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Roosevelt seeking to reduce debt burden on American farmers

By
HARRY W. FRANTZ
A group of Texas tenant farmers who have been displaced from their land by tractor farming ca. July 1937. File Photo by Dorothea Lange/Library of Congress
A group of Texas tenant farmers who have been displaced from their land by tractor farming ca. July 1937. File Photo by Dorothea Lange/Library of Congress

WASHINGTON, July 1, 1933 (UP)-President Franklin D. Roosevelt and his cabinet have ventured on "new and untrod paths" in their effort to restore agricultural commodity prices and to lighten the $12,000,000,000 debt load that burdens the United States farm population.

The average commodity prices paid farmers in February of this year was only 49 per cent of the average for five years before the World War, and angry murmurings in the Great Corn Belt of middle America had made it clear that the good will of the incoming administration would be judged by the earnestness and ability with which the farm problem was attacked.

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President Roosevelt met this challenge by immediate steps to aid farm credits, to raise farm commodity prices, and to obtain Congressional sanction for a variety of drastic agricultural experiments. Whatever may have been the cause-and-effect, farm price averages in May had already risen to 62 percent of the pre-war average, and a new sense of hope and confidence was born of that fact.

Sporadic outbursts of actual or threatened violence in the agricultural regions this year were attributed to mortgage foreclosures against farmers who were physically unable to meet the payments with the depreciated income from farm commodities. Logically, therefore, the president first addressed himself to the revision and improved administrative efficiency of farm credit agencies.

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By executive order of March 27, effective May 27, the various Federal agricultural credit agencies were consolidated in a new "Farm Credit Administration," which combined the credit functions of the virtually defunct Federal Farm Board, the Federal Farm Loan Board, the Secretary of Agriculture, and the Reconstruction Finance Corporation. Subsequently, an act of Congress established a $120,000,000 revolving fund to be used by the new organization in supplying production and marketing credits.

The major immediate relief step for the farm population, however, was the act recommended by the President on April 3 designed to aid the refinancing of mortgages and other indebtedness, to accomplish a more equitable readjustment of the principle of the debt, and a reduction of interest rates. To fulfill this program the Federal land banks were authorized to issue Federal farm-loan bonds to a maximum amount of $2,000,000,000 and $300,000,000 additional funds were made available to the Reconstruction Finance Corporation for agricultural credit purposes.

The fundamental plan of the President for agricultural relief, which seized the imagination of the country, was recommended to Congress in a message of March 19th, in which the President suggested that he would follow "a new and untrod path," and frankly recognized the experimental nature of many features of his plan.

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The major provisions of the agricultural relief act, which became law May 12th, were as follows:

1--The government may lease farm lands and remove them from production, thereby effecting crop reductions in the interest of price betterment;

2--The Secretary of Agriculture may enter marketing agreements with processors, associations and producers to permit the use of the allotment plan of production control, which is based on the idea of bounties to farmers for crop reduction with funds derived from "processing taxes."

3--The Secretary of Agriculture may issue licenses permitting processors, associations of producers and others to engage in the handling, hi the current of interstate or foreign commerce, of any agricultural commodity or product thereof.

4--A "cotton option contract plan," comprised in the bill, would permit cotton farmers who reduce acreage 30 percent to take an option on cotton owned by the government, and thereby to share in the profits from any price rise resulting from the curtailed production.

The government, with these weapons, is thereby enabled to attack the problems resulting from agricultural depression from many angles, and with the adjournment of Congress organizations were quickly perfected to give practical effect to the new measures. Wheat and cotton were the first commodities to be treated under authority of the new law and

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quickly instituted looking to a conference to seek a marketing apportionment plan for sugar.

Chief administrator of the new agricultural relief plan is George Nelson Peek, 59, of Moline, Illinois, a former manufacturer of farm implements, formerly in the public service as a member of the War Industries Board.

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