guidelines. When we were able to negotiate these modifications of section 701, we then reexamined our position with respect to the Community Development District Act of last session and found that we can accomplish everything that could have been accomplished had that legislation passed under the current proposal. We will obtain recognition that rural planning is a necessary factor in planning for the rebuilding of our cities, and lastly we were able to recommend that the program be funded so as not to dilute the funds available for city planning and that a substantial increase in what would otherwise have been available for rural planning.

A TYPICAL COMMUNITY DEVELOPMENT DISTRICT

The Community Development District is a mechanism whereby the small local governments in predominantly rural areas can join together to carry out district-wide comprehensive planning for meeting all the needs-both rural and urban-of people within the district.

The map illustrates what a typical Community Development District might look like. A typical District can be thought of as having a small- or mediumsized city at the center, together with a ring of predominantly rural counties within commuting range around it. Some District might contain two or more urban centers this one has two. The rural counties will contain "county seat towns" and smaller settlements.

The shaded circles represent a 50-mile radius, or normal commuting distance. from the cities that serve as the usual central source of higher and vocational education, major consumer needs, employment, cultural and social interests, newspaper, radio, and television coverage, and the like. In general, this distance is the upper limit on the distance that people commute daily to jobs. The darker shaded areas represent the overlapping of 50-mile distances from two service centers.

The wide cross-hatch line represents the area that might be included in this district. District boundaries would be drawn so as to reflect the actual commuting patterns being followed by residents of the district, and the preferences of the local people concerned. In some districts, the boundaries will depart considerably from the 50-mile radius from the center, because commuting convenience is affected by rivers, mountains, or the accessibility of other trade and service centers. Some territory beyond the 50-mile radius may be included because its residents have no other service center available that is more convenient to them.

Some rural counties may have residents who prefer to use one service center, and other residents in another end of the county who prefer a different service center. Such counties can be represented on the planning boards of both of the districts, if the State Government approves. In those cases the boundary between the two districts would run through the county. But in most cases, except where substantial populations of a county prefer and use two distinct service centers, as in "Monroe" County in the illustration, boundaries probably will follow county lines.

This illustration shows a "District" with two urban centers having populations of 38,500 and 11,700 respectively. The estimated population of the District is 265,000. The population of this "District" is 79 percent rural.

Estimated population included in community development district------ 265, 000

Mr. BAKER. Mr. Chairman, just as Mr. Bertsch pointed out the great value of water and sewer systems and recreational developments in making possible vital and attractive communities a solid base for small business in rural America, so also is the small watershed projects activities and indeed our entire conservation program that relates to the preservation, use, and development of our natural resources, that has proved not only important to the Nation as a conservation goal and ideal but also as a strong base for small business in small towns of our country.

Our next witness, Mr. Chairman, is the Associate Administrator of the Soil Conservation Service which administers many of these important programs, Mr. Gladwin Young.

TESTIMONY OF GLADWIN E. YOUNG, ASSOCIATE ADMINISTRATOR, SOIL CONSERVATION SERVICE

Mr. YOUNG. Mr. Chairman, members of the committee, I have here a short statement about some of the immediate and direct benefits to small businesses and small towns from the nationwide soil and water conservation program of the Soil Conservation Service.

There are some 20,000 small contractors in the United States that depend upon soil and water conservation work for a substantial part of their business.

These contractors have invested $2 billion or so in earth-moving equipment as well as additional millions annually for supplies of fuel, tires, repairs, and services.

Thus the nationwide soil and water conservation program has tangible meaning to small towns where these small contractors live and carry on their businesses.

The cost of soil and water conservation construction is paid for in part by landowners and in part with Federal funds used to share costs of measures that provide benefits to the general public.

While the direct tangible benefits to small contractors are significant to these small businesses and to small towns, such benefits are incidental to and not the purpose of the nationwide soil and water conservation program.

The justification for the nationwide program of soil and water conservation is to prevent further decline-indeed to rebuild and use efficiently the natural resources which are the foundation on which the economy of our communities rest-whether that be small towns or big ones small businesses or big ones.

In this respect, the soil and water conservation program has become more important-not less important.

Techniques for control of erosion and management of land and water have been successfully incorporated into the art and science of farming-even though the job is far from completed. Usable water at the right times and at the right places have always been problems confronting farmers. These problems now confront urban communities in a critical way-but solutions still rest largely in the country where the water falls on the watershed lands. Because urban growth extends cities into the countryside, soil and water conservation problem are no longer confined to farming. Bulldozers, not plows, are polluting many of our critical water supplies with silt. The Soil Conservation Service, therefore, is translating erosion control skills from farming to urban situations.

There are now about 1,000 watershed communities in every part of the United States that are sponsoring watershed projects in cooperation with the Department of Agriculture. These 1,000 projects have gone through the application and planning stages into the operation stages.

We believe the watershed program, cooperative between USDA and local governments, is one of the most positive tools available to

bolster the economy of small towns, stimulate small businesses, alleviate basic causes of poverty, and improve the total environment of our communities.

For example, reports from these watershed communities show that already some 570 new industries employing 16,000 people have been attracted to these rural communities because of watershed developments. In addition, more than 16,000 new jobs have been added in about 1,000 expanded older industries and businesses.

As of June 30, 1966, 123 reservoirs in these projects have incorporated municipal or industrial water supply. These reservoirs will serve 119 communities with a population of about 631,000 people. Investments in these reservoirs for municipal and industrial water represents nearly $30 million borne entirely by the sponsors and not by Federal funds.

Mr. Chairman, this completes my statement. I will be glad to answer any questions.

Mr. KLUCZYNSKI. Thank you, Mr. Young.

Off the record.

(Discussion off the record.)

Mr. KLUCZYNSKI. Any questions or comments?

Mr. HORTON. Mr. Chairman, I just want to state that I worked very closely with Wallace Anderson in Syracuse and that you can be very proud, Mr. Young, of the job he does there and the job that is done in upstate New York by the Soil Conservation Service.

Mr. YOUNG. We are delighted to hear that.

Mr. HORTON. I am concerned that there is a lot of effort to cut back the Soil Conservation Service. I am concerned that you don't have enough people to do even the basic job that you are trying to do. I want to make it clear that I think that you need more help in this particular area.

Mr. YOUNG. Thank you very much, Mr. Horton.

Mr. HORTON. I realize you probably can't go into detail on this but I can certainly indicate my concern. I think, Mr. Chairman, that one of the things that we can discuss in our executive session is the problem of shoring up the Soil Conservation Service. It does render a very valuable service. If it is cut back or taken out of the picture, rural America is going to be seriously affected.

Mr. BURTON. Mr. Chairman, I have no questions. I would just like to associate myself with the remarks of these two gentlemen. We know the great job you are doing out in Utah and all over the West, and we appreciate it very much. We appreciate working with you, too, Mr. Young.

Mr. YOUNG. Thank you.

Mr. KLUCZYNSKI. Mr. Baker?

Mr. BAKER. Mr. Chairman, probably the closest continuous relationship of anyone in the Department of Agriculture with the Small Business Administration and with small businessmen in rural smalltown America is the continuing work in rural areas development of the Rural Electrification Administration.

The next witness is Deputy Administrator of REA, the program you mentioned favorably earlier in this hearing. Mr. Richard Hausler, Deputy Administrator.

TESTIMONY OF RICHARD M. HAUSLER, DEPUTY ADMINISTRATOR, RURAL ELECTRIFICATION ADMINISTRATION

Mr. HAUSLER. Mr. Chairman, members of the committee, this will be very brief.

Just by way of background there are about 1,800 REA-financed rural electric and telephone systems serving throughout the country. They serve in some 90 percent of all U.S. counties. Generally they serve the poorest and the most thinly populated areas. They serve more than 20 million rural people.

More pertinently, perhaps, as far as this committee is concerned, at the end of 1965 the electric co-ops were serving 320,000 commercial and industrial consumers and the telephone systems were serving 195,000 such enterprises.

Almost all of these were small businesses.

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Provision of electric and telephone service in itself is, of course, essential to the development of small businesses in the small towns and rural areas. And when we say provision of electric and telephone service, we think of it in terms of provision of that service on parity with what is provided in urban areas.

For instance, the Secretary mentioned this small industry down in South Carolina in his statement. That industry when it got started several years ago, I think they had about $7,000 in capital. Until the electric cooperative came in on the scene it would have cost them more than half of their capital just to get electric service in this particular area. That would have meant, of course, that they could not have gotten started. But the rural electric and telephone organizations go beyond the provision of service. They have a real stake in fostering small businesses in their areas because idle services mean higher costs and there are some 500,000 idle meters, hooked up homes and churches and schools and small businesses that are now vacant.

So that over the last few years these organizations have been trying themselves to do some of the things that the members of this committee have been talking about in bringing the kind of help that is needed at the local level to get the services applied to the particular problems at hand.

As they began this effort, they found the need for help in about four basic areas. One, technical assistance in analyzing the potential of a small business, in looking beyond the immediate horizons to find out whether there would be a market, say, for the chairs that they might make with the timber they have, this kind of technical problem.

The second one is credit finding. Certainly there are many sources of credit, most of them not known within the small town or local area. Someone there with some knowledge of what is possible under SBA or EDA, or any one of these other programs, and particularly the local development cooperation with which you are all familiar and which Mr. Baker mentioned which is a most useful tool in these areas, to try to put together from private sources, banks, perhaps from without the area when banks within the area are not willing to lend or don't have the money to lend, to fit together these Federal