Proposed Changes in Farm Credit Policies
Outstanding Farm Loans by Federal Agencies
Secretary of Agriculture Wallace announced May 20 that the government would make loans on the 1940 wheat crop at an average rate of about 64 cents a bushel. The farm price had been supported at approximately that point when the Chicago Board of Trade on May 19 prohibited trading in May wheat at less than 79 cents a bushel at Chicago. The Chicago price had dropped 36 cents in less than a week, chiefly as a result of shrinkage of the foreign markets when Germany invaded Holland and Belgium. Prices have recovered a few points since they were pegged, but if the war further disrupts markets abroad the United States government will undoubtedly have to advance large sums at the fixed loan rate in order to sustain the domestic price.
Anticipating such a need for expanded government loans, Senator Byrnes (D., S. C.) has introduced a bill, endorsed by Secretary Wallace, to increase the borrowing power of the Commodity Credit Corporation from $900,000,000 to $1,400,000,000, and the bill was approved May 24 by a subcommittee of the Senate Committee on Banking and Currency. If enacted, the Byrnes bill would enable C. C. C. to more than triple the amount of commodity loans now outstanding.
Commodity credit loans are often in the news because of their direct bearing on the prices of farm products. They constitute, however, only about 12 per cent of total outstanding farm credit which has been extended by or through federal agencies. Figures for the most important agencies, as of the latest dates for which they have been made public, are given in the table on the next page.