law you have that protection? Mr. KIMBRELL. That is right. But many of these others who have supplied the farmer credit during the year are having a very difficult time with their collections this year.

The CHAIRMAN. Do the bankers of Georgia have a more or less uniform rate of interest to charge to the farmers on short terms? Mr. KIMBRELL. Yes, sir.

The CHAIRMAN. What does that average?

Mr. KIMBRELL. Six percent.

The CHAIRMAN. There seems to be a little disagreement.

Mr. KIMBRELL. I imagine most of my friends are thinking about the money they borrowed from the supply dealers and paid from 10 to 15 percent maybe.

The CHAIRMAN. If a farmer desires money to pay for expenses of a current crop the interest that the banks charge is about 6 percent? Mr. KIMBRELL. Yes, sir.

The CHAIRMAN. That is for a short-term loan.

Senator SCHOEPPEL. I would like to ask you this: How long has the banking group had in effect the 6-percent interest? Has that been recent or over the last 4 or 5 years?

Mr. KIMBRELL. I would think that probably the change in interest started pretty near coincident with the beginning of World War II, about 1940 to 1942.

Senator SCHOEPPEL. That shows a very decided improvement over what has been indicated to us in certain other sections of the country. Let me ask you about this surplus picture. You say get rid of it. How we would like to. That is the thing that is giving us difficulty everywhere. As you know, oversupply always depresses the market price. That is axiomatic.

For instance, in the perishable products, and semiperishable, like grains that will go out of condition after so many years of storage, do you, as bankers, give any thought to where these surpluses, say of wheat, or we have some in corn-primarily wheat is the problem in our area and some other sections where those should be disposed of? I figure you think the emphasis should be on the export market? Mr. KIMBRELL. Yes, sir, we think a tremendous amount of additional effort should be made to dispose of them on the export market. Actually, Senator, our views are such that we should like very much

eventually, it seems maybe it is ideal thinking but nevertheless on the long-range picture we still would like very much to hope that eventually our entire farm-production machine could be put to work for its maximum efforts. I mean by that, of course, that we would put each acre that is productive and can be in production to some good productive purpose. There would be certain acres to take out but to accomplish that we realize, certainly, that our own people must across the board be better fed and clothed and we should make diligent effort to dispose of these as far as we can through export to the other parts of the world that maybe are not quite the free world, I may add-that are not as fortunate as we.

Senator SCHOEPPEL. Would you feel it might be necessary to reduce these surpluses, because we want this to be as painless as possible, and even though we have to take a jolt, a lot of my people would rather take a jolt the next year or so than 5 or 6 years hence.

We may have to get rid of some surpluses locally within the United States. Do you, as a banking group, see objection to that? I know it will dislocate some segments of the business economy, but do you not think that is a practical approach?

Mr. KIMBRELL. We are inclined to think very much that doubtless none of the jolts will be any worse to any other segment of the economy than it is at present to the farm segment. We think maybe some of the other segments that are indirectly and directly related should help to share this shock in disposing of these surpluses.

Senator SCHOEPPEL. If we could get rid of from 200 to 350 million bushels of this wheat that is going out of condition in a sense that it is not good milling wheat, easing it into trade channels and feed channels, it might aleviate the situation very, very quickly and yet not do too much damage?

Mr. KIMBRELL. While you are accomplishing that, Senator, we should also like very much to see at least one other thing accomplished and it seems that it might be included, and that is some kind of restriction on the amount of this low-grade wheat that is going to be produced or certain varieties that would be taken out of production and insist that emphasis be given to the better varieties.

We have the same situation-though I am not in the area-the tobacco people certainly are having a tremendous amount of low-grade tobacco that the tobacco companies do not want. They aren't interested in having it. It is largely 1 or 2 varieties that if they were taken out of production we would not have nearly the surplus building up of poor varieties or poor grades that we now have.

Senator SCHOEPPEL. I am glad to hear you say that because those of us in the wheat area are fully aware of this and we regret it.

In my own State of Kansas, greatest wheat-producing State in the United States, we have varieties of wheat being produced that the millers do not want.

In other sections of the country they have gone to certain types of wheat that produce in volume and yet they get the same support price, or did get it, and they get the same guaranteed price. This has contributed to the surplus.

Emphasis now is being put on better milling grades of wheat, in the form of different loan values. In other words, the loan values are up on those good milling qualities and I think it is a step in the right