A SERIOUS REVERSAL ON THE FARM FRONT
Follette, Sen. Robert M. La Jr.
A Serious Reversal On The Farm Front By SEN. ROBERT M. LA FOLLETTE, Jr. FOR SEVEN YEARS Congress and the Federal Government have been endeavoring to reduce interest rates on farm loans. Excessive...
...New credit was made available to the farmers, to save them from foreclosure, and steps were taken to reduce interest rates...
...Such farm loan programs as the Bankhead-Jones tenant purchase plan and the Farm Security Administration's farm land loans have operated on an interest charge of only 3 per cent...
...In the matter of interest rates on Land Bank and Commissioner Loans, holding the line for the farmer is simply a matter of deciding to do it...
...The economic stabilizers refuse to grant price increases to correct these situations...
...Nevertheless, even the Pace Bill provided for an increase in interest rates for 800,000 farm borrowers, at a time when they have every reason to expect the protection of the economic stabilization program...
...A Shocking Reversal But now the Democratic Administration is reversing itself in this, as in many other vital phases of the original New Deal program...
...There are approximately 800,000 farmers who still owe on Federal Land Bank and Land Bank Commissioner loans...
...The total amount of these loans outstanding on Jan...
...1, 1944 was approximately $1,760,-000,000...
...In 1935 the effective rate of interest on these loans was still further reduced to 31/2 per cent, and it has been retained at that level up to July 1 of this year...
...The farmer with a $4,000 Federal Band Bank mortgage outstanding will have his interest charges raised from $140 to $200...
...This amounts to approximately 30 per cent of all loans outstanding on American farm land, including the loans advanced by the insurance companies, the banks, and other private sources...
...The Governor of the Farm Credit Administration, backed by the Department of Agriculture, has recommended that on Federal Land Bank loans the interest rate be allowed to go back up to 4 per cent, and on Land Bank Commissioner loans up to 5 per cent beginning the first of July of this year...
...Every instance of administrative discrimination for one group or against another brings fresh converts to the pressure technique...
...It lies entirely within the power of the Federal Government to do the whole job without asking anybody's cooperation...
...In terms of actual dollars it means the farmer who has a $3,000 Commissioner loan outstanding would have his annual interest charge raised from $105 to $150...
...If the Government itself will not enforce fair play, if the Government will not act justly unless forced to do so by outside pressure, it is not surprising that organized groups of American citizens undertake use their political and economic strength to win their demands...
...Instead, they have set up elaborate machinery and complicated rules and regulations to dole out agricultural subsidies of one kind or another in an effort to make up the difference between the frozen prices of these farm commodities and the return the farmer needs in order to continue production on an economic basis...
...If he was in the hole before, it means he will go in still deeper...
...It does not have to worry about enforcing the law against recalcitrant violators...
...CERTAINLY agriculture is entitled to expect that the Federal Government will use the same vigor in stabilizing farm production costs that is employed in stabilizing farm commodity prices...
...The significance, therefore, of an increase in interest rates on these Federal Land Bank and Commissioner loans is inescapable...
...Economic stabilization, if it is to be successful and win the confidence of the American people, must be applied without discrimination, and with equity for all...
...Excessive debt and burdensome interest rates brought ruin to thousands upon thousands of good American farmers in the years following the last war...
...The future stability of agriculture will depend in large measure upon the Federal Government's success in working out a farm credit program which will relieve agriculture of the excessive debt it acquired during and after the last war, and at the same time providing adequate sources to meet current and long-range credit needs at as low a rate of interest as possible...
...The Pace Bill as it passed the House of Representatives would fix the effective rate of interest on Land Bank Commissioner loans at 4 per cent for the coming year, instead of allowing it to go to 5 per cent as the Farm Credit Administration and the Department of Agriculture have recommended...
...The proposed increase from 31/2 to 5 per cent on Commissioner loans is an increase of 42 per cent...
...The Government will not let him adjust his prices because it is bound and determined to hold tl:e line on farm commodity prices even in instances where the price admittedly does not provide adequate compensation for the cost of production without some form of subsidy...
...Can anyone deny that these additional interest charges amount to an increase in the farmer's cost of production...
...This was true even during the 1920s when the rest of our economy was allegedly entering upon a new era of prosperity...
...The Emergency Farm Mortgage Act of 1933 authorized the reduction of interest rates on outstanding Federal Land Bank loans to 41/2 per cent...
...All that is required is an Act of Congress, approved by the President, extending for another year or another two years the present effective rates on these loans...
...This recommendation, coming as it does when the farmer is beset with frozen prices and rising costs, is a shocking reversal of both the previously established farm credit policy and the economic stabilization program...
...The Job Can Be Done If the Federal Government is going to hold the price line against the farmer it certainly ought to hold the cost line for him...
...In too many instances, as applied by the present Administration, it has been a lopsided club used to crack down on those who could not protest effectively...
...A stabilization program, if it succeeds, must be a stabilization program for all on equal terms...
...The proposed increase from 31/2 to 4 per cent on Federal Land Bank mortgages is an increase of 14 per cent...
...If he was breaking even before, this added expense will put him in the hole...
...The farmer is entitled to a continuation of present rates without any increase at all...
...One of the first significant recovery measures of the New Deal, when it came to power in 1933, was the revitalization of the national farm credit system and creation of the Farm Credit Administration...
...Interest is part of the farmer's cost of production...
...It has remained at this level up until the present time...
...The American farmer has felt its weight many times in the past two years...
...The interest rate on Land Bank Commissioner loans originally set at 5 per cent was reduced to 4 per cent in 1937, and to 31/2 per cent in 1940...
...The technique of force and pressure is easily taught and quickly learned...
...There is no reason why all farm loans backed by the Federal Government should not ultimately be made available to farmers for the same rate of interest...
...But the Administration chooses to look the other way when an increase in the farmer's interest charges is proposed...
...It comes at a time when farmers are admittedly selling many of their products at prices which do not provide a fair return in comparison with the cost of production...
...FORTUNATELY, Congress has not followed the Farm Credit Administration all the way in its recommendation to allow interest rates to go up to 4 and 5 per cent on their loans...
Vol. 8 • June 1944 • No. 25
