Mr. MICHEL. Then how do we preserve in this country persons making enough money to provide the resources for those with low incomes to break out of their particular cycle?

Mr. SMITH. That is a proper question.

Mr. MICHEL. And I don't know that it needs an answer either. I am sure I gather from your response, Mr. Smith, that we are thinking along pretty parallel lines.

I won't belabor the point anymore. I am glad to have had the opportunity to spread at least these examples out in the record here, because I think we have to begin to express some concern when these problems are brought to light and I am sure it is not one of those clean-cut kind of applications you could rule on or approve without second thoughts yourself.

Overall, as the members of this subcommittee have indicated in the last couple days, FHA performs a very vital function throughout the country for our farming and agricultural community. We want to preserve it for the good things it has done and not open it up for criticism for some of these questionable areas like we have been discussing here.

I have a feeling they get thrust upon you involuntarily for a variety of reasons.

That is all.

Mr. NATCHER. Mr. Scherle.

Mr. SCHERLE. Thank you, Mr. Chairman.

Mr. Smith, my compliments to you and your associates for doing a very fine job in helping both the farmer and people in urban areas to better their situation.

In talking to Members of Congress on both sides of the aisle, I am proud to hear that. You are considered a very able Administrator. Mr. SMITH. Thank you.

WATER AND SEWER LOANS AND GRANTS

Mr. SCHERLE. Just a few questions concerning the water-sewer grant. Mr. Smith, if you don't have the answers to these, you might provide them for the record.

What is the number and dollar value of rural sewer projects in Iowa which have been approved, such as the one at Pacific Junction, but have not yet been funded?

(The information follows:)

RURAL WATER AND WASTE DISPOSAL PROJECTS IN IOWA WHICH HAVE NOT BEEN FUNDED AS OF FEB. 22

Mr. SCHERLE. If the Farmers Home Administration had unlimited funds and could spend them all on the approved rural projects in the Nation, what would your total appropriation have to be?

59-584 0-71-pt. 3- -11

Mr. SMITH. A survey was made that would indicate a need for $12 billion to modernize water and sewer systems throughout rural America in communities up to 5,500 and also for new systems.

Mr. SCHERLE. How much money did you fund for rural sewers in this fiscal year? Provide that for the record.

Mr. SMITH. Yes.

(The information follows:)

As of March 31, 1971, the current amounts apportioned for fiscal year 1971 for water and sewer programs of the Farmers Home Administration are as follows: direct water and sewer system loans, $30 million; insured water and sewer system loans, $130 million; and rural water and waste disposal grants, $44 million.

OPERATING LOANS

Mr. SCHERLE. On page 14 of your statement the first sentence states, "Rural housing has grown to become a major activity."

I am pleased to be assured that this program has met with such success. However, when I stop and consider the remarks made by my esteemed chairman that around 600,000 people are leaving the farms every year, the first thought that comes to my mind is that there is a lot of rural houses that are no longer needed but the land is still being farmed.

Are we supplying a sufficient amount of money for operating loans since the land is being farmed? It may be, if it is low, that perhaps we need additional moneys for funding those needs.

Mr. SMITH. There is no question that if the demand were met a considerable amount of funds would have to be added to both the operating loan program and the farm ownership program. As I mentioned earlier, we carried over into this year almost 14,000 farm ownership applications. Some of these, of course, will not be serviced this fiscal year and a similar situation exists in the operating loan program. This has been the case since the early sixties.

Mr. SCHERLE. Have you found it to be true where the people are leaving the farms there is less need for rural housing in rural America as such, yet since the land is being farmed, you have a greater demand on the fund in the form of operating loans?

Mr. SMITH. I might question the relationship the way you presented it, but I would agree with the point you are trying to bring out.

I would want to clarify that we do make housing loans in communities up to 5,500 and recently moved to communities up to 10,000. These now are considered by most people as being rural towns, and we do use the place concept in making these judgments as to the eligibility of a town. In other words, it must be rural in character.

Mr. SCHERLE. The point being made is that since farming today has become such a costly venture, with inflation and increased land cost, it seems that the high cost of farming would necessitate more money for operating capital.

DEMAND FOR AGRICULTURAL CREDIT

Mr. SMITH. That is correct. I have a great concern, Congressman, for the need for agricultural credit whether they are served by the Farmers Home Administration or other lenders.

We find this situation prevailing and I think we ought to talk about it. Many of the rural types of banks even find a more profitable outlet for their cash in other areas than rural. They can, for example, go to Chicago, Detroit, Washington, D.C., or New York and put up high rise apartments or other investments of that nature and receive a higher return for their money that they can in agricultural type loans.

This is bringing a stress upon agriculture credit, and I think it is something that will become increasingly difficult in the years ahead as I see it.

They oftentimes can get a piece of the action, in some cases sell the insurance, and in some instances require compensating balances. This is not the practice in loans related to agriculture. I believe the agricultural credit system will experience a greater need and demand for their loan funds for this reason.

FAMILY FARMS

Of course, we are directing our efforts toward the family-sized farms. I might mention that in your State last year Robert Pim, the State director started 104 new farmers.

I want to describe again the type of our borrower. He is a familytype borrower and he hires very little, if any, labor. It is a familytype operation, and contrary to popular opinion, it is an efficient operation. With the proper supervision and credit at the right time they can produce a good record.

May I extend my remarks to this extent? About a week ago we brought to Washington the very first Farmers Home Administration Farm Family of the Year. A panel of seven judges consisting of Mr. Shuman, the national president of the chamber of commerce and others selected this family. They were a family from North Carolina and they were Dutch immigrants.

They moved from Minnesota to North Carolina 14 years ago last week and after being there 2 years they obtained a loan from the Farmers Home Administration. Today they are worth approximately $80,000.

I want to tell that story because some folks say it can't be done, and it is being done. I recognize a lot of people are leaving the land. I can't debate that. I think the other side of the story ought to be told also, that some young families with assistance at the right time are making it.

AWARDS TO FHA FARM FAMILIES

Mr. SCHERLE. Mr. Smith, if I may comment what you just said a moment ago, about a month ago I had the honor and privilege to attend in my district the award presented by the Farmers Home Administration to the outstanding farm family in Harrison and Shelby Counties, and I was very proud to be able to be there and participate in the presentation of the award.

My administrative assistant called me just the other day and said the same family of Michael Leinen went on and they have now been awarded the district Farmers Home Family. They have 12 children. Every single one of them has been sent to college. It is one of the most interesting stories I have seen in my life, a family that worked that hard, and dedicated to achieve these goals.

They wouldn't have been able to do it without FHA. You have done a tremendous job. This is the reason that the people that have contacted me are those that are interested in soliciting and having operational loans, not always over a long period of time but sometimes only seasonally.

I am concerned that these people, people like the Mike Leinen family, have this money available so they can participate in agriculture and stay on the farm and make a success of it.

Mr. SMITH. From what you have just stated I would say Iowa would have a good chance of being the national winner next year and coming before President Nixon as this family did a week ago.

Mr. SCHERLE. It is a terrific family. I will provide background for the record in their behalf.

[From the Congressional Record, Mar. 1, 1971]

MICHAEL T. LEINEN FAMILY OF PORTSMOUTH, IOWA, FARM FAMILY OF THE YEAR IN HARRISON AND SHELBY COUNTIES

(Extension of remarks of Hon. William J. Scherle of Iowa in the House of Representatives March 1, 1971)

Mr. SCHERLE. Mr. Speaker, in this day of huge mechanized business enterprises, in agriculture as elsewhere, it is heartwarming and heartening to know that the spirit of individual initiative lives on and continues to produce success stories. The Farmers Home Administration of the U.S. Department of Agriculture recently named the Michael T. Leinen family of Portsmouth, Iowa, the Farm Family of the Year in Harrison and Shelby Counties for just such an achievement. By dint of hard work and persistence, Ramonia and Mickey and their 12 children proved that even today the family farm is a viable enterprise and a valuable part of American life. Working their way up first as tenant farmers and then as owners of their own small farm, this close-knit family demonstrated once again the rewards of industry, diligence, and cooperation.

The Leinens are to be warmly congratulated on this splendid accomplishment. This history of their efforts, described in greater detail in the FHA release which follows, should serve as an inspiration to all families, rural and urban: MICHAEL T. LEINEN SALUTED AS FHA FARM FAMILY OF THE YEAR IN HARRISON AND SHELBY COUNTIES

The Michael T. Leinen family of Route 1, Portsmouth, are honored as Shelby and Harrison Counties' FHA "Farm Family of the Year." A certificate citing the Leinens as successful family-farm operators and commending them for their participation in community activities was presented to the Leinens today.

The award was made in their home, one-fourth mile east of Portsmouth, Iowa. Mr. Edward Hansen, chairman of the Shelby County Farmers Home Administration Committee, presented the certificate to the Leinens.

As a boy on a Shelby County farm, where his parents were hard-working owner operators, Michael learned to love the land and dreamed of owning his own farm some day.

In due time, Mr. Leinen, now married to the former Ramona Slaven of Portsmouth, who shared his ambition to build a life on the farm, began farming as a tenant in the Portsmouth area. A Farmers Home Administration operating loan in 1961 gave the Leinens the long-term credit they needed for livestock and machinery.

They worked hard and made progress, but found that tenant farming failed to bring the satisfaction of "building something you can keep." They continued to talk and dream of owning their own place and sought the advice of many people. By 1965, they had gained enough in experience and savings that they felt prepared to take the step toward farmownership.

Once again they turned to Farmers Home Administration for financing to take over the farm where Mr. Leinen had been raised; they would make hogs and beef cattle their main enterprises. Eventually, a suitable farm ownership loan s arranged through FHA, and in January 1966 they became owners of 200 of land in Shelby County.

By this year, the Leinens have developed a hog enterprise of 40 to 50 litters per year; 15 stock cows; 100 acres of corn and 70 acres of beans. The Leinens rent 120 acres in addition to the 200 acres they own. They are joined now in the work of tending crops, raising livestock and buildings improvements on their farm by their children; Richard, 22; Edward, 21; Allen, 19; Martha, 18; John, 15; Thomas, 13; Nicholas, 10; and Anne, 8. The Leinens' four other children, Michael, 28; Jeanne, 26; Jane, 25; and Janet, 24, left the family home for homes of their own and their professions.

Community service and self-improvement as well as the chores of farming rank high on the list of activities for the Leinen family. Three of the four oldest Leinen children have graduated from college. Further education is the goal of nearly all the Leinen children. The older Mr. Leinen is a familiar figure at sporting events in this area. "Mickey" is a baseball and basketball coach for the Town and Parochial school system. He is a director of the Mosquito Watershed, vicepresident of the Portsmouth Housing Corporation, a non-profit organization to provide low-rent housing for the community, ASCS Township Committeeman, reporter, and corn sealer. Both Mr. and Mrs. Leinen are active in the affairs of St. Mary's Church, serving on the Parish Council.

The Leinens are the second family honored in the Farmer Home Administration "Farm Family of the Year" program. Mr. and Mrs. Henry G. Matthews of Logan were selected as the two county winner in 1969. The award was established as a means of honoring farmers and rural citizens. Farming methods, financial progress, family living, property improvement, community leadership, and overcoming adversaries are some of the criteria used in making the selection.

Mr. SMITH. I would also say that the Farmers Home Administration recognizes the support of this committee in helping to make this record. You have been outstanding in your own area in support of agriculture and the families you have mentioned, and I think it is commendable.

Mr. SCHERLE. They are my people and my responsibility.

CORN BLIGHT

Another question, and Mr. Michel brought this up, concerning blight.

Have sufficient preparations been made in case this situation does develop that adequate funds would be available to help those people out in case a disaster would occur in some counties?

Mr. SMITH. Yes. The Farmers Home Administration under the direction of Secretary Hardin is very sensitive to the need of the farmer in disaster situations, and we instruct our State directors and their staffs to make complete, thorough, and continuing investigations of any conditions such as corn blight, flood, frost, drought, or similar natural disasters. At this time we do have adequate cash in the account, but we will need additional authority from the Office of Management and Budget for an increase in the program level.

Mr. SCHERLE. Mr. Chairman, that is all the questions I have.