The people's voice., 1957-06-07

The Eisenhower Administration is
planning to poke the camels nose of
hard money into the REA tent very
soon. A plan was announced May %
for SO per cent increase in the in
terest costs of REA co-ops, and it
will probably be followed before much
longer by the entire hard money
camel
President Eisenhower announced
that the Administration is drafting a
bill to forbid all government lending
agencies from making loans "at less
than the interest rate paid by the
Treasury on its borrowings" through
party congressional leaders. The an
nouncement said Republican leaders
were discussing REA loan policy when
the proposed legislation was ''men-
toned by Eisenhower" Rep. Charles
A. Halleck Qnd.) was reported to
have raised the issue over a loan be-
ing sought by Hoosier cooperative
Energy, Inc.
The annual report of the REA ad-
ministrator for fiscal 1856 stated
that the government has accrued
net profit totaling S48 million from
REA lending operations since the in
ception of the program % years ago.
This is due to the co-ops paying more
than the cost of money to govern
ment.
Rural electric co-operatives have
borrowed So billion from REA, and
have achieved one of the finest re-
payment records in the history of
American financing. As of March 81,
1857, the rural electric co-operatives
had repaid S450,241,415 of principal
and had paid S275, ,347, 7,019 in interest
on their loans. In addition. rural
electric co-operatives have paid
S104.7 million in advance of their
amortization schedules. Moreover. the
total amount delinquent is less than
y of one per cent of all the money
loaned to farmers, approximately
S178,000. The government has never
lost dime on a loan to an electric
coop, Ellis said, but it will if this is
done, rural electric spokesmen con-
tend.
''To increase REA interest rates to
3 &c is 50f6 increase in debt service
for t h farmer owned co-ops,"
NRECA General Manager Clyde Ellis
observed. "This is indefensible when
farmers are already hard pressed by
the cost-price squeeze. Farmers net
income in 1856 was only S11.6 bill
lions as compared to SIC billion in
1951-a drop of 27.59o. Compared to
this, interest income skyrocketed $3.50
from 1951-1956-from $11.6 billion
to $1S.2 billion as a result of the hard
money policy"
At present, REA co-ops may ode
fer" payments on the principal of
their loans for years, until farmers
usage of power and coop revenues
build up. The principal of the loan
IS then paid off at increasing rates
over the remainder of the 35-yeay
oan period.
Under the new procedure, this
'deferral' period will be cut to
years.
At present, interest payments are
also deferred for the first S years,
and then paid over the remaining 80
years of the loan period along with
current interest obligations as they !
,ome due. =
Under the new procedure, the {
first interest payment will become
iue Immediately when the loan is {
advanced. t
This plan has been urged by higher
Ups ever since the Eisenhower Admin
took office. Apparently it
mas been sold to the new REA Ad-
David Hamil. He has been
it with his advisors, includ- I
ng some REA coop officials. II
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