State, in that the reservation Indians that we have, and there are two tribes in Suffolk County, with other tribes throughout the State, were never made wards of the Federal Government.

Their lands are held in common, and they cannot get mortgages to build houses. Is there any reason why the FHA could not assist them in this situation?

Mr. BERTSCH. Mr. Chairman, I believe that we do have a statutory limitation which requires that our housing loans be secured by mortgages on the property. Where tribal councils hold this property in trust, we have made special efforts and have been able to accomplish certain memorandums of understanding in which the tribal council concurred in mortgages given by Indian lessees of individual farms and thus gave them reasonable legal validity.

I am not familiar with the situation in Suffolk County, Mr. Chairman, but you may be sure we will give it our attention and determine whether or not there is some way we can overcome the handicap. I am not sure that there is, but we will give it the old college try.

Mr. RESNICK. I would appreciate it, and possibly, if legislation is needed to correct this defect, we can get it through. I would imagine that just about everybody would agree that these Indians should be treated on the same basis as the ones who are wards of the Federal Government and should have the same benefits. I realize the problems that you have, that you try to operate as closely to commercial law as possible. I am thinking possibly of some sort of leasehold arrangement, if that is within the realm of possibility.

I know that in Hawaii, for example, virtually all of the homes are on leaseholds.

Mr. BERTSCH. For a number of years, we undertook to get some sort of ameliorative amendments permitting us to make both housing loans and our farmownership loans under the Consolidated Farmers Home Administration Act on the basis of leaseholds. We have a limited authority now in that respect, applying to farmownership loans in Hawaii. This authority, I believe, expires in 1968. We can, however, make housing loans to Indians who hold mortgageable leases on farms. But we are not authorized to make housing loans on leased nonfarm

tracts.

We will certainly explore this, and you may expect, Mr. Chairman, a report from us on the problem in Suffolk County.

Mr. RESNICK. I would appreciate it, and I would add that if it does expire, then that just about takes you out of business in Hawaii, for virtually all of the land area is leasehold land.

Mr. BERTSCI. That is true.

Spanish and Mexican Americans in the Southwest also participate to a much greater extent in Farmers Home Administration programs than in the past. At the close of 1966, there were 3,400 Farmers Home Administration loans outstanding with these borrowers for a total of $25 million. They are heavily concentrated in New Mexico and Texas. Employment of minority group workers at all levels in the Farmers Home Administration is another area where we are making steady progress. Employment of Negroes increased ninefold since 1961. We now have 720 Negro employees, including committeemen. This compares with 80 in 1961. Virtually every Farmers Home Administration

county committee in southern counties with large numbers of Negro farmers includes a Negro committeeman.

In five Southwestern and Western States alone, Farmers Home Administration employs about 150 Spanish surname workers or committeemen.

To sum it all up, in fiscal 1960, Farmers Home Administration made loans totaling about $300 million. These loans were concentrated almost entirely among commercial farmers having what were termed "adequate operations." In fiscal year 1967, the Farmers Home Administration made loans totaling approximately $1.3 billion, a sizable percentage of which will benefit families that by any measure are low income and serve communities that have in the past been almost totally neglected by the services of the Federal Government.

The record speaks for itself.

Supervised credit is, of course, the main job of the Farmers Home Administration. But it is by no means the only job. We also are in the forefront of Secretary Freeman's outreach program. Farmers Home Administration supervisors are chairmen of county technical action panels in those counties where their main office is located. This is no small or after-hours duty.

One major reason rural America lags behind in the services and institutions that provide a seedbed for development is that rural America lacks technical skills and know-how when it comes to the increasingly complex task of utilizing public services and aids.

Announce a new Federal grant-in-aid program and New YorkI am referring, Mr. Chairman, to New York City-Boston, or Chicago will have a dozen highly skilled people working on an application the next day. In most small towns and rural counties, however, the governing officials may not learn about the program for weeks and may not get an acceptable application in for months, if ever.

Secretary Freeman's outreach program is designed very simply to overcome this serious rural area handicap by making use of the skills and talents of Department people, and the channels the Department has now or can establish from the Federal to State and local communities.

In each rural county, a group of Department workers, acting as a team, supply information on all Federal programs. They also give assistance to local leaders in meeting the requirements for grants-inaid, loans, and other Federal benefits. When necessary, this "outreach team" or technical action panel, takes the initiative to assure that families in areas they serve know about and apply for special programs, such as medicare, the Job Corps, or food provided through the distribution programs.

The part the Farmers Home Administration and the Department is taking in the war on poverty programs is an example of how the "outreach" technique gets service to rural areas.

Farmers Home Administration and other Department personnel helped organize well over half of the 650 rural community action programs now operating. Department people also serve as advisers to CAP boards.

Farmers Home Administration has just reinforced this relationship by issuing a directive requiring the closest possible cooperation

between the agency and local CAP boards and directors. The meaning of this directive is unequivocal: Full support for local wars on poverty.

OEO and the Department recently established a joint working party on economic opportunity to provide policy direction and generate new initiatives on the part of both agencies to fight rural poverty. OEO and Farmers Home Administration are collaborating on an increasing number of self-help housing projects. OEO funds the construction supervisors and project administration. We make loans for building materials. The low-income borrowers do most of the work. We are working together on this program in six States.

Mr. RESNICK. Might I interrupt you there? We shall go into it deeper later. On this self-help program, are the building suppliers helping you people, supplying material? You know, this is probably one of the best programs that you have to help the rural poor, and it is probably also one about which the public knows the least.

I was just wondering what is being done to publicize it. What are the building supply people doing in helping to publicize this?

Mr. BERTSCH. Our program, Mr. Chairman, is well known to building materials dealers. It is in their interest to know about it. They have been used as channels for referring applicants to us. We have relied for a good many years on building materials suppliers to provide the house plans, modest house plans, for our borrowers. This is a service that they normally are in a position to provide, and I recall that at one time in our history, we had quite a staff of architects ourselves who prepared plans for low-cost housing.

I now have on my staff in Wasington only one architect. His work is primarily that of making adjustments and modifications to commercial house plans.

We have moved clearly into the area of relying upon the building trade for those services which they are best able to provide.

I hope that is responsive to your question.

Mr. RESNICK. If you will excuse me, if there is no objection by the other members of the committee, we will hear the end of Mr. Bertsch's testimony and then possibly, recess for 45 minutes. And if Mr. Bertsch will be kind enough to return, we can ask him some questions--is there any objection to that?

(No response.)

Mr. BERTSCH. I shall hasten through this, then, Mr. Chairman.

Farmers Home Administration has a definite, clearly stated policy to supply credit through all programs, whenever possible, to fund agricultural projects going forward under the leadership of local CAP's. In several areas, a CAP is sponsoring farm improvement and development programs among small farmers, and Farmers Home Administration is providing money for seed, fertilizer, livestock, fencing, buildings and so forth.

Farmers Home Administration local offices, along with those of the State extension services, make referrals and provide information to families about Job Corps, Neighborhood Youth Corps, job training programs, scholarship aid for needy students and a host of other

services.

I might mention in passing, that Farmers Home Administration was among the first Federal or State agencies to supply detailed literature and information on the entire range of war on poverty programs to its workers. We had full-scale discussions with our State directors and their staffs about the entire OEO program in December, 1964, shortly after the Economic Opportunity Act was signed into law.

Up to this point my statement may have given you the idea we in the Farmers Home Administration are proud of the job we are doing. I hope it has. That was my intention.

Nevertheless, we are not so proud that we are oblivious to the size of the task before us, and before all public and private agencies in the front line of this war against poverty. Nor are we in the Farmers Home Administration oblivious to some of our shortcomings.

We know, for example:

Ne need more trained people at the county level to get out and work with families, associations, and communities using our credit. This is particularly true among the families of poverty and the communities of poverty.

Additional tools are needed to reach families now beyond our help. We believe rural families with but little debt-paying potential could profit by a loan supplement or work-grant type of program that would reduce the amount of credit they required.

Housing grant programs are needed to expand construction of decent, safe, and sanitary shelter for the landless and often jobless rural poor.

A supervised credit and credit supplement program should be available that will enable young farmers, particularly poor young farmers, to obtain the land resources that will give them a fighting chance to make a successful, productive life in agriculture for themselves and their families.

We need to recruit more minority group workers in the Farmers Home Administration at all levels, and in all positions, and more young people who have come out of the culture of rural poverty and know what it means. This is a need we can and are doing something about. Some of the previous figures I cited show, at least, a vigorous beginning.

We need to increase our outreach workers and the services they provide, and hope to do so once the 1968 budget returns are in.

This whole issue of resources and programs that are shaped and fashioned to meet the chronic problems that retard the progress of rural areas brings up a much more fundamental concern.

The Commerce Department says there are now some 220 standard metropolitan statistical areas. These include city cores and their surrounding counties. Sooner or later most of the territory within these areas will be metropolitan in character. In some cases, two or more of the SMSA's will grow together to form the familiar strip cities the planners and sociologists deplore or applaud, depending upon their ideals and goals.

Outside the SMSA's about 300 primarily nonmetropolitan multicounty areas now exist, areas that have the potential for providing all of the facilities people need.

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Whether these primarily rural areas will fully realize their potential as viable places for living and working depends on whether the American people are willing to make a fundamental decision: That continuing urbanization in the form it is taking promotes neither a healthy nor a peaceful society, and alternative areas for living and working must be developed.

The cost and effort required to develop this "rural alternative" to city suburban living will not be small. It will require tremendous technical and managerial resources, as well as capital investment. But it will be, I am convinced, the best investment this Nation could possibly make.

Thank you, Mr. Chairman.

Mr. RESNICK. Thank you, Mr. Bertsch.

I would just like to say before we adjourn that if anybody else would like to make a statement on this, we will have time before we have questioning.

I would like first to compliment you, Mr. Bertsch, on the very fine and very lucid statement you have made. I would also like to say that to the best of my recollection, yours is the first statement by any agency that admits that his department has some shortcomings.

If we were to listen to some of these other things that have been said, we would get the impression that all is fine and everything is perfect out there on the countryside.

I want, again, to compliment you on your frankness and forthrightness in knowing that you do have problems that still have to be resolved.

Are there any questions?

Mr. NICHOLS. I have questions, but I will hold them, Mr. Chairman, until we return, if that is all right with you.

He will be back?

Mr. RESNICK. Yes.

Mr. NICHOLS. Shall we come back at 10 minutes to 3, Mr. Chairman? Mr. RESNICK. We will adjourn now until 10 minutes to 3. That will give us all time—until 2:45, at which time we will reconvene. (Whereupon, a recess was taken.)

Mr. RESNICK. The hearings will now come to order once again. Mr. Bertsch, you pointed out in your very fine testimony that there are areas of difficulty; things that should be getting done are not getting done.

One of the things that stands out in my memory in these hearings is that in California, I believe it was, there is a rather large FHA selfhelp program in the San Joaquin Valley. The witness pointed out that it took something like 6 months to get the plans approved, by the time it went back and forth between the local FHA and State and local authorities, and so on, and finally, after it was all approved, they rejected as frills certain features that would have made these places a little nicer-you know, built a little beauty into them.

I expressed surprise at that time, that the FHA would do that. Is that the FHA policy? Is this normally how long it takes, or is that a special case out there?

Mr. BERTSCH. Mr. Chairman, California is a special case, so far as the Farmers Home Administration is concerned. It is a very difficult State in which to administer our program.