million dollars a year for 2 years. Budget expenditures in 1958 are estimated at 47 million dollars and will gradually increase in later years.

Public housing programs.-The Housing Act of 1956 authorized the Public Housing Administration to contract with local public agencies for construction and operation of 70,000 additional units of low-rent public housing, at the rate of 35,000 new units a year. These units will be particularly helpful in meeting the needs of low-income families displaced as more urban renewal sites are cleared.

Many small communities which need low-rent public housing units have unnecessary difficulty in qualifying for Federal aid because of the requirement for a workable program to eliminate or prevent slum conditions in their areas. Since the benefits to be obtained in small communities from this requirement do not justify the burdens and expense involved, such communities should be exempted from it.

By the end of the fiscal year 1958, the Public Housing Administration expects to dispose of all remaining war and emergency housing units from an inventory that originally exceeded 900,000 such units. In addition, a substantial start will have been made in sales of housing units and commercial properties in the Government-owned communities of Oak Ridge, Tennessee, and Richland, Washington.

College housing.-Rising college enrollments, plus the attractiveness of a very low statutory interest rate on Federal loans, have caused sharp increases in applications for loans for college dormitories and related facilities. To continue the present commitment level of 250 million dollars a year, additional borrowing authority of 175 million dollars is requested for the fiscal year 1958. Also, a more realistic formula for interest rates on these loans should be provided in legislation. This formula should be based on current Treasury borrowing costs for comparable maturities.

Aids to private housing.-The Government encourages private housing primarily through insurance of mortgages by the Federal Housing Administration and guaranties of loans by the Veterans Administration. Increased demands for credit for other purposes last year made these insured and guaranteed mortgages unattractive to many private lenders at the maximum interest rates then permitted. As a result, many potential buyers were unable to borrow for the purchase of homes, and as the demand fell off, builders curtailed the number of new homes begun. To bring interest rates on insured mortgages into line with market rates of interest, the Federal Housing Administration has permitted adjustments in all rates which were not already at their

statutory ceilings. Legislation is recommended to permit similar interest rates on loans guaranteed by the Veterans Administration, so that more veterans may obtain these loans.

Private lenders cooperating with the Housing and Home Finance Agency under the voluntary home mortgage credit program have provided insured or guaranteed loans for many veterans and other home buyers living in remote areas as well as for members of minority groups otherwise unable to obtain private credit. This program should be extended for 3 years beyond the present expiration date of June 30, 1957.

The Veterans Administration makes direct housing loans to veterans in areas where credit is hard to obtain. Adjustment of interest rates on guaranteed loans and extension of the voluntary home mortgage credit program should make the funds now available adequate for the direct loan program. Legislation is also proposed to adjust the interest rate on direct loans so as to keep it the same as on guaranteed loans, in conformity with past practice.

The direct loan program for all veterans and the guaranty program for World War II veterans expire in July 1958. To help make adequate mortgage funds available at that time, additional authority may be needed to permit the Federal Housing Administration to liberalize the terms under which it insures mortgages for veterans and nonveterans alike.

Federal National Mortgage Association.-Under its secondary market functions, the Federal National Mortgage Association purchases both insured and guaranteed mortgages at prevailing market prices. Adjustments in interest rates on these mortgages should encourage private lenders to reenter this market, thus reducing the volume of mortgages offered to the Association. However, as a result of the substantial purchases made over the past several months, the effective borrowing authority of the Association will be fully committed before the close of the fiscal year 1957.

To enable the Association to continue making available a reasonable minimum of mortgage funds, new obligational authority in two forms should be provided by legislation early in the present session of the Congress. First, the Government should be authorized to buy an additional 100 million dollars of preferred stock of the Association. This will allow the Association to obtain up to an additional 1 billion dollars privately, through the sale of nonguaranteed debentures to private investors. Second, the Association should be authorized to borrow an additional 700 million dollars from the Treasury. One-half of this borrowing authority should be made available in the fiscal year 1957, and the remaining half in 1958. If the Congress provides adequate authority to draw temporarily on the Treasury when necessary, it should be possible to finance privately the bulk of the secondary

market operations in 1958. Budget expenditures for such temporary Treasury loans are estimated at 203 million dollars in the fiscal year 1958.

In other operations of the Association, substantial commitments are anticipated in both 1957 and 1958 to purchase mortgages insured under the urban renewal, military family, elderly family, and other specially designated housing programs. Additional legislation to authorize new purchases amounting to 250 million dollars, including 50 million dollars for cooperative housing, is recommended for the fiscal year 1958.

Other aids to business.-The Small Business Administration has been providing effective assistance to help small concerns obtain adequate financing and a fair share of Government contracts. Because of the difficulties many small businesses encounter in obtaining adequate bank credit in a money market subject to heavy competing demands, applications for loans have been increasing. Available funds will shortly be exhausted, and additional appropriations of 45 million dollars in 1957 and 66 million dollars in 1958 are requested. These figures assume extension of the basic legislation for the Small Business Administration which expires on June 30, 1957.

The fees of the Patent Office in the Department of Commerce should be adjusted to make the Office more nearly self-supporting. Under an 8-year program initiated last year, substantial progress is now being made to reduce the backlog of pending patent applications.

Area redevelopment—proposed legislation.-Despite continuing high levels of employment and income, pockets of unemployment persist in several areas. Legislation is again recommended to authorize the Secretary of Commerce, with the assistance of other appropriate agencies, to provide loans and other aids to communities which seem to be in chronic economic distress. This aid will help those communities in attempting to solve their basic problems.

Disaster insurance, loans, and relief.-The experimental program for Federal insurance against flood losses, which was recommended and enacted last year, will soon be underway. A supplemental appropriation of 100 million dollars is recommended for this fiscal year to finance initial operations. An additional appropriation of 4 million dollars for administrative expenses is recommended for 1958.

The 1958 recommendations also include 12 million dollars under proposed legislation for disaster loans by the Small Business Administration.

Civil defense. For budget classification purposes, expenditures for civil defense are grouped with those for peacetime disasters. The

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civil defense program was discussed, however, in the major national security section of this analysis.

Highway and housing trust funds.-Under legislation enacted last year, the Federal share of the new highway program will be financed from proceeds of certain excises on motor fuels, tires, and vehicles. These receipts are deposited in a highway trust fund.

The legislation authorized Federal grants averaging about 2 billion dollars a year for a 13-year period to cover 90 percent of the cost of completing the Interstate Highway System-an integrated network of efficient and safe roads linking major centers of population and industry. Increased grants amounting to 875 million dollars for the fiscal year 1958 were also provided for primary, secondary, and urban highways not in the Interstate Highway System. Prudent planning is continuing in cooperation with the States in order to assure maximum value for each dollar spent.

AGRICULTURE AND AGRICULTURAL RESOURCES

Agriculture is confronted with serious adjustment problems that stem from international as well as domestic agricultural developments. Technological advances in agriculture by other nations are resulting in increased production which in many instances has restricted United States export markets. These problems are further complicated by our own improved capacity to produce as well as by the large agricultural inventories held by the Commodity Credit Corporation.

The agricultural programs of the Federal Government are designed to meet these problems and to foster long-run improvements and adjustments in the Nation's farm economy. The soil bank legislation enacted last year is helping to curtail crop production and support farm income; it also facilitates the shifting of cropland to uses more consistent with long-term conservation objectives. Other Federal programs are helping to move large quantities of food and other farm products into consumption at home and abroad. Research programs