Mr. MATSUNAGA. They operate under the peculiar type of lease arrangement we have. Frequently, with the Government, and even with the plantations. The plantations will lease out to the independent farmers on a contractual basis.

Mr. GATHINGS. These loans that the Farmers Home Administration has made, referred to in your statement, only about one-third of the total applications in your State have been approved by that agency. What kind of a lease arrangement do they have?

Mr. MATSUNAGA. These were principally the same type of arrangement that is being proposed in the extension of the act; that is, the Kamilonui farmers are right in the same area having about 212 acres each. In that vicinity, we, also, have other farmers who managed to be in that area where the housing development did not catch up with them, and right now, under Public Law 586, we have seven applications which have been approved. It is right within that same area, and we have an additional six right now which would be approved under the Rural Housing Authority rather than under this act, making a total of 13 applications received by the FHA right in the Kamilonui tract. The proposed 27 two-and-one-half-acre minimum lots will be in addition to these, but the farmers have not as yet had the lease written up for the approval of the FHA and the FHA cannot proceed without the actual lease document being approved by the parties involved, as I said earlier in my prepared statement. Hawaii-Kai Development Co., and, of course, the city and county would enter into this so far as rezoning of this area goes.

Mr. GATHINGS. Your bill will relieve how many farmers, and what area, over your State?

Mr. MATSUNAGA. Well, primarily, this bill is intended for these 27 displaced farmers. They were farmers in that area which has been converted into residential lots, but the Bernice P. Bishop estate has been kind enough to set aside these 80 acres for these 27 farmers who were displaced, and it will apply to these 27 additional farmers who are waiting the grant of a lease from the Bishop estate.

Mr. GATHINGS. It could apply to other farmers up to the expiration date of your bill?

Mr. MATSUNAGA. It could; yes. But it is primarily intended for the farmers in this valley, the Kamilonui Valley.

Mr. GATHINGS. Mr. Teague?

Mr. TEAGUE of California. I have no questions.

Mr. GATHINGS. Mr. Goodling?

Mr. GOODLING. I want to ask one question as to what you were saying. Did you say that a family can exist on 22 acres?

Mr. MATSUNAGA. Amazingly enough, yes, Mr. Goodling, because of the wonderful climate we have, where we can grow vegetables all yearround.

Mr. GOODLING. How many crops are involved in that rotation where you spoke of lettuce? How many crops of lettuce are grown in a year? Mr. MATSUNAGA. It takes 3 months to grow lettuce. About four crops, I would say. And then they have it going into harvest at different times, continuously. In other words, they do not plant all at one time, in rotation growing, so that there is a continuous crop there.

Mr. GOODLING. And they can make a respectable living on 212 acres?

Mr. MATSUNAGA. Yes, they have.

Mr. GOODLING. I am going to move to your State.

Mr. MATSUNAGA. Thank you, you'd be most welcome.

Mr. GATHINGS. Mr. Zwach?

Mr. ZwACH. I note you have pending seven loans for about $232,000. They do not rent it only; they lease it?

Mr. MATSUNAGA. That is correct.

Mr. ZWACH. This money will be used then for that purpose. Do they make a lump payment or do they make an annual payment on the lease for the rent? How will the money be used? Is that for equipment?

Mr. MATSUNAGA. For the development of the land, not as payment on the lease of the land.

Mr. ZWACH. It is a personal loan?

Mr. MATSUNAGA. That is correct. The payment on the land will be on an annual basis as rental.

Mr. GATHINGS. Chairman Poage?

Mr. POAGE. I would like to ask a question off the record. (Discussion was had off the record.)

Mr. GATHINGS. Are there any further questions of Mr. Matsunaga? If not, we thank you very much.

Mr. MATSUNAGA. Thank you very much. I certainly appreciate your holding an early hearing.

Mr. GATHINGS. Our next witness is Mr. Henry Lowe, Assistant Administrator of Farmers Home Administration who is accompanied by Mr. Howard Campbell, Assistant General Counsel of the Department of Agriculture.

We will be pleased to hear from you now.

STATEMENT OF HENRY LOWE, ASSISTANT ADMINISTRATOR, REAL ESTATE LOANS, FARMERS HOME ADMINISTRATION; ACCOMPANIED BY HOWARD CAMPBELL, ASSISTANT GENERAL COUNSEL, RURAL DEVELOPMENT AND CONSERVATION, U.S. DEPARTMENT OF AGRICULTURE

Mr. Lowe. Mr. Chairman and members of the committee. We do not have a prepared statement.

The position of the Department is outlined in a letter from the Secretary that just arrived this morning. It is the same position as taken originally, which is that the Department opposes the extension of the bill primarily because it is limited to the State of Hawaii. It is felt that if this authority is made available for the State of Hawaii, it should be made available to the other States, as well as Puerto Rico. Other than that, we have no further statement.

Mr. GATHINGS. As I recall, Mr. Lowe, in the 89th Congress I believe the Department of Agriculture took a similar stand? Is that correct? Mr. Lowe. Mr. Campbell was here at the time. He is more familiar with the background than I would be.

Mr. GATHINGS. Thank you.

Are there any questions?

Mr. Poage?

Mr. POAGE. Do you think this is a good policy, to encourage the entailment of land over long periods of time?

Mr. Lowe. From the family standpoint, who primarily we are attempting to assist, this is, as I understand it, about the only opportunity whereby they can obtain land to operate for agricultural purposes. Mr. POAGE. Do you think that we should allow the entailment of estates, as such, and if we did not, would there not be more land open to farmers than if we did continue to permit that?

Mr. Lowe. Mr. Campbell, would you comment on that, please?

Mr. CAMPBELL. The problem is broader than trust estates. We are talking predominantly about the Bishop Estate here this morning, but it is my understanding that when the island took on a territorial status there was a provision in the treaty between the then sovereign of Hawaii and the United States, that the land then in Hawaii, a certain amount of it at least, would be available for native-born Hawaiians. That provision, I think, was the policy of the territory to which the United States agreed in its inception. Circumstances may have warranted it at that time. I express no opinion on that. Nevertheless, there are certain blocks of land in the State of Hawaii that are under the control of the lands department, the incumberance of which is still restricted to native-born Hawaiians. There are other public lands owned by the State of Hawaii in which much the same character of public policy of the State is administered but under less rigid control.

It is my view that it would require a change of the constitution of the State of Hawaii, consented to by the Congress of the United States, before this problem is completely solved reversing the policy of the State with respect to land tenure. I am not sure that the entire solution can be accomplished by legislation. Some change can be made by State legislation, I am sure. What constitutional problems you would run into if you passed a legislative act for the State of Hawaii which directed that these trusts are no longer valid, the existing trusts, in their restrictive application, I am not quite sure but that there will be some constitutional problems.

Mr. POAGE. Aside from the constitutional and legal questions, I asked: Do you think this is good public policy to retain these large estates without breaking them up?

Mr. CAMPBELL. It is my personal opinion that we always get in trouble when we permit large landownership by a small part of the community.

Mr. POAGE. We went into Japan and, in effect, instructed those in charge after the war to break up the large estates; did we not, and we did break them up rather substantially, I understand? Is that not right?

Mr. CAMPBELL. I think that is true. I have never studied that problem, Mr. POAGE.

Mr. POACE. And it seems to have worked pretty well.

Now, we encouraged that policy in every underdeveloped nation, do we not, where we give aid or have given aid?

Mr. CAMPBELL. Yes, sir.

Mr. POAGE. And is it not a little inconsistent to export American ideas to everybody else in the world, to tell them to break up their landed estates, and yet to encourage and extend and give validity to such situations that even now exist in these parts of the United States? Mr. CAMPBELL. Again, my personal inclination is to agree with you.

I have some reservations about part of your question relating to the legality of some situations that now exist.

Mr. POAGE. I am not talking about the legality; I am talking about the policy.

Yet, the Department of Agriculture comes to us and asks that we make it easier to maintain these entailed estates in the other 49 States. That is what you are asking, is it not, in your report?

Mr. CAMPBELL. It was not for the purpose of permitting entailment of estates, Mr. Chairman.

Mr. POAGE. But it does do it, does it not?

Mr. CAMPBELL. It also addresses itself to a factual problem in the United States, which is affected by the high price of land and the inability of many farmers to acquire by purchase a sufficient land base at today's price and today's return in order to have ownership of all of the land he needs.

Mr. POAGE. But it does do it, does it not, Mr. Campbell? The report of the Department of Agriculture--in enacting the law-would make it easier to maintain in perpetuity large land estates in all of the States of the Union; is that not true?

Mr. CAMPBELL. But there is no prohibition in the United States as to the number of acres the individual can obtain. There is no prohibition against devising land acquired to the family so long as it is done in compliance with the law.

Mr. POAGE. There is no law in the United States that says that water cannot go down the Mississippi River.

My question is not whether water is flowing down the Mississippi, nor is it as to the law of selling land. I am simply asking you if the report of the Department of Agriculture, if enacted into law, would make it easier to maintain these estates?

Mr. CAMPBELL. I do not think it would have that effect, necessarily. Mr. POAGE. What other effect could it have?

Mr. CAMPBELL. The enactment of this type of provision in the Consolidated Farmers Home Administration Act would only authorize the extension of credit on the basis of leasehold interests and the development of those leasehold interests for farming purposes. It has nothing to do with the laws of inheritance or the laws of distribution or the law otherwise.

Mr. POAGE. Does it not make it much easier to maintain an estate if it is possible for the renter to get credit to improve it-does not that make it easier to maintain that estate?

Mr. CAMPBELL. It makes it easier to develop the land by an operator who is not the fee simple owner.

Mr. POAGE. I want to give it to Hawaii on a temporary basis, but to extend it to the other 49 States of the United States it seems to me would be moving in the reverse direction of what we want. I have not been one who has desired to go out and break up everybody's estate. I believe that a man has the right to acquire land, the same as anything else, but I do not think it is good public policy to encourage the maintenance of those estates in perpetuity, and I think that what we are talking about here is public policy.

Mr. GATHINGS. Would the chairman yield?

Mr. POAGE. Yes, sir.

Mr. GATHINGS. I believe that the rule in Shelley's case was that the devise of the land must vest within a life or lives in being, plus 21 years. That is the law today, is it not?

Mr. POAGE. Yes, sir, in many States.

Mr. CAMPBELL. Yes, sir.

Mr. GATHINGS. Mr. Goodling?

Mr. GOODLING. Are we not in effect doing exactly the same thing in the United States?

I am thinking of our corporation farms.

Mr. POAGE. Again, that is a policy. I come from a State_which has a constitutional prohibition against corporate farming-I guess we are the only ones with such a law, and I think we have had it ever since '76. You can have a corporation in Texas for the purpose of raising livestock. That is perfectly constitutional, but it is not to engage in agriculture.

Mr. GOODLING. As I recall, the King Farm is in Texas, is it not? Mr. POAGE. That is perfectly constitutional. That is purely ranching, and the constitution provides specifically for corporate livestock operations. That is one of the peculiarities of it. It specifically authorizes livestock operations. The King ranch is a range operation: they do not do farming.

Mr. GOODLING. The same organization came into one of my good counties in Pennsylvania and bought up farm after farm.

Mr. POAGE. They did that under the Pennsylvania law.

Mr. GOODLING. It is perfectly legal, but I am wondering if we are not talking about the same thing.

Mr. POAGE. We are, and I do not think it is a good thing. Do you? Mr. GOODLING. No, I do not.

Mr. GATHINGS. Are there any further statements with respect to this legislation?

If not, we thank you.

Mr. LowE. Thank you.

Mr. GATHINGS. Chairman Poage states that we will now go into executive session.

(Whereupon, at 10:45 a.m., the committee retired into executive session and the reporter was excused.)