GENERAL FARM PROGRAM 587 



should recognize the national need for adjustments in production, severely limit 

 the loans to the achievement of that purpose, see to it that this credit is not a 

 substitute for routine production credit, and should not he used for so-called 

 rehabilitation loan puriwses. In other words, it should be related closely to the 

 annual announcement of production goals and, if they are invoked, to marketing 

 quotas and acreage allotments. 



Mr. Smith. Unfortunately, it did not prove possible for some of 

 our people from the wheat country to come in and testify on wheat 

 quotas, as had been suggested would be a good idea. I talked with 

 them, however, at some length and prepared a statement which I 

 think is representative of the wheat farmers' views in our part of the 

 Northwest. 



The principal novelty in the recommendations in this statement is 

 at the conclusion. It relates to the difficulty of adjusting crop pro- 

 duction to demand, not just wheat but any crop that is susceptible to 

 this treatment. It has seemed to me that throughout the hearings one 

 critical question has been that of how far you must go with regimenta- 

 tion in order to get shifts in acreage, and in production. 



If you will recall in our testimony on the general program, we 

 made the observation that the adoption of an interchangeable com- 

 modity unit as a basis for a support program would enable us to 

 avoid severe controls in most instances. There were several points 

 made by committee members as to other difficulties in the way of 

 getting voluntary adjustments. The principal one related to credit. 



In other words, how is it possible for a cotton farmer to shift 

 suddenly to dairying^ The suggestion made in this statement is that 

 as a part of a production adjustment program, perhaps a new kind of 

 credit ought to be made available limited strictly to exactly that kind 

 of a ]Droblem, where a cotton farmer has been approved as an able 

 farmer where the only drawback to his shift is a matter of credit. 

 Then perhaps a special type of credit for that case ought to be devised. 

 We do not think it should be competitive with production credit, 

 association credit, nor with the direct credit afforded by the Farmers 

 Home Administration. 



We do believe that there may be a gap there which would be of 

 inestimable value in the success of a voluntary adjustment program. 



Mr. Pace. ]Mr. Smith, I would like to interrupt you there and express 

 my pleasuie to hear that recommendation. A bill to do that very 

 thing is now lying on my desk. I think if we are going to bring about 

 shifts, especially if we are going to apply the force that is contained 

 in the Aiken bill to bring about shifts, we must have some credit 

 method set up to aid the farmer in making the shift. 



Mr. Smith. I see we again have been independently thinking along 

 the same lines, Mr. Chairman. 



Mr. Pace. One thing disturbs me. Sometimes in a shift there is a 

 2- or o-year lag. The only thought I have had to cover that is in the 

 nature of grants. As you know, I am not too enthusiastic about 

 grants, but I see no other method of carrying the farmer until he is 

 back in production in his new crop. 



Mr. Smith. Perhaps some element of subsid;^will be necessary in 

 any such program, but if this credit were tailored to fit those situa- 

 tions and if it were a graduated type of credit based on the future 

 earning power so that the grant could be absorbed later in payments 

 to the farmer, ]jerhaps it could be worked out so that over-all there 

 would be no subsidy of importance. 



