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incurred. Now anybody can take the history of the price structure for the past 7 years throughout the country and see that it has been bad. Now do you not believe that it is the duty of the Congress to take the whole problem of the farmer into consideration with a view to giving him a decent price with which to pay his obligations rather than sit here day after day, month after month, year after year and not do anything about the real fundamental problem of providing a decent price for farm commodities?

Mr. THATCHER. I think this material I will extend in the record will discuss the question you are talking about.

Mr. ANDRESEN. Do you think if we had achieved the objective that we have been after that we would have had any 4,000 farms in Mr. Murray's district in Wisconsin with foreclosed mortgages, or would we have had 23 percent of the Federal land bank loans delinquent at this time?

Mr. DOXEY. Let me interrupt you, Mr. Andresen, to ask that since you refer to the 14 years you have been on this committee and have referred to the last 7, if you would say what you did during the first 7 years you were here.

Mr. ANDRESEN. When I was on this committee-during the first part of my service, for several years, I think cotton sold for 22 cents. Mr. DOXEY. Well, that was an act of God and not because of any legislation. The Lord had charge of that.

Mr. ANDRESEN. Just the same, the farmers were getting 22 cents for cotton without a subsidy. I think we ought to get back to where Mr. Doxey's farmers, raising cotton, could get a decent income from what they have to sell to enable them to meet their mortgage obligations.

Mr. THATCHER. That will require more than the recent price-
Mr. DOXEY. Or speeches.

Mr. ANDRESEN. It may require a great deal, but do you not think we ought to do something to help the farmer hold his farm?

Mr. THATCHER. I touched on that yesterday and I will touch on it again.

Mr. ANDRESEN. I am sorry I did not hear your discussion on that yesterday; I was called away.

Mr. THATCHER. Yes.

Mr. ANDRESEN. Now let me ask you this question: The purpose of this bill is to reduce the interest rate to 3 percent.

Mr. THATCHER. Yes.

Mr. ANDRESEN. Or a reduction of one half of 1 percent under what the farmers are now paying.

Mr. THATCHER. Yes.

Mr. ANDRESEN. Do you think the farmer can pay the 3 percent unless his income is supplemented?

Mr. THATCHER. He cannot pay any percent unless he has the income; he cannot take care of any payment.

Mr. ANDRESEN. Is it not the job of this committee to try to provide the farmer with income so he can meet his payments?

Mr. THATCHER. I do not see how he can get by when industry fixes its price, and when the farmer has to buy in a market where the price is fixed and has to sell for whatever he can get.

Mr. DoXEY. Are there any further questions, gentlemen? Do you wish to try to conclude your statement? I am not trying to hurry you, you understand.

Mr. THATCHER. I am anxious, Mr. Chairman, to cover one or two more points.

I should like to touch upon the matter that Congressman Coffee's question raised concerning the soundness of this institution, in the matter of credit and appraisements the amount of extension of credit, and so forth.

I think I discussed the question before this committee of extending credit, by determining the productivity of the land rather than determining its value by simply having someone go over the land and appraise it.

I do not see how the best appraiser in the world could hope to tell what a piece of land will carry in the way of debt and service charges in view of the unpredictable quantity that can be put into the market, and the unpredictable price structure itself, the unpredictable income, all of which makes it impossible, even if you wanted to be fair, as am sure everyone does, to determine what a loan should be.

Of course, this system must be guarded. It must be protected. There is no question about that. But, it is more important to protect the farmer than it is credit the system, in my judgment.

Now as to change of prices: I asked the Commodities Exchange Administration yesterday to make up for me a schedule of cotton and wheat prices, high and low, of future prices of cotton on the cotton exchange.

That shows that in 1926 the highest cotton prices, contract market, was 18.30, that is during that year, and the lowest was 11.85 during that same year.

Now, look at that range: 11.85 to 18.50 in a year.

Now that is of far more importance to the cotton farmer than an interest rate or 10 percent of the principal. Take 10 percent of the principal debt at that price, with that price structure, and that is much more important in the matter of determining the amount the mortgage should be.

Now, the next year, 1927, the highest price for cotton was 24.72 and the lowest 13.36.

How could any businessman operate if the price of his product suffered any such variation during the year-almost twice as low as compared with the higest price.

Mr. COOLEY. That is all in the same year?

Mr. THATCHER. All in the same year; these are the highs and lows in the same year for cotton prices.

Mr. HOPE. What year was that?

Mr. THATCHER. The last year was 1927.

Now getting down to 1932. The high was 9.66 against 5.30.

In 1933, high 12.20, against 6.30.

In 1934, high 13.98, against 10.73.

And coming to 1938, the high was 9.50 and a low of 7.73.

For last year the high, 11.56 and the low 7.26.

Now, on wheat, and the gentleman from Nebraska knows a great deal about wheat.

Let us go back to the year 1925: The top price was 2.05 for Chicago May wheat and the low 1.19. So, you have a variation of 86 cents per bushel in May futures price for 1 year.

What businessman could hope to get credit under such a price system? In the fitst place, how could he hope to get his banker interested in a loan if the price of his product was determined in a gambler's

market, where the range would be from a high of 2.05 for an article that sold as low as 1.19 during the same year. He just could not hope to do it.

Mr. THATCHER (continuing). He just would not get the credit.
Mr. COFFEE. What is the answer to the problem?

Mr. THATCHER. The right answer, of course, is to give the farmer price insurance.

Mr. LEMKE. You would favor a policy of fixing a minimum price below which the gambler cannot drive the market?

Mr. THATCHER. Absolutely.

May I submit for the record, Mr. Chairman, this schedule of prices prepared as of March 12, 1940?

Mr. DOXEY. Without objection it will be made a part of the record. (The table referred to follows:)

High and low price for December cotton future on New York Cotton Exchange

1926

1927.

1928.

1929.

1930.

1931.

1932

1921

1922

1923.

1924.

1925

1926.

1927

1928

1929

1930.

[blocks in formation]

High and low price for May wheat future on the Chicago Board of Trade

[blocks in formation]

Mr. COOLEY. On the question of price fixing: Do you think the Congress would be justified in fixing a minimum price for farm commodities?

Mr. THATCHER. They do fix them within the law.

Mr. COOLEY. I know, but the Secretary of Agriculture thinks that is a bad policy. Do you think the Congress would be justified in passing such legislation to fix minimum prices of farm commodities? Mr. THATCHER. I certainly do. Now, with reference to the collection of interest and principal let us see what you are doing, the Administration is doing in the way of farm mortgages. You make the loan and you just hope that it will work out, and you just hope the price will stay up, that the weather will be good and there will be an amount of money for the farmer-that the market will stay upwhen he takes his stuff to market.

And when I am talking about the Administration, I am referring to the Farm Credit Administration; what it does.

In the case of the organization that I manage, and we are large borrowers from the Central Bank for Cooperatives of Farm Credit

Administration practically all of the time, and today we owe them over $2,000,000 so I certainly have some interest in protecting the F. C. A. Cooperative Bank.

Now in our case what does the bank do, the F. C. A's. Central Bank for Cooperatives, to make sure that the money loaned to our cooperative is safe? Loans are made under certain definite agreements and contracts. We pay $300 a month to the Farm Credit Administration for this man in our office to see that our loan contract is kept, that the collateral we put up is in proper form and amount as a means of protecting credit extended to our cooperative. And, we enjoy that credit because we operate in a definite and businesslike

manner.

Mr. COFFEE. May I ask you another question?

Mr. THATCHER. Yes.

In the event we should fix a minimum price for wheat, for instance— and that is what was done by the Farm Board Act-what would you do with the exportable surplus; how would you get rid of that?

Mr. THATCHER. Well, if I had a little time I would go into the whole question.

Mr. COFFEE. Yes.

Mr. THATCHER. I would fix a minimum loan price for wheat, for cotton, and these other important commodities and I would employ a tax, impose that tax for the difference between the low market price, which is away down here and fair price; I would impose a tax between that minimum loan price and a fair price.

To illustrate with wheat, if the loan price were 75 cents, and I think that is probably the bottom at which the loan price of wheat ought to be, and the price which the farmer should have were $1.15, then I would impose this differentiation tax of say 40 cents a bushel. And when the miller or the processor took a bushel of wheat and processed it I would collect 40 cents for the farmer, that plus the low price of 75 cents paid to him, would yield him $1.15 per bushel.

Mr. DOXEY. We are going to have to have some system.

Mr. THATCHER. You will one day have that or be oblighed to fix the price.

Mr. COOLEY. What is the difference between the proposition you have just stated and outright price fixing by law?

Mr. THATCHER. The difference is that if the Government fixed the whole price you would inevitably put the Government in business. If you would fix a minimum loan price, when the product should move into the cash market, based on supply and demand you minimize the amount of goods that will fall into the hands of the Government, as a result and thus will keep the Government out of business. The imposed tax above the minimum loan price would yield the additional income required to give the farmer a fair exchange price.

Mr. COOLEY. Well, under the loan policy we accumulated quite a lot of cotton.

Mr. THATCHER. You may have an excessive loan price for cotton or for corn.

Mr. DoXEY (interposing). Gentlemen, it is evident we cannot conclude this hearing this morning, and we will stand adjourned until 10:30 o'clock tomorrow.

(Thereupon, at 12:10 a. m., an adjournment was taken until 10:30 a. m. of the following day, Friday, March 15, 1940.)

FARM CREDIT LEGISLATION

FRIDAY, MARCH 15, 1940

HOUSE OF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,
Washington, D. C.

The committee resumed hearings on H. R. 8748 at 10:30 a. m., Hon. Marvin Jones (chairman) presiding.

The CHAIRMAN. Mr. Thatcher, I do not know whether you wish to conclude your testimony before calling on Dr. Dickerson. I understood you wished him to appear this morning as he may have to leave. Mr. THATCHER. I think it would be well for Dr. Dickerson to appear, as I understand he would like to go back home to Arkansas. The CHAIRMAN. I think it would be better; that will enable him to get away.

Dr. Dickerson, we will be glad to hear you at this time.

STATEMENT OF M. F. DICKERSON, LITTLE ROCK, ARK., PRESIDENT OF THE ARKANSAS STATE FARMERS UNION

Mr. DICKERSON. Mr. Chairman and members of the committee: My name is M. F. Dickerson, of Little Rock, Ark. I am president of the Arkansas State Farmers Union and also chairman of the farm debt adjustment committee, a voluntary organization, serving without pay, of course, under the supervision of the Farm Security Administration.

I became connected with the Federal Land Bank System immediately after it began operating in 1917, as an appraiser until 1922, land bank appraiser, and then as director and treasurer of the bank until 1926, at which time I resigned to become president of the Southwest Joint Stock Land Bank, remaining there 2 years until I sold my stock and retired from the system.

I went back as director of the bank, as elected director of the bank, by the Production Credit Association in January 1935 and served 3 years, retiring voluntarily at the end of that term.

The CHAIRMAN. We will be glad to hear from you.

Mr. DICKERSON. Mr. Thatcher, chairman of the legislative committee of the National Farmers Union has requested me to discuss the question raised before this committee as to whether this bill, if enacted into law, would destroy the cooperative feature of the Farm Credit Administration, and I shall largely confine my remarks to that question.

In the first place I want to say that the committee has raised this question several times since I have been here but it is my contention

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