The Development of the Rural Rehabilitation Loan Program

Abstract

The rehabilitation loan program is designed to aid destitute and low-income farm families in becoming self-supporting at decent standard of living, by the extension of credit for operating goods, furnished upon the basis of individual farm and home management plans, and through the provision to such families of the advice and guidance necessary for the successful completion of such plans. A brief summary of the economic and social justifications for this program is found in the Report of the President's Special Committee on Farm Tenancy,2 which pointed out that approximately 420,000 farm families, already near the bare subsistence level, had been forced below it by agricultural depression, that 500,000 or 600,000 families, normally well above the subsistence level, had, largely as result of drought, exhausted their resources of capital and credit, and that another large class of farm families, including probably the great majority of the I,83I,000 tenant and cropper families of the South, is obliged to seek operating capital at crippling rates and under such conditions as to perpetuate the cash-crop system. The Report, in developing the type of loan program suitable for these classes of farm families until they are able to qualify for bank credit, stressed the need of technical guidance to assure an effective expenditure of funds and stated that a primary objective of the system of rehabilitation loans should be to stimulate the development of better lease contracts. The