Veto of Bill Concerning the Loan Approval Authority of the Administrator, Rural Electrification Administration.

To the United States Senate:

I return herewith, without my approval, S. 144, "An Act to modify Reorganization Plan No. II of 1939 and Reorganization Plan No. 2 of 1953."

The bill provides that, in the approval and disapproval of loans, the Administrator of the Rural Electrification Administration (REA) shall not be subject to the supervision, direction or other control of the Secretary of Agriculture. In all other respects the functions and activities of the REA would be exercised within the Department of Agriculture under the general direction and supervision of the Secretary.

Were S. 144 to become law it would mark a major retreat from sound administrative policy and practice. Twenty years ago the REA, then an independent agency, was by Reorganization Plan placed within the Department of Agriculture and under the general direction and supervision of the Secretary. The President, in his message transmitting Reorganization Plan No. II of 1939, said that the proposed reorganization was for the "sole purpose of improving the administrative management of the executive branch".

That action of twenty years ago accords entirely with the later finding of the first Commission on Organization of the Executive Branch that: "There must be a clear line of authority reaching down through every step of the organization and no subordinate should have authority independent of that of his superior."

Because S. 144 violates this sound injunction I am compelled to disapprove it.

Moreover, there is nothing in the recent history of the REA which affords any basis for concluding that the best interests of the agency or the public would be served by removing the Administrator's loan-making authority from the general direction and supervision of the Secretary of Agriculture.

The REA since its inception has moved steadily in the accomplishment of its mission. When the agency was established, only a small percentage of the nation's farms had central station electric service. Today 96% of our farmers have such service and about ½ the increase has been provided by REA financed facilities.

In the past six years the REA financed systems have made their greatest progress. Loans of more than a billion dollars have been made in this period, nearly half as much as was loaned by the agency in the previous seventeen and one-half years of its existence. Power sales have more than doubled since 1959, loan delinquencies have been reduced to the vanishing point and the net worth of electric borrowers has more than tripled. Plant investment for these systems has more than doubled in the past decade. The REA telephone loan program, authorized in 1949, has resulted in loan approvals which now total approximately $500 million and modern dial telephone service is rapidly being extended to the nation's rural areas.

The REA has been working well and progressing efficiently under the existing administrative arrangements. The change in those arrangements proposed by S. 144 would be contrary to the public interest.

DWIGHT D. EISENHOWER