items of administrative cost, such as telephone and telegraph expenses and travel. He has exercised precautions to be certain that more funds were not loaned for rehabilitation purposes than were needed and has brought about changes which greatly increased the participation of local county committees in the functions of the Farm Security Administration.

Although this new Administrator has been in office only a short time, the accomplishments to date in making savings of Government funds and in bringing Farm Security Administration's operating procedures and policies into line with orthodox techniques have been impressive.

PRODUCTION AND SUBSISTENCE LOANS ΤΟ LOW-INCOME FARMERS

The Congress has recognized that reasonable assistance to lowincome farmers is necessary. Private banks, insurance companies, privately capitalized agricultural lending agencies, and agencies of the Farm Credit Administration generally have been able and willing to finance farmers and stockmen with sufficient margins of security. But the low-income farmers, such as farm tenants, farm laborers, sharecroppers, and owners of small inadequate farms who could not obtain Government financing and could not furnish margins of collateral, were either forced to go without needed credit or borrow upon unreasonable terms. This situation was not due to any lack of honesty or ambition upon the part of the low-income farmer. It was because of the economic hazards of farming and the fact that private lenders, particularly landlords and merchants who were not in position to do such financing, could not afford the risk incident to loans to farmers who did not have a reasonable amount of capital of their own. Then, too, there are thousands of these low-income farmers who have had neither education nor training in farm and home management sufficient to enable them to make the most of their opportunities.

The national interest in the welfare of farmers has long been a matter of Federal concern. As early as 1904, the Congress made appropriations to the Department of Agriculture for assistance in farm management on a limited scale. In 1910 appropriations were made for training in home economics. Since that time, substantial appropriations have been made for both types of technical guidance through the extension services, operating largely in conjunction with the States in about 2,900 of the 2,970 agricultural counties in the United States and in Hawaii and Puerto Rico.

The existing Federal programs for loans to farmers in economic distress began on July 26, 1918, when President Wilson placed $5,000,000 at the disposal of the Treasury Department and the Department of Agriculture to aid farmers in drought-stricken regions. Crop and feed loans were made, on an area basis, at intervals from 1918 until 1931. In 1931, this form of assistance to low-income farmers was extended on a national scale and has so continued to the present time. In 1932 the Reconstruction Finance Corporation was authorized to create the 12 regional agricultural credit corporations to assist in alleviating the extreme credit stringency with respect to loans for general agricultural purposes, including the raising and marketing of livestock. In the Federal Emergency Relief Act of 1933, the Congress made $500,000,000 available for grants to and

through the States to aid in meeting the cost of furnishing relief and work relief and in alleviating the results of unemployment. A part of these funds was earmarked, apparently by the Federal Emergency Relief Administration, for rural rehabilitation purposes. Also, in the National Industrial Recovery Act of 1933, $25,000,000 was made available to the President for making loans and otherwise aiding in the purchase of subsistence homesteads. Since 1935 the Congress has given recognition, in part, to the need for the programs of financial and technical_assistance of Farm Security Administration and its predecessors, Federal Emergency Relief Administration and Resettlement Administration, by appropriations to aid in the rehabilitation of needy farmers.

In 1937, the Congress passed the Bankhead-Jones Farm Tenant Act, now administered by Farm Security Administration, which, among other things, provided for production and subsistence loans to lowincome farmers.

The repayment record of these low-income farmers, although not sufficient as a general proposition to justify commercial banks and other private lenders in handling their financing, has been perhaps better than could be expected under all the circumstances. It must be kept in mind that the loans to these farmers are largely character loans in which the lender, as well as the borrower, is taking the risk of weather hazards, price declines, and other economic and physical adversities. But, of 3,901,373 emergency crop and feed loans, totaling $451,976,734, made from 1918 through December 31, 1943, 76.3 percent or $344,952,035, has been repaid. Special drought loans by the crop and feed loan offices are excluded, because many of these borrowers had little chance to pay such debts. However, the foregoing figures do include loans made in times of depression and low production and some loans in the Dust Bowl area of the West. Notwithstanding these facts, collections in 9 of the States exceeded 90 percent and in Hawaii the repayment percentage was 98.8.

The regional agricultural credit corporations, starting in times of economic stress during 1932 and making many loans of well over $100,000 each, had, for the period ending December 31, 1942, loaned $343,268,709, of which $336,849,339 or 98 percent, had been repaid. The results through 1942 are used to give a true picture of the operations of the regionals because in 1943 they made a number of special loans for food financing, many of which had not matured by the end of that year.

The Farm Security Administration, sometimes inspired by paternalistic and socialistic motives and, in some cases, with an intermingling of credit and relief, had loaned for rehabilitation purposes $809,215,750 from the inception of its program (1936) through December 31, 1943. Of this amount, $443,371,982 or 54.7 percent, had been repaid. This latter figure is said to represent about 87 percent of the maturities but that figure is probably of little significance because of Farm Security Administration's extremely liberal policies of renewal and extension of old debts upon which installments of principal and interest were delinquent.

The figures on rehabilitation loans of Farm Security Administration are, of course, exclusive of grants of approximately $152,622,643 to 1,115,423 families, which it made in the period from 1936 through December 31, 1943. These figures are exclusive of loans made by

the various State rural rehabilitation corporations, but do include loans made by the Resettlement Administration, predecessor of Farm Security Administration. Many of these loans, however, were made to families in urgent need of direct relief. It would be grossly unfair to the repayment record of low-income farmers generally to include in the record of their ability to repay, the negligible recoveries which reasonably could be expected on sums disbursed in connection with relief programs. (For verification as to amounts, see appendixletter of March 28, 1944, from W. A. Jump, Director of Finance, United States Department of Agriculture.)

In case of all the loans mentioned above, additional sizable collections on the outstanding balances are anticipated and these collections will, of course, operate to improve the repayment record of the low-income farmers.

It should be noted, however, that the national advantage in Government assistance to the low-income farmers who could not obtain adequate credit from other sources does not arise solely from humanitarian reasons. This assistance reduces the demands for private and national relief. It adds to the total wealth and revenue of the country by increasing the per capita income and resources of the farmers. It makes for a better citizenry and, therefore, for law and order. Finally, it has aided substartially in the war effort because of the sizable contribution these low-income farmers have made to the national supply of commodities essential for civilian and war needs.

DUPLICATION OF CREDIT AGENCIES FOR ASSISTANCE OF LOW-INCOME

FARMERS

In its investigation and in its efforts to determine the advisability and feasibility of further financial aid and assistance to low-income farmers who are not able to obtain such aid and assistance from other sources, the committee deemed it necessary to make inquiry concerning the policies and programs of other governmental agencies engaged in making comparable loans to needy low-income farm families.

The committee, therefore, obtained information as to the policies, functions, and programs of the regional agricultural credit corporations, the emergency crop and feed loan offices, and production credit associations, three lending agencies now under the direction of the Governor of the Form Credit Administration. The last of the agencies mentioned, to wit, production credit associations, are cooperative lending agencies, in which each individual borrower has a financial interest, represented by stock which must be purchased and acquired by every borrower from the local production credit association from which his loan is obtained. The other two agencies mentioned are engaged in making direct loans to low-income farmers who cannot obtain loans and financial assistance from other sources. These two agencies, regional agricultural credit corporations and the emergency crop and feed loan offices, are engaged in making loans in many respects comparable to and analogous with loans which are now being made by the Farm Security Administration.

The committee finds that there is no substantial difference in the eligibility requirements of an applicant for a loan from the regional agricultural credit corporations, the emregency crop and feed loan offices, and the Farm Security Administration.

SUMMARY OF CONCLUSIONS OF THE SELECT COMMITTEE

As a result of those factors previously discussed in this report, the committee is of the opinion that, up to the time of the recent changes in those in authority over Farm Security Administration, that agency has not been wisely administered and has been used as an experiment station of un-American ideas and economic and social theories of little or questionable value.

The committee sees no need for the present duplication of Federal agencies furnishing analogous types of services to low-income farmers. Such duplication undoubtedly causes loss of Government manpower, increases Government expenses, and creates confusion in the minds of farmers who must necessarily utilize that type of credit. The committee, therefore, feels that the Farm Security Administration, the regional agricultural credit corporations and the emergency crop and feed loan offices should be discontinued and that the Farmers' Home Corporation, which Congress established in 1937, to render assistance to low-income farmers, should be utilized as Congress intended, with such additional limitations and restrictions as appear advisable in the light of the experience gained in extending Federal credit to low-income farmers since 1937.

The committee believes that the tenant purchase program should be expanded. It believes that the credit agency should be in position to give the worthy low-income farmers who qualify for loans from it, practical guidance in farming and farm home plans and operations of the same type and character now being rendered by the Extension Service. The committee believes that such Federal credit agency should not be permitted to finance farmers who are able to obtain the credit they need from commercial banks, cooperative and private lending agencies, and other responsible private lenders, at reasonable rates and upon reasonable terms.

The committee has found it imperative to provide a clear and definite authority for liquidation of the resettlement and rural rehabilitation projects of Farm Security Administration. The existing authority, being derived from brief language in current appropriation acts and the statutes relating to sales of surplus property of the United States, is not adaptable to expeditious accomplishment of the liquidation of such projects in a manner most advantageous to the United States and the farmers who may wish to purchase portions of the land.

The committee stresses the importance of having the powers of the Federal lending agency clearly outlined. There should be no latitude for experiments, favoritism, and reckless handling of Federal funds with respect to Federal programs such as those indulged in by former Administrators of the Resettlement Administration and the Farm Security Administration.

In reaching its conclusions, the committee has held to the basic purposes which motivated it during the course of the entire investigation of Farm Security Administration; namely, to make it certain that the credit agency finally utilized to render the services in question should be held to traditional American policies and methods and that credit services to low-income farmers and the provisions for farm ownership should be simplified and improved without sacrificing the essential functions of any existing Federal credit program.

No comments are made upon the noncontroversial programs presently being administered by Farm Security Administration, such as projects under the Case-Wheeler Act or the Water Conservation and Utilization Act. Further, no comments are made with respect to the land-utilization program of the Department of Agriculture or the agencies of the Farm Credit Administration not engaged in making direct Government loans to farmers.

LEGISLATION RECOMMENDED

The select committee, based upon information obtained and facts and circumstances disclosed during the course of the investigation, drafted H. R. 4384, which was introduced on March 13, 1944, by the chairman of the select committee. A copy of H. R. 4384 is attached and is submitted as a part of this report. It is believed that the proposed bill, wisely administered, would eliminate undesirable features of a national agricultural credit program for low-income farmers.

The bill would abolish the Farm Security Administration and the regional agricultural credit corporations, discontinue the functions of the emergency crop and feed loan offices, as such, and transfer the assets of these agencies and certain functions and assets of the National Housing Agency to the Farmers' Home Corporation originally created by title IV of the Bankhead-Jones Farm Tenant Act (7 U. S. C. 1014-1029). Tentatively it was agreed that the assets would be used to create revolving funds for use by the Corporation in carrying out its prescribed functions, subject to certain definite limitations with respect to such use, annual reviews of the transactions of the Corporation by the Comptroller General, and complete annual reports to the Secretary of Agriculture and the Congress.

The bill also provides for the transfer of such qualified personnel from the three agencies abolished as may be necessary in the execution of the authority vested by the legislation recommended. The assets relating to flood restoration loans authorized pursuant to the item in the Second Deficiency Appropriation Act, approved July 12, 1943, would also be transferred to the Corporation. The legislation would clothe the Farmers' Home Corporation with certain definite powers and authority, would place upon its functions certain definite restrictions and limitations, and would spell out the eligibility requirements of applicants for loans and the manner of performing the duties and functions vested in the Corporation.

The basic purpose which the committee has in mind is to simplify and improve credit services to farmers and promote farm ownership without sacrificing the essential functions of any existing credit programs.

Under the proposed bill, the powers, duties, and functions of the Corporation would be amended and extended so as to authorize it, among other things, to make loans to and insure mortgages for eligible farmers and war veterans to enable them to acquire family-size farms; to make loans to farmers and stockmen for the purchase of livestock, farm equipment and supplies, and other farm needs, the refinancing of indebtedness and family subsistence; and to liquidate resettlement projects and rural rehabilitation projects for resettlement purposes.