In the Pecos Valley, N. Mex., net income of irrigated farms of 40 to 320 acres ranged from $2,995 to $28,933 (Farm Organizations in Pecos Valley, N. Mex., by Pingrey. New Mexico Agricultural Experiment Station, State College Bulletin 368, August 1952, p. 16).

In North Dakota one study indicated that with from 71 to 135 irrigated acres and with 160 to 880 dry acres, net income could be from $6,430 to $9,683 (Agricultural Experiment Station, Fargo Bulletin 434).

Apparently on these types of operations, irrigation of only a relatively small part of the farm or ranch increases income out of proportion to what one would normally expect. The irrigated area stabilizes the farm income and tides over the operator in time of drought, exceptionally severe winter, or period of low prices.

These several studies reported by the Department of Agriculture covering much of the West indicates that 160 acres (at most 320) is enough land for a family to irrigate, especially if irrigated land is farmed along with some dry land. And the question may be raised quite properly that if a crop is so low priced or land production is so poor as not to produce enough to support a family, should a reclamation project subsidized heavily with taxpayers' money be developed in the first place?

This would lead us to believe that 320 acres under irrigation is sufficient. I might say that we have here this committee print from the Department of Agriculture in regard to acreage limitation and reclamation law, released April 25, 1958, and on page 48 you have size of farms, net income, and other statistical information from various States and various projects throughout the West. In exchange these tables and this material, my views based on this material which I had compiled from individual bulletins, was somewhat strengthened because I note that the information indicates that in areas, no matter what crop they had, 320 acres of irrigated land seemed to be sufficient to support a family, particularly if there was some dry land to go along with it.

Senator BARRETT. I certainly could not disagree with that statement.

Mr. McDONALD. Perhaps we are not as far apart as we at one time believed.

Senator BARRETT. I do not think we are particularly on this basis of 320 acres. The only difference, apparently, between you and me is that I would like to give these veterans that are starting out now on these projects where they cannot make a living on 160 acres more land so they can make a living for themselves and their family. That is the only difference if there is any difference between you and me.

Mr. McDONALD. I am getting down now to the Engle formula, and I believe there is a difference, though, perhaps, with this statement you will come over to our side.

Senator BARRETT. I do not know whether you are coming over to my side instead of me going over to your side. We will not argue about that too much.

Mr. McDONALD. An attempt has been made by this organization to determine the extent to which big landowners would benefit if the 320-acre limitation benefit would be repelled. I was not able to secure the statistical information with regard to large ownership in regard

to the 17 reclamation States. While that attempt has not been successful there is reason to believe that the big landowners in the West and particularly in California would benefit to the extent of millions. of dollars. According to the chairman of the House Interior Committee, and I quote from a letter which he wrote to the Attorney General in California on February 4, 1957:

The capital investment to put water on land under the Central Valley project averages $350 per acre. If an irrigator owns 1,000 acres, the capital investment to serve his land is approximately $350,000. This money is interest free and the interest cost to the Federal Government over the payout period roughly equals the capital investment. In other words, the interest on $350,000 over a 50-year period is roughly $350,000. This is a direct subsidy to the irrigator. Using the percentages on repayment referred to in Chief Justice Gibson's dissenting opinion, the irrigator will pay back approximately $123,000. The balance of the capital investment will be paid by public power revenues. This amounts to $227,000. Thus, the total subsidy to this 1,000-acre irrigator adds up to approximately $577,000.

Here is a list of known ownerships of 5,000 or more acres in certain areas in the Central Valley of California as existed in 1946. (The list referred to follows:)

KNOWN OWNERSHIPS OF 5,000 OR MORE ACRES IN PROBABLE PRESENT AND FUTURE SAN JOAQUIN VALLEY SERVICE AREAS OF CENTRAL VALLEY PROJECT

Mr. McDONALD. These, I assume, would be potentially irrigable. A few words should be said about the so-called Engle formula which would require large landowners to pay interest on amounts the Federal Government invested in irrigation facilities. We call attention to the above statement of Congressman Engle to the effect that even though large landowners paid interest they would still be heavily subsidized. We do not believe that it is a primary purpose of the reclamation law to put the Government in the irrigation business or serve as a vehicle for a partnership between big corporations and Uncle Sam. The purpose of the excess lands provisions, in our view, is to encourage family type farming and to bring about benefits of reclamation project to the family farmer. The Engle formula might defeat the original purpose of the framers of the Reclamation Act.

It is significant that some large landowners favor the Engle formula. We call attention to an article in the Sacramento Bee, October 17, 1956. Citing a letter from the Southern Pacific Co. to the Bureau of Reclamation, this newspaper said:

The railroad also indicated it would favor the so-called Engle formula, under which a landowner receiving water on more than 160 acres pays higher charges for water received for that excess land. It said that the railroad is holding the land (150,000 acres) for long-range purposes and is not prepared to commit it for sale under the usual Bureau recordable contract which would require disposal of lands in excess of 160 acres for which Bureau water was received.

Finally, we urge that the 320-acre limitation not be increased but that the Secretary of Interior, after hearings, be authorized to adjust the limitation downward to adapt it to types of farming characteristic of different areas. We are in accord with the views of the President's Water Resources Policy Commission that

the present acreage limitation is sufficient land to make possible irrigated familysized farms in any area where irrigation is feasible, especially as the limitation would apply only to the irrigated acres of a farm (A Water Policy for the American People, from the report of the President's Water Resources Policy Commission, Dec. 11, 1950, vol. 1, p. 171).

The authors of this report predicted that 100 million new acres or their equivalent would be needed in agricultural production by 1975. It was estimated that only 30 million of these new acres would be provided if programs went forward at their project pace. Of these 30 million acres, 6 million represented newly irrigated land which was equivalent to 9 million acres of nonirrigated land. According also to this report there was at that time, according to the Bureau of Reclamation

sufficient water available to irrigate 16,695,000 acres of western land with an adequate supply and to provide 8,706,000 acres of presently irrigated land with additional water.

Mr. Chairman, that concludes my testimony.

Senator BARRETT. Thank you very much, Mr. McDonald.

Does that conclude your group, then?

Mr. McDONALD. Yes, sir.

(The telegram and statement of Mr. Kraenzel are as follows:)

ANGUS MCDONALD,

Coordinator Division of Legislative Service,

BOZEMAN, MONT., April 28, 1958.

National Farmers Union, Bond Building, Washington, D. C.: Authorize you to file my testimony on 160-acre limitation I sent to Elizabeth Herring at April 30 Senate Interior Hearing.

CARL F. KRAENZEL.

STATEMENT OF DR. CARL F. KRAENZEL, PROFESSOR OF RURAL SOCIOLOGY, MONTANA STATE COLLEGE, BOZEMAN, MONT., ON THE 160-ACRE LIMITATION ON IRRIGATED FARMING IN PUBLIC IRRIGATION PROJECTS

This testimony is in favor of the retention of the spirit and intent of the established tradition in the Nation's reclamation policy that water for irrigation from a public project shall be limited to the requirement for 160 acres. There are certain devices and procedures that permit larger acreages for irrigation in many instances, so that adherence to the spirit of this tradition does not now appear to cause exceptional difficulties, and the rejection of this "rule of thumb" criteria at this time would, in all probability create more problems than it would resolve. Therefore it should be retained for the present.

One might wish that another criteria, that of farm family income and type of farm and ranch operations might be used to determine the most desirable land and water use distribution. And this is in fact done by administrative procedure on projects where the acreage per household head is less than 160 acres. But it is not done where a somewhat larger unit is required for reasons of soil type, type of agriculture, climatic influences, and other factors that bear on income production of land and water. Until an income criteria has been developed for use "across the board" it would appear desirable to use the traditional criteria, that of the standard 160-acre limitation.

This problem is largely a western one, though in the future it may not be limited to the West. It is an issue in the 11 Western States, and also in States immediately to the east of these, so that it should be identified as an issue in the 17 Western States. This testimony is not burdened with statistics, but is designed to clarify some of the basic philosophy and ideas that attend the problem of limiting the acreage to 160 per operator.

THE POPULATION CONTEXT OF THE 160-ACRE LIMITATION

First, one major point needs clarification. Much of the West suffers and will continue to suffer generally from underpopulation. Except for certain islandlike urban settlements, population is sparse, towns are few and small, and distances are great. Many services are necessary for the resident population regardless of density of population. This applies to public services as well as the functions of the economy and the factors that enter into the level of living. One might apply the economic principle of "decreasing costs" to much of the situation. The fixed cost of these services-schools, churches, local government, roads, rural electrification, store physical plant investment, the place of doing business investment, etc., are already there. What is needed is more people, to have more volume over which this fixed investment cost might be distributed. This is not an argument for more population as such; but it is an argument in favor of increasing population somewhat, or at least retaining what there is now, if that adds to the well-being of all in the community. The alternative is some kind of zoning for many areas to depopulate entire areas completely since there is an element of unnecessarily high social cost connected with sparsity of population. There comes a time when this social cost becomes prohibitive, especially the public part of it.1

Furthermore, agriculture and related industry and agricultural service connected businesses are the basis of much of the economy in these Western States. Farm and ranch size, though interspersed with small units (some too small) tends to be of the larger size, and is tending further in this direction. This means that not only is there increasingly less opportunity on the farms and ranches, but in the agricultural service connected businesses on the main streets. It is probably true that the fewer operators have more income, as individual operators; but part of the prosperity of the economy is influenced by turnover of the original income. It is a well known axiom that money and business activity consists of the original income (M for money) times (V) or volume. And it is clear that in a community with smaller farms, more of the original income is consumed and also circulated or turned over more frequently to hire teachers, lawyers, doctors, dentists, and purchase goods and services than is the case for areas with fewer but larger farms and ranches. It is altogether

For greater details of the meaning of this social cost concept see Kraenzel, Carl F., Montana's Population Changes, 1920 to 1950, Montana Agricultural Experiment Station Bulletin 520, June 1956, pp. 57-65. See also Kraenzel, Carl F., The Great Plains in Transition, University of Oklahoma Press, 1955, p. 201 ff.

See the contrast between Arvin and Dinuba in the Central Valley of California as described in Small Business and the Community, A Study in Central Valley of California on Effects of Scale of Farm Operations; 79th Cong., 2d sess., Senate Committee Print No. 13, December 23, 1946.

likely that in an area where there are more farms the same amount of original income, multiplied by turnover will be larger than in an area with fewer large farms, and while each family may have a lesser average income than in the last instance, the total community will have more income.

Somewhere between the extreme of too few and large farms and too many small farms there is a happy medium for the community and the residents in the sparsely populated Western States. And the point here is that this happy medium would result in greater efficiency of the total institutional pattern of the community with somewhat more rather than with fewer farms and ranches, and the social cost of space would be that much less pressing.

3

160 IRRIGATED ACRES ONLY PART OF AN OPERATIONAL UNIT

This brings us to size of irrigation acreage. To speak of irrigated farms or ranches of 160-acre size (or 320 in community law States) is only part of the picture. Where farms or ranches are that small, the type of crop agriculture would likely be of the rather intensive type-cotton and sugar beet raising, vegetable agriculture, fruit and nut orchards, and, perhaps dairying. And in this instance, 160 acres (or 320 in community law States) would appear to be sufficiently large for a family-type operation in the majority of instances.

But even in this instance, and certainly in the case of most other agricultural production, the greatest good to the greatest number, and perhaps for a greater number than now in agriculture, the 160 acres of irrigated land would be only a part of the farm or ranch unity in these Western States. Dryland crop and dryland grazing on private range or on public range would be part of the total management unit. This is known as integrated land use dryland crop and grazing integrated with the irrigated operations or vice versa. The term area diversification is also used in this connection.*

This kind of operation is desirable in the arid and semi-arid West for the irrigated base serves as a reserve to the total operations, as an insurance program, and as a stabilizing influence. And, from a community standpoint in the semiarid and arid region, it would appear to be true that such reserves and stability provisions for all or most farm and ranch families would be preferable to having only some having this advantage, even to excess or unused capacity, while the remainder of the population was without this. This would argue for smaller rather than larger irrigation tracts per farm or ranch unit, and would support the case for retaining the 160-acre limit.

Secondly, especially in the arid part of these Western States, much of the public and private range and dryland crop areas could not be used at all were it not for this irrigated base to which such drylands were attached. In short, livestock could not survive in most areas of these States if they were dependent totally upon the dryland and public forest lands at higher elevations. In short, to use the extensive dryland crop and pasture resources, it is necessary to have an irrigated base from which to operate. The issue then is simply one of whether the few or the many will have access to both the dryland and irrigated resources. And with a recognition of the high social cost of space in these Western States as explained earlier, it is clear that this evidence argues for more operators rather than few, and therefore acceptance of the traditional limitation of 160 acres of irrigated land would be justified.

Thirdly, such a more stable farm and ranch economy would require a certain amount of farm and ranch labor of the permanent, year-around, or other than short season kind. Thus, it is entirely conceivable and practical that some of the permanent population would consist of such laborers and their families who would have part-time income from a small irrigated acreage of their own. Certainly the evidence at hand would support a position that such resident labor supply is to be preferred over the seasonal migratory labor. In addition, such residents would add to the permanent consuming population of the community

3 See McDonald, Angus, One Hundred and Sixty Acres of Water, The Story of the Antimonopoly Law, Public Affairs, Institute, 312 Pennsylvania Avenue SE., Washington, D. C., 1958.

4 See Kraenzel, Carl F., The Great Plains in Transition, ibid., pp. 320-322, 343 ff., ch. 15; see also certain experiment station publications, such as Montana Agricultural Experiment Station Bulletins 481, 476, 464, and 517. Also see Huffman, Roy E., Irrigation Development and Public Water Policy, Ronald Press, 1953, pp. 122, 144-146, 288-290, 133, 130-132, and 123-124.

Relative to Western States, for example, see Grass, the Yearbook of Agriculture for 1948, especially the section on The Mountain Region, p. 541 ff., and the section on The Pacific Coast States, p. 575 ff.