The Farmers Home Administration Act (FHAA) of 1946 grew out of the Dust Bowl of the 1930s, the Great Depression, and the Resettlement Act of 1935. Government was beginning to take a greater hand than it ever had in the life of the farmer. This involvement included price controls, surplus destruction, and farm loans. The Farmers' Home Administration (FHA) became part of what is known as the Farm Credit System.
The FHA was preceded by the Farm Security Administration (1937), which built cooperative structures where tenant farmers could work in a communal setting. The FHA differed from the former agency in that it concentrated on helping individual farmers acquire their own farms, just as the Federal Housing Authority helped people own their own homes. The main purpose of the act was "to simplify and improve credit services to farmers and promote farm ownership by ... authorizing government insurance of loans to farmers." The act consolidated various organizations so "eligible farmers" could "obtain their agricultural credit and services at one central point."
The FHA issued both direct and guaranteed loans to those who had trouble gaining credit lines through commercial banks. FHA assistance was directed toward young farmers just starting out, small farmers, poverty stricken farmers, veterans, and larger farming businesses struck by disaster. The FHA was to be their "last resort." Some states even took it upon themselves to stipulate that a loan applicant had to have been rejected for a commercial loan before applying to the FHA.
President Truman signed the bill into law on August 14, 1946, but had reservations. Section 9 of the act reads: "Any conveyance of real estate by the Government or any Government agency under this Act shall include all mineral rights." Truman, however, stated, "I do not concur with the objectives of this provision." He cited the Atomic Energy Act of 1946 and Executive Order 9701, both of which gave the government greater control over important natural resources such as gas and oil. The nuclear age was also just beginning, but private enterprise in this sector would have to wait for the Eisenhower Administration, which would prove to be more permissive.
The act went through various updates over the years, being reorganized to reflect the changing times. In general, the act's scope expanded to encompass all farmers in need. By 1977 this would come to include a growing amount of "emergency loans." These factors contributed to tremendous loan losses ($16.19 billion from 1986 to 1993 alone) and instigated a great deal of criticism. As a result of such losses, the agency made an effort to shift from predominantly direct loans to mostly insured loans. In 1980 "guaranteed loans" made up only 2.9 percent of farm owning and operating loans; by 1993 that number had risen to 70.5 percent.
In 1994 the Farmers' Home Administration was incorporated, along with the Agricultural Stabilization and Conservation Service, the Federal Crop Insurance Corporation, and others into the Farm Service Agency. This agency continues to oversee loans once controlled by the FHA.
See also: AGRICULTURAL ADJUSTMENT ACT; FAIR HOUSING ACT OF 1968; NATIONAL INDUSTRIAL RECOVERY ACT
Rapp, David. How the U.S. Got Into Agriculture and Why It Can't Get Out. Washington, DC: Congressional Quarterly Inc., 1988.
Sumner, Daniel A., ed. Agricultural Policy Reform in the United States. Washington DC: American Enterprise Institute Press, 1995.
U.S. Farm Service Agency. <http://www.fsa.usda.gov>.
Did this raise a question for you?