These efforts to encourage new and expanded industry and commerce helped to create almost 60,000 new jobs during 1963. Those jobs represent an investment of a half billion dollars-92 percent of it local and State money.

Most of the financing was local-and the "seed" fund from Federal sources came from the Area Redevelopment Administration and the Small Business Administration. About $670,000-or one-tenth of 1 percent-came from REA section 5 loans to rural electric and telephone borrowers.

Adequate water supplies sometimes spell the difference between getting or losing an industry. In Leavenworth County, Kans., the area around the little town of Basehor would have lost a dairy if a USDA loan had not made possible the development of an adequate water system. Some wells in the area were becoming contaminated, and the dairy, with its 75 employees and $30,000-a-month payroll, was in danger of closing.

The Department made an $80,000 loan and local people put up $10,500 to build a community water system. Now the dairy has all of the clean water it needs, new homes are going up all over Basehor, and business firms and schools no longer have to ration water during dry spells.

RECREATION AS A FARM CROP

A 220-acre dairy farm in New York had a net income last year of $3,450-$2,050 of it came from a vacation farm enterprise that the family ran during the summer months.

A midwestern cash-grain farmer with an 85-acre lake found he could make almost as much from renting fish poles as from farming. His net income last year from selling fishing privileges after deducting the cost of stocking the lake and other expenses was over $2,800.

We estimated that many farmers are adding $4,000 to $8,000 a year in total income because of a recreation enterprise. Some farmers also are likely losing money. With technical assistance *** and research*** the number with profitable projects can be increased, and those that would end in failure can be avoided.

Since the passage of the Food and Agriculture Act in 1962 which provided authority for the Department to assist farmers in recreation development, we estimate that 18,000 farmers who are members of soil and water conservation districts have established a recreation project on part or all of their land. Another 18,000 are considering recreation possibilities.

FHA loan funds for recreation development have helped establish recreation projects in 166 areas in 41 States. These are funds well invested for they open to the farmer and the rural community the means to share in the $20 billion a year outdoor recreation business *** a business that is growing rapidly.

Recreation development also provides new jobs *** jobs the rural community needs. I am reminded particularly of the Blue Knob ski resort near Bedford, Pa. Part of the funds for this project came from an REA section 5 loan, and, as a result, much criticism has been directed at the project and REA. Yet, without the loan, the project would never have begun.

Mr. WHITTEN. Mr. Secretary, I have felt that, whatever the merits of that type of program from a financial standpoint, the REA has enough problems with private power companies without getting into something that has resulted in as much adverse publicity as this has. We shall develop this more thoroughly later. But even though this. is thoroughly sound, REA has got about all the load it can carry, in my opinion, without getting off into this area.

Has there been any investigation to see whether this type of operation could more properly be carried on by the Farmers Home Administration which, after all, is set up from the standpoint of making and supervising loans?

Secretary FREEMAN. Yes, sir; there has been, and there have not been recreation loans made by REA in recent months, Mr. Chairman, because of the problem in connection with it.

Mr. WHITTEN. I don't know what the Government should do. I don't know how far REA should go. But I am aware that we live in a very practical world and that some agencies are better set up to handle certain types of things than others and such operations by some agencies are generally more accepted by the public than others. We will get into that later, but I am glad to know some thought has been given to this possibility.

Secretary FREEMAN. I thank you, Mr. Chairman.

I did want to call this to your attention-because it was controversial, and I know the committee is interested. Of course, this committee knows these things-I just note this experience for the record and for the information of others in connection with it.

If I may continue, Mr. Chairman, today the resort is drawing an average weekend attendance of 3,000 persons, and is grossing about $10,000 a day. Some 58 people have jobs that were not there a year ago, and next year at least 30 more jobs will be created.

But that is only half the story. Merchants in surrounding towns are suddenly finding business they never before knew existed. And, as a reporter for one of the top business publications wrote, Blue Knob will "become one of the top half dozen resort areas in the eastern section of the country.

There is one further benefit of recreation that most people don't realize. It is far cheaper to loan the farmer, or groups of rural citizens, the money to convert cropland to recreation than to pay to take that land out of production and have it lay idle.

For example, a group of citizens in Hardin County, Iowa, obtained an FHA loan to convert an 80-acre farm into a 9-hole golf course. As the local newspaper editor noted, the Government, because of the loan, "won't have to battle some 128,000 bushels of corn as surplus.' Recreation is more valuable than corn to the community.

Mr. WHITTEN. May I interrupt there to point out that we have the Small Busniess Administration where Government loans are made available to small businesses.

I mentioned that at this point in the record to indicate that this is not the only place where the Government is lending money for the purpose of developing and expanding small business.

DEVELOPING NEW USES FOR LAND

Secretary FREEMAN. Other programs seek directly to encourage the conversion of cropland to other income-producing uses. The Food and Agriculture Act authorized $10 million for a pilot cropland conversion program. About 41 counties in 13 States were selected as test areas for converting land to grass and trees. One or more projects to encourage conversion to recreation are being developed in 33 of the 50 States.

Agreements with 2,800 farmers, running for 5 or 10 years depending on the project, have been signed to convert almost 130,000 acres of cropland. Most of the land has gone to grass or trees, and about 8,300 acres are being developed for recreation on about 130 farms.

Other programs also contribute to major shifts in land use, particularly the agricultural conservation program (ACP). In one county, in my own State of Minnesota, 150 farmers used ACP to shift about 3.5 percent of the county's cropland to timber. And in one county in Iowa, ACP was used to help farmers shift nearly 3,000 acres from corn to grass, and improve 3,000 existing acres of pasture at the same time. In both cases, the long-term income prospects have been improved.

One of the more promising long-range programs to develop more productive uses for land in rural areas is the resource conservation and development project. Authorized in the Food and Agriculture Act of 1962, there are now 10 "R.C. & D." pilot projects now underway. These projects are designed to improve the use of land and other natural resources in an area embracing several counties and often including several small watersheds. Within these projects, farmers and their organizations will be encouraged to work with city and urban families and their organizations to develop recreation activities which benefit both city and country.

One of the ten projects covers all or parts of five Western Minnesota counties where the soil and water conservation district sponsors already are working with State funds and assistance to establish a 79mile canoe trail along the Crow Wing River. There will be eight camping sites, and the project already has drawn considerable public interest, interest which will turn into extra income for the area.

This idea is not new-this idea of farm and nonfarm people working together to create on private property more of the outdoor recreation that urban people want-and are willing to pay for.

In fact, I am convinced the "R.C. & D." approach to land use development, if the Congress had not created it in 1962, would have come into being on its own. A recent survey made by the Soil Conservation Service of various city groups using farmland in special recreation programs showed that over 51,800 organized groups with 8.9 million members lease or have permits to use 39 million acres of privately owned land for outdoor recreation.

Nearly 50,000 landowners were involved, and over half of them received some kind of income from the arrangement. The opportunities for future expansion are enormous, and the "R.C. & D." program is an excellent means to stimulate this kind of rural-city cooperation in which everyone benefits.

STRENGTHENING RURAL COOPERATIVES

The Department is directed by the Cooperative Marketing Act of 1926:

to provide for the acquisition and dissemination of information pertaining to cooperation; to promote the knowledge of cooperative principles and practices; to provide for calling advisers to counsel with the Secretary of Agriculture on cooperative activities; to authorize cooperatives associations to acquire, interpret, and disseminate crop and market information, and for other purposes. I am convinced that a dynamic and aggressive effort to expand the role of cooperatives in rural America can do much to encourage the more rapid growth of the rural economy. Co-ops have contributed hugely to agriculture and the farmer, but there is much more that they can do.

Existing cooperatives should help new co-ops to get started on some of the jobs that need doing in rural areas recreation, new industry, more aggressive marketing of unique local products. In some areas, co-ops are beginning to move. In the State of Washington, apple growers formed a co-op to use a new process for concentrating apple juice which the USDA developed. The plant creates a new market for 30,000 tons of apples each year, and provides work for 100 persons.

In Michigan, a farmers' association to market wood products is using technical assistance to upgrade pulpwood production from private woodlots-and to improve income of farmer members in the process.

In West Virginia and eastern Kentucky, the Southern States Cooperative is helping on special projects to develop feeder pig and egg producing cooperatives.

In Oklahoma, a rural electire co-op helped 140 farmers and ranchers organize a feed supply co-op that uses homegrown grain mixed with supplementary ingredients. Federal funds were available, but only to fill the gap in financing that local sources could not cover.

CONSERVING SOIL AND WATER AND WILDLIFE RESOURCES

In Louisiana, two farmers with the help of their local soil conservation district converted an 80-acre marsh into a farm pond for recreation uses. After checking the USDA soil survey of the marsh, the owners decided against draining the land.

Instead, they used SCS engineering help to create the pond. The farmers now sell fishing privileges, rent boats, and operate a bait shop. Last year, the land grossed almost $30 an acre, and before, it had never produced enough income to cover tax costs.

Near Russellville, Ky., the Mud River watershed project is a source of water and recreation-and a protection from floods. A 900-acre recreation lake will provide fishing and other water-based recreation for local people and thousands of visitors.

Property values around the lake are rising, and construction projects together with the increased jobs from recreation will bring employment to about 170 persons. Availability of water helped convince one firm to locate a plant in the community and another firm to double its size. Over 700 new jobs will be created.

ACP programs, combined with the efforts of the soil conservation districts through the small watershed program, demonstrate that conservation is more than resource protection-it is a creative process that we have only begun to employ. On the basis of past experience alone, we can expect one or more new industries to be brought to a watershed community. The value of recreation cannot be overestimated.

Last year 88 new small watershed projects were approved for operation and 121 were authorized for planning-the largest number in any year since the program began. Overall, we expect to help some 1,800 local organizations develop land and water resources on 36 million acres, involving a population of some 4.1 million persons in 606 watershed projects which will be in operation in fiscal 1965.

DEVELOPING MODERN COMMUNITIES

Local people seeking to create new opportunities through resource development soon find that the community is a resource which also needs to be developed. Roads must be adequate, homes must be improved, adequate water and sewage is necessary, power and communication needs must be met.

In Clinton Township, Ind., a new elementary school was under construction before city officials discovered that the town wells were inadequate and some had water unfit for human use. A water system loan through the expanded Farmers Home Administration loan program enacted in 1962 helped the community provide a dependable supply of water and open the new school on schedule.

In Yorkville, Tenn., the development of a community water system helped pave the way for an industrial park, a new medical clinic, new home construction and the remodeling of some business buildings.

Overall, the rural water system local program has been increased ninefold in 3 years. Last year, the program enabled 40,000 rural families to obtain adequate supplies of clean water. So far this year, we are about 66 percent ahead of last year's pace.

Rural housing programs also have expanded substantially since the Department was authorized in 1961 and 1962 to extend loans and grants to rural nonfarm families, the elderly, and to constructing adequate quarters for migrant workers.

In Tulare County, Calif., the rural housing program helped farm labor families to complete a self-help, do-it-yourself home building project. In New Jersey, 20 retired farm couples will move into lowcost rental housing built through the loan program to encourage housing for the elderly in rural areas. In eastern Kentucky, 619 rural families have received housing grants to help bring their homes up to a level where water no longer will freeze 6 feet away from the stove.

Mr. WHITTEN. Mr. Secretary, you are aware, I am sure, of the interest that my colleague of Kentucky, Mr. Natcher, has in this watershed and the part he played in promoting it.

You may proceed.

Secretary FREEMAN. The rural housing program last year provided 20,000 loans for a total of $186 million, and the demand would easily support an insured loan program twice this size to help rural families build and repair their homes.