out and increase his crop. It is true that there were speculators who came into this country and farmed and sometimes were known as suitcase farmers. But it is also just as true that a great many of the people who are there now were there in 1939 and 1940 and upon the prodding and urging of their own Government expanded their acreage in the production of wheat, a policy which is now deplored by a great many of our more conservative people. The continuance of this, of course, was heightened by the retention of the principle of high fixed parities up to and including the crop year for 1954.

Now all this is said not by way of creating a diversion or an argument with respect to farm policies but rather to demonstrate from one who has lived with farmers and with stockmen and with cattlemen, and who has borne their problems, both as a friend and as a legal counsel throughout these years, that the farmers, stockmen, and cattlemen of the Great Plains area have not placed themselves in this plight solely of their own initiative. The demands made upon him by the United States Government during World War II and later during the Korean war, and by way of high rigid supports, have placed him in a position from which he had no other recourse or choice. His investments in machinery and land increased with the demands of our Government for more food. Having asked our farmers to divert large amounts of land which had been grazing land and grassland into crop production, many of our citizens are prone to criticize the same farmer who responded so patriotically to this appeal particularly during World War II.

On February 19, 1954, one of the most devastating duststorms occurred over the Great Plains that has ever occurred in the history of that area. High winds of from 70 to 80 miles an hour scourged the country for a period of nearly 24 consecutive hours. A storm of this type, of course, is as much a catastrophe as a flood or a hurricane, or a tornado, because, regardless of crop practices, soil rotation, or any of the other known and approved methods of farm practice, it is impossible to hold land in these circumstances. Immediately after this storm I personally examined thousands of acres which were farmed in accordance with good conservation practices, including the leaving of natural coverage, strip farming, and other methods, and, without respect to the method employed, the fields were uniformly torn up and destroyed.

This was followed by a second storm on February 22, which, although not as severe, did great damage. At that time Governor Thornton of Colorado requested me as Lieutenant Governor to make a survey of the area, which I did. My recommendations were contained to him in a letter dated February 26, 1954, a copy of which was sent to Mr. Ross Rizley, then Assistant Secretary of Agriculture. Among the recommendations contained in that letter was a very strong recommendation for extended agricultural credit. At that time and at every opportunity between that time and this, I have talked with farmers, ranchers, and stockmen not only in Colorado but all over the Great Plains area. May I emphasize that at no time have I found a general desire by those people to engage in or receive some give-away or Government handout.

It is almost axiomatic in these times-and it flows as an indirect result of our demand that our bank accounts be insured through the Federal Deposit Insurance Corporation-that as soon as times get a

little hard the banker starts tightening up on his loans. Now the question poses itself directly to us: What are we as American citizens and as members of the United States Senate going to assume as our responsibility in this situation? We have placed these thousands of people in a situation where the Government not only asked but demanded larger production. They have done so, and now we have in a contracting farm economy left them there without adequate aid or assistance. It soon became apparent to me that the present FHA laws were inadequate and that they did not offer adequate assistance. After studying this matter for 2 years, and particularly studying the needs of the people involved and who need the credit, S. 3247 was finally drawn, in which so many of my able collegeaues were so kind as to join.

What are the prerequisites of good farm-credit legislation? Well, first of all, it must be certain and it must be sure. The farming population, like any other population, has a few low-output people at one end of the curve whom no one contends should be supported by the Federal Government. But the great and vast majority of all farmers and stockmen are sincere, conscientious people who ask only the opportunity to work, receive a fair price for their crops, and have a reasonable chance to finance themselves.

If financing is only on a spring to fall basis, it is not conducive to a good national economy. No one can foretell from the spring to the fall whether the farmer is going to have rain in the interim. In other words, a farmer's economy rests not upon his crops in a single year but rather upon the average of his crops and the average of his farm production over a period of years. He must, therefore, plan his own economy in the same way. If his banker is unwilling to do this, or if his banker-because of the laws under which he must operate his bankis a person who reflects the first dark cloud appearing on the horizon, he has no place to which to go the secure credit. The farmer then lives under a constant state of anxiety and fear. So, the first thing and the first prerequisite for farm credit is that it must be certan and it must be sure. When the time comes that a banker can or will no longer carry him then he must have some agency to which to turn. This agency has been the Farm Home Administration and what are commonly known as FHA loans.

I shall not go into the long history of FHA loans, stemming from the Bankhead-Jones Act, but I will say a few things about it. FHA loans as they are now written constitute a hodgepodge of laws which have grown up like a crazy patchwork and are completely unsuited to the present situation. There are, I believe, six and possibly more general types of loans, and the practical results run like this: Farmer Jones comes in and asks to be financed by the FHA after having been turned down by his banker or loaning agency.

The FHA agent discusses it with him and tries to explain that part of the loan will have to be production and subsistence, part water facilities, part something else and tries to explain the regulations. Long before he has gotten this far he has left the farmer behind, and in many cases the agent, himself, is lost in the maze.

As a result, thousands and thousands of farmers have walked away from FHA offices convinced that they could not get loans. The methods of procuring them and the methods of handling them are so complicated and cumbersome that not only could the farmer not under

stand it but, in many instances, FHA administrators did not understand it themselves. If what they have told me is true-and I believe it is they are still lost in a maze of laws and interpretative regulations today.

In talking with a great number of FHA administrators last year, I became convinced that they were, in many instances, confused about the regulations. One of their great complaints today is that the laws are so complicated and the regulations interpreting those laws necessarily more complicated that no one actually knows at any given time whether they are completely within the law in making or refusing a loan.

That brings us to the second necessary qualification for Government financing of farmers. It must be simple and easy. I have later joined in a bill, S. 3429, seeking to amend the Bankhead-Jones Farm Tenant Act. It will be some improvement upon the present laws, but it does not attack the fundamental situation-the fundamental problem of simplifying these laws.

To be of real assistance to the farmer, to give him real relief, to remove the fear and anxiety that come from complication, and numerous trips to the FHA offices, S. 3247 should be adopted. It simplifies the entire loan procedures and this, I may say, is a necessity as expressed to me privately time and time again by members of the Department of Agriculture, by State administrators of FHA, by local directors of FHA all over the plains country and also by the administrators of FHA at the local level.

The next necessity for farm credit, it seems to me, should be that the overall provisions should be more practical. If we take the position that Government credit must be controlled by the same business principles as private credit, then we are defeating the purpose of Government credit. Our first qualification for an FHA applicant is that he must be unable to get credit at his bank or through the ordinary sources of lending. That means that, of course, he has already reached the place that eliminates the use of banker's standards to make loans. I have already touched upon the fact that the length of time should be expanded. The present 7-year limitation finds many of our farmers who have been in drouth-stricken areas for the last 5 years in a situation where they will shortly be precluded from obtaining further extensions or renewals of FHA loans. Yet, during the 1930's and during the existence of the Regional Agricultural Credit Corporation, in spite of the great leniency with which such loans were made, they were paid back 95 percent to the Government. These loans that are now made will be paid back the same way.

Credit must be made easier with respect to the amount. Fifteen years ago $1,200 would buy a good tractor. Today it will cost four times that amount. Everything else which farmers need has gone up in proportion, and, consequently, the legal limitations which have been placed on loans in the past are no longer applicable.

Now, what does the S. 3247 do with respect to some of these matters? First, the bill refers only to loans made under title II of the Bankhead-Jones Act and does not affect title I of that act dealing with real estate loans.

Two, title I of S. 3247 deals with emergency loans and title II of it is devoted to refinancing and general farm loans. The first section of the bill deals with emergency loans and provides that the Secretary

may designate emergency areas pursuant to subsection B for any agricultural purposes, including the purchase of livestock, feed, fertilizer, farm equipment, supplies and other farm needs and for refinancing of existing indebtedness and family subsistance. A Presidential declaration would no longer be required.

The Secretary may designate any such area as an emergency if he finds that there is a general need for agricluture credit which cannot be met for temporary periods of time and that the need for such credit is the result of natural disaster of severe production losses.

The act then goes on to provide for loans in the emergency category, at a rate of interest not to exceed 3 percent. It further retains the provisions of the old law that if loans are made to corporations or other business organizations that it must be the personal obligation of each person holding as much as 10 percent of the stock or other interest in the corporation or organization. It contains the agreement of the old act that when it appears that the borrower may borrow or secure from existing sources that he must liquidate the loan and do so.

It provides that the Secretary may utilize the personnel, facilities, property, and funds of the Commodity Credit Corporation for carrying on these purposes and to use the revolving fund created by section 84 of the Farm Credit Act of 1933.

Title II of the act simply authorizes the Secretary to make and insure loans to farmers and stockmen who are citizens of the United States for any agricultural purposes and specifies certain purposes without limiting them under the general powers. It sets the maximum amount at $21,000. I might say that I have had some correspondence indicating this is too small an amount. It also provides that in case of additional loans, the total loans shall not be in excess of $30,000. There is some thought that this is too small, and numerous letters indicate that this amount might properly be raised.

The time for making any loan, including renewal or extension, shall not exceed 15 years. It also provides for the voluntary adjustment of indebtedness between the farmer and his creditors.

At this time, Mr. Chairman, I wish to address myself specifically to the recommendations of the Department of Agriculture as enumerated in a letter dated April 23, 1956, to the chairman of this committee. In that letter, the Department says:

The Department favors the objectives of having its emergency lending authorities consolidated into one law which would be accomplished by sections 3 and 5 through 9 of S. 3247.

The Department goes on not to recommend title II of the bill.

It would be satisfactory with me to accept an amendment to the act in accordance with the indented paragraph of page 2 of the Department's letter by adding a section 3 (a) (4) on page 3 after line 11, except that the limitations contained therein should be modified to be $21,000 and $30,000, respectively.

At the time this is written, I have hopes that Mr. James B. McKeever, a banker at Holly, Colo., will be here to present his views on certain phases of this credit legislation. The numerous factors which have contributed to the increase in the size of farms, includeThe lowering of farm prices;

The increase in the costs of farmers' goods, particularly as evidenced by labor costs, tractors, harrows, plows, and so forth;

The constantly increasing determination under rigid parity that part of the land shall lay idle under our allotment systemall of these tend to make the farmers' operation a larger one and its cost far greater.

The limitations placed on this in the letter from the Department of Agriculture are unrealistic. The offered amendment would be satisfactory with me if the figures were amended to $21,000 and $30,000.

If, as suggested in the third paragraph of page 2 of the Department's letter, there is a question of whether feed and seed assistance might not be available, it is suggested that an amendment as follows might be added to section 4 (d):

The benefits and provisions pertaining to major disaster areas under Public Law 875 of the 81st Congress and under section 407 of the Agricultural Act of 1949 as amended by section 301 of Public Law 480, 83d Congress (7 U. S. C. 1427) shall be applicable to all farmers and stockmen in areas designated by the Secretary under section 2 hereof.

With respect to the suggestions contained in the last paragraph of page 2 of the Department's letter, the amendment set forth in the last page of the letter would be acceptable to me.

Although the Department has refused to approve, generally, the provisions of title II, the brevity of it is, in fact, the reason for its existence. In actual experience, I have had many FHA administrators at the county level say to me in substance, "Senator, for Heaven's sake do what you can to get FHA loan regulations simplified and to get the law simplified so that we know what we are doing!" This is not an overstatement, and it is borne out in actual practice by many letters indicating that in many instances neither the proposed borrower not proposed lender, including some of its top officials, were clear as to the precise and exact meaning of the complex patchwork of Federal laws and regulations relating to farm loans.

While S. 3429 by Mr. Aiken improves the general situation, it does not strike at the one fundamental difficulty in farm credit, namely: that of making farm credit simple, understandable and workable. It would, therefore, be far better if the desirable portions of the S. 3429 were incorporated as title II of S. 3247, keeping the entire farm credit in one simple bill, than it would be to amend piecemeal the BankheadJones Farm Tenant Act further, giving rise to new supplemental regulations resulting in new supplemental confusion.

Mr. Chairman, only the great divergence of views with respect to the Agricultural Act, and the long debate had upon it in any way justify the long delay of action in this important field. Generally, throughout the United States, the price of farm commodities is the No. 1 problem of farmers, but in the Great Plains area for 5 successive years it has been a lack of crops themselves. The increasing need for an expanded, simplified farm credit is an obligation which, in my opinion, the Department of Agriculture and this Congress can no longer ignore. Next to the foregoing it is the most important to our farm folk. To patch the law further may do some good, but to rewrite the pertinent provision in a simplified way is the primary task and challenge of the Congress. No farm credit act will provide the assurance needed for our agricultural economy unless it is simplified enough to be understood by the farmer himself and the people who are expected to administer it.