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Farm Security Administration

The budget recommended by the President for the Farm Security
Administration for the fiscal year 1940 totals 1165,4-57,150. Of
this sum #110,153,725 is self-liquidating.
The proposed supplemental budget includes $$00,000,000 in
self-liquidating items, as follows:
I. $160,000,000 FOR REHABILITATION LOANS TO EEACH APPEOXBSATSLX 300,000
L0»-I!IC(MB FAKH FAMILIES, WQ ARE KKGWN TO BE ELIGIBLE AHX3 IK URGENT
HEED OF SUCH ASSISTANCE.
During the
such loans.
est. Losses
in the Great
loans should
payable over

last four years 760,000 needy families have received
At least 30 percent will be repaid at 5 percent interare largely due to seven years of unprecedented drought
Plains area* Under normal weather conditions, such
be 95 percent recoverable* They ordinarily are rea five-year period*

Rehabilitation loans are spent for seed, livestock, family subsistence, and equipment needed to make these families selfsupporting on the land. If they do not receive such aid, many
of these 300,000 families inevitably will become dependent on
relief*
The entire supplemental $160,000,000 could be disbursed within
the 1940 fiscal year, if It were made available before November 1,
1939* If it were not available before March 1, 1940, not more
than $80,000,000 of this supplemental sum could be disbursed within
the fiscal year, because in general rehabilitation loans oust be
made at the beginning of the cropping season.
H . $100,000,000, TO ESACH 200,000 UM-ZSGCm FARM FAMILIES, THROUGH
LOANS FOR MINOR IMPROVEMENTS AND REPAIRS, TO FARM HCHE3 AND BUILDINGS.
It is estimated that approximately 3,000,000 farm homes —
largely occupied by sharecropper and tenant families — are inadequate by minisnni health and living standards.
Loans averaging #500 each would be used for construction of
sanitary privies, repairing wells to provide a safe water supply,
screening windows, repairing horae, and constructing tobacco barns,
smoke houses, fences, and similar structures. Such loans would
be virtually 100 percent recoverable*




- 2 Ordinarily such loans would be made to tenants who hold
long-term leases* Such a loan program therefore would be a
powerful instrument for improvement of the tenure system.
The program could be expected to cause a marked improvement in the health and income-producing capacity of the
borrowers* Fencing, for example, would make possible a
much greater degree of diversification on Southern farms,
resulting in improved diet and lees dependence on cash
crops such as cotton.
This program could be put under way very quickly, since
plans for each type of structure already have been prepared.
Virtually the entire $100,000,000 would be spent either for
durable goods or for construction.
III. $130,000,000, 10 REACH 20,000 LOW-INGCME FAR? FAMILIES, THROUGH
LQAHS TO CO-OPIEATITK ASSOCIATIONS FOR PBBGHASE OF LAND AND DIVEL0R«T
It is believed that good agricultural land — particularly in
the Mississippi Delta and Pacific Northwest areas — can be acquired at an average cost of $50 an acre; and that 60-acre farms,
complete with homes, outbuildings, and fencing, can be developed
for about 16500 each, including all technical wcpensa and land
purchase costs«
This program could be put under way rapidly, because plans
already have been prepared and a considerable number of large
plantations are now under lease by co-operative associations
with option to buy* Homes could be speedily erected by prefabrication methods, which already have proved highly successful, at a cost of about $1,100 each* this is believed to be
the lowest cost at which comparable houses have ever been
built, either by the Government or private industry.
Such a program would be a beginning toward replacing the
collapsing plantation-sharecropper system with a more stable
system of diversified, partially co-operative agriculture.
Since these loans would be secured by land and physical
properties, practically the entire sum could be considered as
recoverable. Except for the 160,000,000 which would be spent
for land, these expenditures would be for durable goods and
construction.




J¥« $100,000,000, TO Mkm 20,000 UMF-HCQafB FAUt FAMILIES, THROUGH
WhMS f© SHaFSGROPPBRS AMD TKffAWTS TO EHABLE THHf TO POBCKASE PAH588.
This ?*ould be an eacpansion of the present liankhead-Jones
Farm tenant program, and could be put into operation without
delay. Since the loans would be secured by first mortgages,
virtually the entire sum "would be recoverable.
V, $10,000,000 TO MkQE 10,000 lOI-IUCCHE FAH§. FAMIUBS, TfiicQ0@H
LOABS fO PROVIDE W A T ® FACILITIES II ARID A!?B SMI-ABID RESIOHS.
this program w m l d finance tlie construetl^i ®f Irrigation
wells, small dams, ditches, pipi lines, reservoirs and livestock watering facilities in the 17 Western States.
It would enable farmers in the Great Plains area to change
over from wtisat-raislug to a more stable type of diversified
agriculture. Consequently it would materially assist in halting wind erosion, resulting from improper farming practices.
Since the loans are secured by mortgages on land and waterconserving struetures, the program would b# at least 90 percent
self-liquidating.
This work would be an expansion of the present waterfacilities program, and could be started without delay.




JFimh
6/14/39