Some merit is sought to be attached to this company for filing its acceptance of the 6-month guaranty provisions. It is argued that it thereby agreed to surrender any excess earnings there might be. Without in any way questioning the motives of the company in filing such acceptance the argument seems to us to be far from convincing. What gamble did the company take? The acceptance was wholly void, as the company of course knew, for there could be no valid acceptance by a company to which the law did not apply. If the law did apply, the company would have no reason to be here seeking this legislation. And suppose that the company's earnings had shown an excess during the 6-month period. Does anyone imagine that a void acceptance would have bound the company to surrender such excess earnings, or that the Government which had inisted throughout the controversy that the company was not under Federal control would have sought to collect them? Certainly not. The acceptance may have been in good faith, as a matter of precaution, but as a gamble it was simply a case of "heads I win, tails you lose.'

The company's business for the 3-year "test period" preceding Federal control showed substantial earnings, but for a number of months immediately preceding Federal control its business had been going to pieces, and when the company was taken over it was in bad shape financially. In fact the company had been losing money all through 1917. When the Government took over the company it found the fleet reduced from 23 to 14, many of the best ships having been sold by the company for overseas traffic at the enormous prices then prevailing.

All the company's ships taken over by the Government were returned when the company was relinquished. In spite of the fact that the company was in bad shape when taken over, its deficit during the period of Federal control has been met from the Public Treasury in accordance with the law, and settlement has been made on the theory that the company was not only under Federal control from April 11, 1918, to March 1, 1919, when the company resumed actual control of its properties, but for a full year after that, or until March 1, 1920, when Federal control of all carriers ceased. Not satisfied with this, the company now asks to have the benefits of the additional six months' guaranty. As already stated, there is in this case no semblance of legal obligation. if this relief is to be based on the theory of a moral obligation, then let relief also be extended to the many ship lines which were never under Federal control, but which were affected equally with this company by Federal control of the rail carriers and suffered the common burden of war conditions. Indeed, the same policy, if consistently applied, would not stop with ship lines. There are countless claims equally meritorious.

And

There is no way to measure the tolls of war, nor is it possible to equalize or compensate for all of its burdens. Any distinction favorable to this particular company which might be drawn between this case and scores of others is at best, in our opinion, technical and not substantial.

It is time to close the gates, and not to open them wider.

HOMER HOCH.

J. STANLEY WEBSTER.
CARL E. MAPES.
WALTER H. NEWTON.
ALBEN W. BARKLEY.
SAM RAYBURN.
PAUL B. JOHNSON.
GEORGE HUDDLESTON.

For the above reasons we are of the opinion that S. 3723 should be defeated.

O

WALTER H. NEWTON.

CARL E. MAPES.

HOMER HOCH.

T. J. B. ROBINSON.

M. C. GARber.

SAM RAYBURN.

GEORGE HUDDLESTON.

ASHTON C. SHALLENBERGER.
ROBERT CROSSER.

CREATION OF ORGANIZED RURAL COMMUNITIES TO DEMONSTRATE THE BENEFITS OF PLANNED SETTLEMENT AND SUPERVISED RURAL DEVELOPMENT

MARCH 10, 1930.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. ALLGOOD, from the Committee on Irrigation and Reclamation, submitted the following

REPORT

[To accompany H. R. 10475)

The Committee on Irrigation and Reclamation, to whom was referred the bill H. R. 10475, introduced by Mr. Crisp, of Georgia, to authorize the creation of organized rural communities to demonstrate the benefits of planned settlement and supervised rural development, having considered the same, report favorably thereon with the recommendation that it do pass with the following amendments: Page 1, line 6, after the word "Tennessee" insert the word "Missouri."

Page 1, line 6, after the word "Tennessee" insert the word "Oklahoma."

Page 4, line 19, after the word "thereto" strike out the comma, insert a period and strike out the following words in lines 19, 20, 21: "and all payments theretofore made shall be deemed to be rental paid for occupancy."

Page 5, line 5, strike out the period, insert a colon, and add the following:

Provided further, That if a forfeiture is made by the purchaser and the Secretary of the Interior shall take charge of said tract of land after deducting a reasonable rental for said property and if settlement is not agreed to then the purchaser or the Secretary of the Interior may have same adjusted in a court of competent jurisdiction.

The pending legislation provides for a Federal loan of $12,000,000 to begin in a cooperative way the establishment of a farm colony of 200 families in each of the States mentioned in the bill. These farm communities are planned to be located in the sections that were devastated by the boll weevil and were thereby reduced to poverty and have not been able to reestablish themselves. While it is a ★3-13-30

fact that to a great extent the boll weevil has been exterminated, yet it has left the farms in the sections in which it has invaded almost without an exception heavily mortgaged, and in most instances the people in these sections still depend on growing cotton for a money crop. Owing to the expansion of the cotton area, which was necessitated by the invasion of the boll weevil, many millions of acres of lands in other sections formerly in other crops have been put into cotton to the extent that there is an overproduction of cotton, which results in a low price and hindered the farmers in the former boll weevil sections to making a living, let alone to pay the mortgage on their homes.

The intent and purpose of this bill is for the Government to supervise and direct agricultural production on these community farms that will balance their agricultural lives and enable the farmers to produce, as far as possible, a living at home and, wherever they can, to produce something to sell that is needed by other people.

For a number of years a group of men representing the Southern States have been giving serious consideration to the present status and drift of rural life in the South. In each of several Southern States there has been a committee of 20 representative, outstanding, forwardlooking men who have been seeking some means to begin the establishment of a rural life in the South that will be satisfying, remunerative, and happy.

The first fruits of this agitation was an act passed by the Sixty-ninth Congress (May 10, 1926), in which a small appropriation was made to the Department of the Interior for the purpose of preliminary investigation of certain lands that might be developed, and so forth. Pursuant to this action of Congress, on November 9, 1926, Secretary of the Interior Dr. Hubert Work requested three distinguished men to investigate and report on conditions in the South. The special advisers selected by Secretary Work were Howard Elliott, chairman of the board of the Northern Pacific Railway Co. and president of the board of overseers of Harvard College; Daniel C. Roper, counsellor at law, formerly Commissioner of Internal Revenue, and vice chairman United States Tariff Commission; and Dr. George Soule, a director of the National Bureau of Economic Research and editor of the New Republic.

The advisers made an exhaustive report of their findings and the following gives the salient points of this report:

The South is facing agricultural difficulties which represent one phase of the Nation's agricultural problem. This problem includes low prices of agricultural products, increase of mortgage debt and of tenancy, drift of population to the cities especially of the young and vigorous-and depletion of soil fertility.

Conditions of the Southeast favorable to agriculture include long growing season, adequate rainfall, fertile soils or soils highly productive if adequately fertilized, nearly flat or gently rolling lands, nearness to markets, good transportation facilities, and low land values. These advantages have not been adequately utilized on account of the 1-crop system, large acreage per farm, absentee ownership, prevalence of tenancy, drift of population from the land, abandonment of farms, impoverishment of the soil, shortage of local food crops, lack of selfsustaining farms, inadequate marketing facilities for diversified agriculture, and unattractive rural environment. Plenty of advice and information are available to enable the remedying of these defects, but it is difficult under existing conditions for the advice to be followed. The habits and knowledge of those actually on the land, the existing credit policies, and the lack of organized markets handicap change.

The advisers' report went into detail in their report on many of the outstanding facts as they found them. Of particular interest are the following facts:

Tenancy.-Tenant farming is the predominant type in the regions visited. The percentages of farms operated by tenants in these six States are (1925 census):

This compares with 5.6 per cent for New England, 15.8 per cent for the Middle Atlantic States, 26 per cent for the east North Central, and 37.8 per cent for the west North Central. Tenancy has been increasing all over the country, and particularly in most of the Southern States.

This

While it is sometimes possible to conduct fairly good farming with the tenant system, it is an axiom of agriculture that the tenant is likely to take less care with his work than the owner, and is more likely to impoverish the soil. is especially true where the tenant has little hope of acquiring the farm for himself, as is the case throughout most of the South, many of whom have been trained only for growing cotton and do not easily lend themselves to diversification or scientific agriculture.

Shortage of local food crops.—In spite of crop surpluses of various staples, the South imports, often from great distances, food and fodder crops which could easily be produced at home. This generally recognized fact is difficult to express in wholly accurate and recent statistics, but an indication is furnished by a study made in 1920 by Miss Henrietta R. Smedes, of the University of North Carolina. Her estimate is based on standard food and feed products, excluding extras and luxuries of diet. It ranks the 48 States according to the extent to which they are self-feeding, expressed in the percentage which each State produces of its own requirements. The States in question are ranked as follows:

Lack of self-sustaining farms.-Nowhere is the lack of local food products more visible than on the farms themselves. It is possible to travel long distances through cotton plantations without seeing a fence, a barn, a cow, or a vegetable garden; there are comparatively few chickens and pigs. It is customary for tenants to obtain most of their few articles of diet at the store on credit, which is extended on the basis of a cotton-crop lien.

Difficulty of change to better practices.-The opportunities and needs of southern rural life here described are no new discovery; the facts have long been known, and agricultural authorities have long been urging remedies. The desirability of diversified and intensive farming has been explained by agricultural colleges, county agents, and editors with skill and vigor. If good advice could accomplish reformation there would be no need for further action.

STATEMENT BY CONGRESSMAN WHITTINGTON

Mr. Chairman, we find there is a problem in the South in agriculture that can not be solved by ordinary farm legislation. There is a menace to rural life that we believe requires a new set-up and new organization. The more energetic and the more ambitious farmers of those communities are leaving the farms and going to the towns and into industry to-day. Farms are being deserted, abandoned, soils are being depleted. Agricultural life is not satisfactory. Our boys and girls are leaving their homes for other sections of the country, and for the cities. A number of causes contribute to this situation.

First, we have the 1-crop system. Our farms are not producing enough feed crops for local consumption. Again, there is a very large percentage of tenancy. Our marketing and marketing facilities are inadequate. In short, rural life is generally unattractive. Profitable farming is difficult under all circumstances to-day and particularly difficult in the South.

1902.

Now our country can not endure without home ownership and a safe and satisfactory_civilization depends upon the right sort of development in the countryside. We know that reclamation as a Federal policy began with legislation in We know that it has promoted rural development in the West, and we also agree with the students of reclamation that reclamation is not merely a matter of constructing dams and providing reservoirs. That is the engineering problem. However, there is a human element that must be considered.

We are pleased with the development of reclamation in the West. In the South we have no arid lands, but there is a place for a similar development. Individuals can not solve the problem. Private capital is neither adequate nor available. Here and there rural developments have been promoted. The rural population must be encouraged. We recall the Durham settlement in California, the Fairview Farms in Montana, and in the South Mr. McRae has demonstrated that the very project promoted by this legislation can be worked out satisfactorily; but individual enterprise can not do it. Government was ordained to do for the people that which they can not do for themselves. This plan has been carried out in other countries, therefore it is not an experiment. It involves a reorganization, and, really, a revolution in country life. Under the proposed legislation I will say just a word about the bill-Congress would appropriate $12,000,000 to enable the Secretary of Interior to create one organized rural community of at least 200 farms, in each of the Southern States named, to prove that rural development under proper advice and instruction and underwellmatured plans is practicable and feasible. Farms will be sold to qualified settlers who can furnish a part of the capital. Long-time loans are provided. The better type of soil can be utilized. A new type of farmer and farm life will be developed in the South. The countryside will be made attractive. The country will really have the advantages of village or town life. There must be the community life so that intelligent, ambitious, normal young boys and girls will willingly remain upon the farm. This proposed settlement, supervised and directed, and made on the right foundations will serve as an example to other sections of the country. Our experimental farms throughout the Nation are examples of what can be accomplished on other farms in the various sections of the country. These settlements would promote the social and economic development of the Nation.

Mr. MacRae stated: "The agricultural conditions in the South have, after years of retrogression, reached a crisis. Being the foundation of the South's economic structure, the distress of agriculture means the distress of all society. As one of the means to alleviate the present condition change the trend and, if possible, prevent disaster we are here in support of a definite, well-worked-out program, a program which is in accord with the national policy as applied to other parts of this country, a program which has worked out entirely satisfactorily in other countries."

Testimony will be presented by leaders from seven States, several of the speakers being recognized authorities on the subjects concerning which they will speak. The testimony will in a general way cover three features of the situation. First, the facts as evidenced by present conditions; second, the reasons or contributing causes for these conditions; third, the necessity for adoption of the program offered by the Department of the Interior as a result of the report of the special advisers and as proposed in the Simmons-Whittington bill, the Lankford bill, and the Crisp-McKellar bill, which will be offered in parallel.

Mr. J. M. Patterson, of Georgia, who will read from a letter by Mr. H. G. Hastings, president of the Georgia association, who could not be present:

"During the last few years there have been foreclosures on Georgia farm lands by insurance companies, mortgage companies, and individuals approximating $25,000,000. This was done because the owner could not out of his production pay anything on either principal or interest. Of these the Federal Farm Loan Board of this district has about 500 farms that it has taken over.

"It is a matter of common knowledge that there are thousands upon thousands of cases of mortgaged farms where both interest and principal are overdue that have not been foreclosed simply because the holder of the mortgage has not been able to see where foreclosure would advantage him, and it would simply add to the total indebtedness the mortgage foreclosure cost.