(e) Combining Farm Security Administration loans with grants to low-income farm families for accomplishing conservation work upon farms where these families live. This not only would permit more low-income families to participate in the rehabilitation program, but would improve their chances for making a living by building up the physical base upon which they are dependent. Where such low-income families own their own farms procedures could be very simple. Where they are tenants, appropriate leasing arrangements would be necessary to assure the benefits to low-income families.

A conservation works program including projects and procedures of the character just described could be administered without great difficulty. The Department of Agriculture has already gained considerable experience in conserving natural resources. The kind of appropriate measures are well-known and many are already being practiced although on too limited a scale. Most of the work could be handled by unskilled labor under proper supervision. Unemployed and underemployed farmers are qualified. The work could be so scheduled that those farmers who are presently totally unemployed could devote full time while other farmers, a part of whose time is required by their limited farming operations, could be available for work during off seasons.

Both public employment supported by public works projects pay rolls, and private employment supported by public or private credit, could well be involved. A distinction would have to be made, of course, between low-income or unemployed farm people and other farmers above the low-income level. Conservation work could be undertaken under the program on lands belonging to both types of farmers. The laborers employed, however, on both types of farms should come from the underemployed and unemployed farm group. Where the conservation work would add substantially to the value of a farm owned by a comparatively prosperous person, the farm owner should either finance an appropriate part of the cost of such work himself, or, where the work could best be performed through public projects, agree to repay a proper portion of its costs or stand a proportionate share of the total costs through contributions of material, equipment, or labor.

Within a particular area, and even on the same farm, a conservation program might be developed involving both public works projects and private work supported by public or private credit. Thus, a public works project in a particular locality might be undertaken in which certain large scale operations would be financed at public expense to constitute a developmental skeleton, while loans on a self-liquidation basis, or a combination of loans and grants, depending upon the economic status of the landowners, could be made to individual farmers for work on their own farms necessary to complete the area conservation plan.

OTHER MEASURES PROPOSED FOR PERMANENT REHABILITATION AND SECURITY

But other measures are needed to provide permanent security and rehabilitation for these people. Presumably, after a few years, assuming the works program were developed on a reasonably large scale, the most urgent needs of conservation would have been met. Other devices are needed, therefore, of a continuing and longer-time nature that will give permanency to the effort. Such programs or procedures might include:

First. A Proposal That the Present Farm Security Administration Program of Supervised Loans, Debt Adjustment, and the Like, Be Extended To Reach a Greater Number of the Low-Income Group.

For our present purpose, farms may be considered in four groups. In the first are those that, assuming reasonable farm prices, are large and productive enough to support families residing thereon, hence are not in need of assistance of the type available through the Farm Security Administration. The proportion of farms of this kind obviously is highest in the better agricultural areas, comprising nearly 100 percent of the farms in some areas but sharply diminishing from a large majority to a small minority as we pass from the good to the poor agricultural areas.

In the second group are farms for which a so-called balanced farm plan can be drawn up. That is, the present earning capacity of such farms is sufficient, with a certain amount of reorganization and with reasonable farm prices, to produce enough income to support family living and repay operating expenses and any necessary rural rehabilitation loan. It is farms in this group which now constitute the bulk of the clients of the Farm Security Administration receiving "standard" rehabilitation loans.

In the third group we may place those farms which at present cannot support a family, but could do so if means were available to enable the operator to

rebuild his soil resources. It is this type of farm which would be most helped by a conservation works program of the type previously discussed. Such a program, by building up the physical productivity base of the farm probably would permanently rehabilitate the farmer residing thereon and give to him and his dependents reasonable security. These farms are then potentially standard farms in the Farm Security Administration sense. With temporary assistance in the form of grants for building up their resources, they would be able to support the family, pay operating expenses, and meet under reasonable terms of payment any necessary rural rehabilitation loan.

In the fourth class are farms whose resources are so limited that they will only partially support a family even after their productivity base is developed to the utmost. In other words, there are many farm families who still could not be reached even though the present efforts of the Farm Security Administration to extend loans to this class of farmers were expanded to the fullest. Something additional will still be needed.

With this general statement of the problem, it is clear that it is to the last two of the four groups of farmers mentioned to which increased attention urgently will have to be given. And it is in this connection that the suggestion is made that the Farm Security Administration program be extended to reach a greater number of the low-income group.

Such an extension would require an increase of supervisory personnel and funds for work grants to be tied to a farm plan and used in conjunction with rural rehabilitation loans. Such a program, if generally extended, would take care of the third group mentioned above very well.

But the conservation works program would not completely meet the needs of the fourth group of farmers, who would not be entirely self-supporting even if the limited physical resources they have were developed to the utmost.

If they are to be rehabilitated, either some means of supplementing their farm income from part-time work off the farm will have to be found, or a part of them will have to be relocated in areas of greater opportunity. If enough families left these areas, the size of farms of the remaining families could be increased so that with the aid of the Farm Security Administration, most of the remaining families could become self-supporting. If those families who would leave were to remain in agriculture, it would be necessary for them to have access to good land, either new lands which may become available through drainage or irrigation, or flood control measures, or by subdividing good land which is now thinly populated in large holdings. Development of local industries which would furnish part-time employment opportunities for the families in this group would obviate the necessity for part of them to relocate. About the only alternatives to relocation or part-time employment off the farm would be either a permanent public works program or permanent relief. Second. A Proposal That a More Adequate Program for Farm Labor Be Developed.

Up until very recent years, the problem of farm labor received but little attention. Most people apparently thought of farm labor in the conventional setting of the hired man in the Corn Belt and general farming areas where usually not more than one man was hired on each farm. Furthermore, he was probably a son of a neighbor and was taken into the household and virtually occupied the status of a family member. Farm labor under such a setup obviously did not create many serious economic or social problems. But even in this earlier period this picture of farm labor was by no means complete. Before the era of the combine in the Great Plains, for example, we had the migrant harvest laborer, and in the intensive fruit and vegetable, sugar beet, and similar areas we had hired labor working under conditions that were not too good.

In recent years the problem has become much more acute. With the increased mechanization that has taken place, more and more hired labor has been displaced. Their adverse situation has been intensified by drought, by unemployment in the cities, and by the other conditions arising out of the general depression. The problem has been dramatized by the situation of the migrant farmers and their families who left the Great Plains and adjacent areas in the 1930's to go farther West, in search of work and a place to live. Three remedies are suggested:

A farm placement service both for short-time labor and for permanent settlement, either as farm operators or as farm workers.-For short-time labor, the main function of such a service would be to coordinate the labor demand in

an area with a labor supply from another area. This would involve a determination by the labor placement service of the amount of the seasonal labor demands of the various types of work on the basis of acreages and normal yields and the amount of labor obtainable locally. It would also involve the placement of labor orders with the employment service by individual growers and the making of such information available to laborers within other areas. Such a service also should be designed to enable tenants to find desirable farms and enable landlords to get in contact with suitable tenants. It should also keep abreast of conditions in different parts of the country and keep rural people in one area currently informed as to other areas which provide either full-time farming opportunities or a combination of part-time farming and outside farm or nonfarm employment opportunities.

Some work along these lines is now being done by the Farm Placement Service of the Social Security Board and in some of the States, notably Texas, but a much greater effort is needed.

A housing program for farm labor.-Not only should aid be given to facilitate the employment of farm laborers, but a well-planned housing program is needed to provide them with adequate living conditions. Such a program may take various forms, depending on local conditions.

Camps for migratory workers, although in operation already, require further development in areas where perishable or other crops afford a short labor season and force laborers to move frequently from area to area. Such camps with adequate shelter and sanitary and water facilities should be constructed on land either leased or owned by the Government so as to provide security to residents and to enable the Government to provide them with technical guidance.

Labor homes should be provided in areas in which it is desirable to maintain, within the area, the peak-season labor supply throughout the year. In such places as southeastern Missouri, for example, the crops are nonperishable and the peak labor season lasts for several months. Such labor home sites should include sufficient acreage for home gardens, a brood sow, poultry, and milk cows for home use. The combination of such a subsistence program with seasonal labor income should afford in many instances sufficient real income for an improved standard of living.

Rural counterpart of wages and hours unemployment and old-age devices needed for farm labor.-For the further benefit of the low-income farm labor group, we should have a rural counterpart of the wages and hours legislation and the unemployment insurance and old-age retirement that are now in effect for urban workers. To accomplish this will not be easy, but these people need protection and security just as much as urban workers. This is particularly true of that large group of migrant seasonal laborers who follow the crops.

Third. A Proposal Looking Toward Maintenance and Encouragement of the Further Development of Owner-Operated Family-Sized Farms.

Another major proposal looking toward the rehabilitation and permanent security of these displaced and underprivileged people is to encourage and maintain the family-sized farm. We have noted that progress in mechanization in recent years has resulted in stepping up the size of farms in particular areas and in displacing farmers. When one individual extends his operations, either through purchase or by leasing, to cover areas formerly handled as individual units by one or more other farmers, obviously he is intensifying the problem of bona fide tenants seeking farms to operate. This, as we have seen, is already becoming a problem of considerable importance in certain parts of the country. Various measures might be adopted for encouraging and maintaining the familysized farm.

One is to expand the present tenant-purchase program so that the Government can make loans on a much larger scale than at present to qualified tenants, sharecroppers, and farm laborers to enable them to acquire family-sized farms and to make the necessary improvements on them.

The keen interest that tenant farmers have taken in the tenant-purchase program of the Farm Security Administration since 1937 points clearly to the fact that American farmers are eager to own family-sized farms. The Farm Security Administration has been limited in the number of tenant farmers that it could assist in becoming owners, but the experience that has accumulated is invaluable as a guide to an enlarged program.

A second suggestion is to provide that all reclamation and other new farm land developments be settled on a family-sized and owner-operated basis and that the perpetuation of this tenure system be guaranteed.

We might well give consideration to the possibility of using reclamation areas as a means of rehabilitating low-income farmers and landless farm workers. But if such were done it is imperative to prevent concentration of holdings in these areas as long as a population surplus exists in agriculture. For those areas yet to be settled, restrictions on size can more easily be put into effect, but measures ought to be adopted to encourage and maintain family-sized farms even in the older reclamation areas.

Another suggestion is to settle or resettle shifting and nonpower farm families on good lands now owned and operated in larger than family-sized units. With our land resources already occupied in acceptable farming areas, an increase in the number of farms must come mostly from subdivision of larger holdings. If the large holdings are not now effectively used, subdivision probably will result in a net gain in the amount of employment afforded by the area. Machinery and funds will be needed to utilize such lands and rather close guidance in subdividing and settling would be necessary.

A fourth suggestion is to extend cooperative loans, and technical guidance when needed, to groups of operators of family-sized farms, both owners and tenants, for the purchase of purebred sires, mechanical equipment and like things as a means of bringing the latest, proved benefits of technology to relatively small farms. A companion measure is to extend federal aid, both financial and advisory, to farm-forest cooperative associations, which hold considerable promise for betterment in the marketing and management aspects of farm forestry.

Of two methods for fitting machines and equipment to farms, one involves designing machines to fit the needs of the farms, and the other involves "designing" the farms to fit the capacities of the machines and equipment. The objective of both is to lighten the overhead costs of owning and operating equipment. In the absence of well-adapted machines for small farms, an attempt to adjust the size of farm to the capabilities of existing machines involves enlarging the size in acres, but this may mean the displacement of some other farm family. To give the advantages enjoyed by large operators to those with small farms, therefore, the cooperative ownership of expensive machines is recommended. This would entail real cooperation and planning, but would not be difficult with sincere and intelligent effort.

Small farms would benefit even from the cooperative ownership of ordinary farm machinery such as combines, manure spreaders, drills, and the like. They also would benefit from the cooperative ownership of large machines, such as those required for conservation operations, land leveling, or clearing. Cooperation need not be limited to the use of machinery and equipment. It might be employed in a number of directions, including cooperative farming, cooperative medical care, etc. There may be or probably will arise a need for credit on the part of groups interested in such cooperative undertakings. Where such a need exists, efforts should be made to provide the necessary loans.

A fifth suggestion is further to scale Agricultural Adjustment Administration allotments and payments in favor of the small producer. The Agricultural Adjustment Administration has already gone a considerable way in this direction but possibly could go somewhat further. But there are many problems involved in it. Obviously, this should not be carried out to the point of alienating the support of the larger producer because to do so would tend to defeat the purpose of the Agricultural Adjustment Administration program, and result in lower farm incomes of all classes of farmers.

In place of further scaling of allotments, it might be easier, and more practical, to work out a procedure for further scaling of payments in favor of the small producer. At present the law requires a write-up of all payments under $200 to any person on any farm. Because of the limitation upon funds allotted and of large participation in the program, the bulk, possibly 90 percent or more of the benefit payments made, average less than $200 per person per farm. This means that the big majority of the checks have to be stepped up, and further that the above-average income farmer gets an increase just the same as the farmer with low income, although the percentage increase is much greater on the smaller than on the larger payments. If some other scheme of calculating the allowance could be devised whereby the small farmer would earn greater payments without having to go through the stepping-up process it might result in greater equity.

A sixth suggestion is to equalize credit opportunities by making credit available to small holders at reasonable rates of interest. Removing part of the

present burden of financing small farms, however, requires more than just & reduction in interest rates.

The terms under which an individual farmer may borrow are quite often much more severe than the terms on which corporations obtain funds. When a loan for production purposes is not paid, a deficiency judgment may be rendered against the borrower. Thus if a farmer has other property, he may Restricting bear all the risk of the loan and the lender very little or none. the use of deficiency judgments and requiring that the lender limit his security to the collateral on which the loan is to be made would decrease this abuse. In the most distressed situations it would be desirable to limit the amount of credit given to what can be repaid by the estimated earning capacity of the farm and to extend any necessary additional funds on the basis of a conservation work agreement grant. By the additional aid of a small grant for use in building up the productivity base of the farm, it may be possible to render the farmer completely self-supporting in a short time and thereby improve the security of the original loan.

Another heavy credit load, particularly for small farmers and for noncommercial farmers, is the requirement of high amortization payments, or the renewal fees on term mortgages. Financing over a longer period lessens the annual principal repayment burden and is to be encouraged. This is true, too, of the adoption of amortization payments varying in accordance with the financial success of the farm business.

But even such payments may represent elements of forced saving and building up of an estate that small farmers can ill afford. It would be well, then, to investigate circumstances under which it would be unnecessary for a farmer to repay all the principal. A low requirement of principal repayment (but one that would somewhat more than cover depreciation on improvements), and a continuance of interest payments form one plan for reducing the financial burden of small farmers; principal payments are lessened, and the farmer's stake in the land might still be strong enough to give all the advantages of ownership. If this measure were adopted, the land should not be pledged as security for any other debts.

A seventh suggestion is to facilitate transfer of land from old to young farmers. Many farm owners have reached retirement age but are unable to utilize their property to provide for their retirement. There perhaps is no heir to take over the farm, or the owner may be unable to sell without too large a risk on a loan to the purchaser. Even if there is a good cash sale, he may not know how to invest his funds securely. Further, it is often difficult to find a home suitable for living during retirement. On the other hand, many capable younger men want land. It is logical, then, to advance a program to facilitate arrangements for the retirement of these older farmers; both groups would be helped.

This can be done by setting up regional semipublic corporations, such as the Federal land banks, or agencies to act with the land banks. The corporations would stand ready to purchase farms from operators wishing to retire, giving investment bonds of the corporation in exchange, the bonds to be secured by the real estate and guaranteed by the Government. Rental and interest income from the purchased lands would furnish funds for the interest payments on bonds; and repayment of principal through amortization would provide funds for bond retirement. The corporations would be ready to buy back bonds at par from retired farmers who wanted to liquidate a part of their estate. An annuity arrangement can be worked out for the farmers who have a current need for gradually liquidating their estates. The land would be carefully appraised and classified according to its most desirable use, size of farm, and need for conservation.

The difficulty of finding suitable homes for the retirement years could be overcome by establishing suitable homes, perhaps on plots near villages and towns. An agency set up to establish noncommercial units could cooperate in this function, and the homes could very well be part of the allowance paid the retiring farmers for their farms.

Retirement homes might also be provided for the older farm people who have not been able to accumulate an estate. If the local units of Government can build these homes and rent them to the older people eligible for old-age pensions, these people can earn a part of their living on such small tracts of land. More room on the land thus is provided for the younger age groups, and the morale of both groups is strengthened.