Message to the Congress Transmitting First Annual Report on Financial Assistance to Rural Areas.

To the Congress of the United States:

I am transmitting today the first annual report on financial assistance to rural areas, as called for by Title 9 of the Agricultural Act of 1970.

The revitalization of rural America is one of the important objectives of my administration. For I am convinced that the growth which this Nation will inevitably experience in the coming decades will be healthy growth only if it is balanced growth---and this means growth which is distributed among both urban and rural areas. The recent trend of diminishing population and diminishing prosperity in many rural areas must be actively resisted. This report tells about some of the steps we have taken in this direction--and about some of the conclusions we have reached concerning future steps.

As the report points out, financial assistance is now available from public and private sources for agriculture, industrial development, housing, community development and other economic activities in rural areas. This document describes some of the things this administration is doing to correct deficiencies in these programs. It also provides detailed financial data for selected Federal programs for Fiscal Year 1970, most of them Federal direct and insured loan programs.

Perhaps the most important element of the report, however, is its conclusion that the most critical financial needs for achieving greater rural development are those of State and local governments. My General and Special Revenue Sharing proposals are geared to meet these needs. These proposals recognize both the steadily increasing demands for service being placed on State and local governments and the severe limitations on new and existing sources of revenue at these governmental levels.

These proposed revenue sharing funds could be used for specific services presently provided by State and local governments, or to finance new programs and services tailored to particular needs of States and localities, including rural development. One of my six Special Revenue Sharing programs, in fact, is earmarked specifically for Rural Community Development and it alone would provide a total of $1.1 billion annually for rural programs and services administered at the State and local level. In addition, substantial portions of my revenue sharing proposals for transportation, education, urban community development, manpower training, and law enforcement assistance would directly benefit rural residents. And my General Revenue Sharing proposal would provide additional funds which could be used to augment various rural efforts.

I would emphasize that revenue sharing monies could be used not only to pay for direct governmental services but also to give credit assistance for accelerating the expansion of commercial and industrial development through locally sponsored institutions. Such institutions can be particularly useful in those specific areas where there are shortages of private investment capital, and where even the removal of existing barriers to the free movement of private capital may not entirely meet local needs.

I strongly believe that it would be better to establish a series of State and local special credit institutions than to create a nationwide federally sponsored community .bank, since the former course places responsibility for decision making and action closer to the people who require assistance--and is more likely to produce decisions which are truly responsive to their needs.

This report also highlights the problems caused by the excessive proliferation and fragmentation of Federal assistance programs. Too often, the result has been an uncoordinated and piecemeal approach to rural development. Merely to increase the level of rural assistance without making basic reforms in the delivery systems will not enable us to solve the problems of rural communities.

This is why it is so important that my proposals for reorganizing the executive branch be enacted by the Congress. For only a thoroughgoing restructuring of the organizational framework can bring about a true consolidation and coordination of numerous Federal programs and with it the more effective and efficient delivery of Federal assistance. The proposed new Departments of Community Development and Economic Affairs would have particular responsibility in the rural development area.

As the report indicates, many families are presently excluded from eligibility for Federal credit assistance because of their 'low income. Traditional development programs can do little to give them the direct aid they need. This is another reason why I believe so strongly that my proposed family assistance program could have a major impact on the quality of life in rural America. Not only would it immediately help poor families raise their standard of living, but it would also enable many of them to take advantage of Federal credit assistance which is presently beyond their reach. Coupled with more effective delivery of federally assisted housing services, the family assistance plan would permit great strides in improving the quality of rural housing.

The problems of agricultural credit and farm debt are also taken up in this report. While the credit requirements of commercial farmers appear to have been adequately funded during the last 20 years--primarily by private lenders--the recent trend of increasing farm debt is likely to continue throughout this decade. Fortunately, the federally sponsored farm credit lending institutions--which are now entirely member-owned--have been playing an increasing role in meeting the credit needs of farmers. If private lenders and the Farm Credit System continue to expand their credit assistance at the same rate as during the 1960's, there should be adequate credit available to meet the needs of commercial agriculture during the 1970's.

For those farmers who are unable to qualify for credit from private lenders and the Farm Credit System, recently strengthened Federal credit programs administered by the Farmers Home Administration are available to meet additional needs. In my "Salute to Agriculture" speech this past May, I announced plans to increase the farm operating and farm ownership loan programs by $215 million over the level originally budgeted for 1972--an increase of nearly 50% in available loan funds. I pledge that my administration will continue to be responsive to the needs of those farmers who are unable to qualify for private credit. I also believe, however, that we should continue to rely primarily on private lenders to meet the general credit needs of commercial agriculture, and I would point to various measures which are recommended in this report for improving the flow of private credit to agricultural borrowers.

In addition to all of these decisions and recommendations, I have also supported enactment of legislation to create a Rural Telephone Bank which will soon be able to provide substantially increased credit assistance to small rural telephone companies and cooperatives. This will mean better telephone service for our rural citizens. I have recently sent to the Congress a budget amendment requesting $30 million for the initial purchase of capital stock in this Bank. My speech last May also announced increased lending for rural sewer and water projects in both 1971 (an additional $100 million) and 1972 (an additional $111 million ) --a nearly 60% increase over the level budgeted for the 1972 fiscal year.

I am confident that the actions already taken by this administration--in conjunction with the new programs which I have recommended to the Congress--can do a great deal to bring about the renewal of rural America. The achievement of this goal is essential if the growth we experience in the years ahead is to be for us not a curse but a blessing. All Americans have a high stake in the success of rural development.

RICHARD NIXON

The White House

July 23, 1971