FARM CREDIT LEGISLATION WEDNESDAY, MARCH 27, 1940 HOUSE OF REPRESENTATIVES, The committee met pursuant to adjournment at 10 a. m., Hon. Marvin Jones (chairman) presiding. The CHAIRMAN. The committee will come to order, please. I believe at the close of the session yesterday Mr. Ferguson was asking you some questions, Mr. Secretary. Have you concluded, Mr. Ferguson? Mr. FERGUSON. Will I be foreclosed from asking further questions if I do not continue now? The CHAIRMAN. The House meets at 11 o'clock and we may have to answer a roll call soon after that time. STATEMENT OF HON. HENRY A. WALLACE, AGRICULTURE-Continued SECRETARY OF Secretary WALLACE. Mr. Chairman, there was a portion of my testimony yesterday which I found is probably inaccurate and I would like to have an opportunity to correct it sometime this morning before the hearings adjourn. The CHAIRMAN. You will have that opportunity. Mr. FERGUSON. I have one or two questions, Mr. Secretary: While it is not a part of this bill, while we are on the general subject of farm credit, and since the Farm Credit Administration is now under the Department of Agriculture, have you given any thought to the possibility of consolidating all the short-term credit agencies, such as production credit, feed and seed, and farm security which are all operating in the field of short-term credit? Secretary WALLACE. The only consideration we have given to the consolidation of the short-term credit agencies has had to do with the possibility of transferring the crop and seed loans. After giving that considerable consideration we decided not to make the transfer. Mr. FERGUSON. Well, in this bill there is a reference to feed and seed loans being scaled down by the committee. Whether it be under the Farm Credit or the local committee, would the seed and feed loans be carried on in much the same manner they have been carried on? Secretary WALLACE. We plan to carry them on in the same manner as they have been; yes. Mr. FERGUSON. You do not feel that the seed and feed loans, and the other similar types of loans, could be made by the Farm Security Administration? Secretary WALLACE. They are in some respects very like the loans made by Farm Security and there are many arguments that could be advanced on both sides. Mr. FERGUSON. Well, I feel that the Farm Security Administration has done a very fine job, justifying a certain amount of supervision, and that the seed and feed loans might perhaps also need that supervision. And, I am wondering whether the same type of loans, whether they be seed-feed loans or production-credit loans might not be handled better if they were placed under the Farm Security Administration. Secretary WALLACE. Well, no. Thus far no detailed supervision of the type given by Farm Security has been given to seed and feed loans. Mr. FERGUSON. Maybe greater repayments would follow, which would indicate the need of that type of supervision. There has been a bigger loss in seed and feed loans than the other credit extensionSecretary WALLACE. I think that is slightly unfair. Mr. FERGUSON. I beg your pardon. Secretary WALLACE. I think that is a slightly unfair statement with respect to the administration of feed and seed loans. The CHAIRMAN. And I think the word "slight" might be stricken. Mr. FLANNAGAN. That is not the case in my district. Mr. FERGUSON. I would like to have that information for the record with respect to the seed loans. Mr. PACE. It is not even comparable. Mr. FERGUSON. Could you get us that information showing the repayments on seed and feed loans? The CHAIRMAN. Mr. Secretary, could you furnish that information for the record? Secretary WALLACE. Yes. But it is my impression that the subject under discussion before the committee is that having to do with the land-loan activities and not with short-term credit. The CHAIRMAN. You are correct. Mr. FERGUSON. There is a provision in here that deals with shortterm credit. The CHAIRMAN. The primary purpose of this measure is as you have indicated, Mr. Secretary, but there is embodied in the measure a provision for canceling out some of the old feed loans. Secretary WALLACE. Yes. The CHAIRMAN. If you can have someone prepare a concise statement it might be helpful to us. Secretary WALLACE. Yes. (The information requested is as follows:) Farm Credit Administration emergency crop and feed loans Number and amount of loans made and collected from 1918 through Dec. 31, 1939, and balances outstanding Dec. 31, 1939 Farm Credit Administration emergency crop and feed loans Number and amount of loans made and collected from 1918 through Dec. 31, 1939, and balances outstanding Dec. 31, 1939-Continued Source: Farm Credit Administration, Division of Finance and Accounts. 69. 2 1, 131, 942 114, 706, 943 1,052, 450 15,736 115, 775, 129 257, 148, 046 69. 21, 128, 058 Farm Credit Administration—1934-35 drought relief loans-Number and amount of loans made and collected through Dec. 31, 1939, and balances outstanding Dec. 31 1 Amounts shown transferred from drought area. Source: Farm Credit Administration, Division of Finance and Accounts. Mr. COFFEE. I have a few questions, Mr. Chairman. Mr. HOPE. I understood the Secretary was going to make a correction for the record. The CHAIRMAN. Did you want to make that correction at this time? Secretary WALLACE. Yes; at least I would like to make it before the hearings close. Mr. COFFEE. I will defer my questions. The CHAIRMAN. You may proceed, Mr. Secretary. Secretary WALLACE. This has to do with a question asked me by Congressman Hope yesterday as to the cost to the Treasury of the application of this bill as contrasted with the continuation of the present set-up. You may have noted when I read off the statement yesterday that had been prepared, and which I had not seen, that I was not quite satisfied with what I was reading, and I may find furthermore I am not quite satisfied with what I will read now. But I believe that this is closer to the truth than what I read yesterday. I would like to ask the privilege, however, when we have had more time to dig into these very complicated figures, of presenting a more accurate statement if I find a more accurate statement can be obtained. The CHAIRMAN. Without objection that will be done. SUPPLEMENTAL STATEMENT ON COMPARATIVE COSTS OF INTEREST SUBSIDIES UNDER PRESENT LAW, UNDER H. R. 8450 (As IT PASSED THE HOUSE On March 18), UNDER H. R. 8748 IN ITS PRESENT FORM, AND UNDER H. R. 8748 IF AMENDED TO FIX THE RATE OF INTEREST PAYABLE BY BORROWERS AT 3% PERCENT Secretary WALLACE. Yesterday, I was asked the comparative costs to the Treasury of the interest subsidies under present law and under H. R. 8748 in its present form. The estimate which was given to me yesterday, and which I gave in answer to Mr. Hope's question, was an approximate figure of $350,000,000 under the present law and $365,000,000 under the proposed bill. These figures, however, were based merely on a rough comparison based on last year's profit and loss statements, and do not reflect exactly how the subsidies would be affected. In view of this I should like to comment more fully this morning regarding the appropriations which would be required in connection with the administration of the provisions of H. R. 8748. For purposes of comparison I am also indicating the appropriations which would be necessary under three additional assumptions, (1) if the present law, which provides a 3%1⁄2-percent rate on land-bank loans and a 4-percent rate on Commissioner loans, should be continued beyond June 30, 1940, (2) if H. R. 8450, which has already passed the House, should become law and which reduces both Federal land-bank and Land Bank Commissioner loans to 31⁄2 percent after June 30, 1940, and (3) if H. R. 8748 is amended to fix the rate of interest payable by borrowers at 31⁄2 percent with the banks and Corporation being reimbursed by the United States Treasury for the amount by which the actual interest expense on bonds exceeds 21⁄2 percent per annum, and vice versa, reimbursing the United States Treasury for the difference between the actual interest expense and a 21⁄2 percent rate if their interest costs should go below 2%1⁄2 percent. |