Senator HULL. Have you any estimates as to the number of home owners that might seek relief under your bill, apart from farm mortgagors?

Senator HARRISON. I have been unable to get any data that would be worth while. It would be merely a guess as to the amount required in the case of home owners where the lands are mortgaged. We have some data, however, and I think it is very good data, that Mr. Englund will present elaborating somewhat with reference to the farm situation

Senator HULL. And as to the home-owning situation, when we extend it to all the States, in every part of the Nation, being able to pay up tax delinquencies will operate as a tremendous factor on the credit of States, counties, and municipalities, and be of great aid in the school situation. That is a thought that I had in this connection, Senator Harrison.

Senator HARRISON. Yes, Senator Hull, in my opinion it would be very helpful, because there are mighty few cities and towns in the country that are not affected on account of their bonded indebtedness, and some of them are having trouble meeting their bond situation, and if this aid could be extended by way of paying taxes I am sure it would help in various ways, particularly in the way of paying salaries of teachers and other employees, and the machinery of government would go on more smoothly.

Senator HULL. And perhaps they would be more numerous than in the case of farms mortgaged.

Senator HARRISON. Well, as to the number would be only a guess on my part, because it would only apply to farm property mortgaged, and it would not apply on any city property that is not mortgaged. Senator BARKLEY. Your bill does not provide that this loan shall operate as a lien on the property except in case of foreclosure. It shall be a prior obligation to the mortgage that exists.

Senator HARRISON. Yes. And the mortgagee must agree that he will not foreclose before two years.

Senator BARKLEY. But you have a provision in there that I do not quite understand: "That in the event of foreclosure," this loan by the Reconstruction Finance Corporation shall operate as "a paramount lien."

Senator HARRISON. Yes.

Senator BARKLEY. Does that contemplate in cases where the mortgagee will not waive his rights for two years, and goes ahead and proceeds to foreclose?

Senator HARRISON. I think it ought to operate in both cases.

Senator BARKLEY. Well, then, that is not quite in harmony with the provision that in order to make this loan in the first instance the mortgagee must agree not to foreclose his mortgage for a period of two years from the date of making the loan. So that if he does not agree to it there would not be any loan.

Senator HARRISON. Yes; but if he agreed to it and then went back on the proposition and should foreclose, then it provides that it should be the first lien.

Senator BARKLEY. The bill allows the corporation to accept any security or no security as it may see fit?

Senator HARRISON. The security would be the land.

Senator BARKLEY. Well, the bill does not say so, except in cases where there is a foreclosure for private debt.

Senator HARRISON. It says it shall be the first lien upon the property-prior lien upon it. But then if it is ambiguous, that can be cured.

Senator BARKLEY. I do not think that would apply except in case where there was a foreclosure of the private loan where the mortgagee had agreed not to foreclose and then went ahead and violated his agreement. In that case it would be a first lien. But I do not see anything in the bill that would make it a first lien on the property generally. It may be that it ought to be.

Senator HARRISON. If that is not clear, a provision should be in it as to a first lien.

Senator BARKLEY. What do you think of the legal power of Congress to authorize loans through a corporation like this, which is really a private corporation in a way, although financed out of the Treasury? Have we the power to say that a loan made subsequent to a mortgage already existing shall take priority?

Senator HARRISON. Well, this provides that the mortgagee must agree not to foreclose his mortgage for a period of two years before the advancement is made, and I think if he agrees to it he is estopped from the other thing. I do not think we can pass a law and compel him to do it.

Senator BARKLEY. And the loans made to any mortgagor, just on general principles, where there was no foreclosure involved, could not be regarded as first liens-that is, to take priority?

Senator HARRISON. The object is to get the mortgagee to agree to this arrangement.

Senator STEIWER. Of course, the tax is a first lien as long as it is unpaid.

Senator BARKLEY. The tax itself is; yes.

Senator STEIWER. And the mortgagee's position will not be hurt

any.

Senator BARKLEY. The State has a first lien. That is one thing. That is the operation of the State law. The payment of taxes. But I doubt if we can substitute the Reconstruction Finance Corporation as a first-lien holder in lieu of the State.

Senator STEIWER. We can not, unless we are willing that the Reconstruction Finance Corporation take over these taxes as assignee.

Senator HARRISON. I should think we would have the right to make provision for the Reconstruction Finance Corporation to make the advance to the State, and the State gets the money, with the consent of the mortgagee. I should think we have that right.

Senator BARKLEY. Well, those are matters that we can thresh out. Senator STEIWER. I notice, Senator Harrison, that the report made by the Reconstruction Finance Corporation suggests that the administration of this bill would require the organization of a large personnel. Senator HARRISON. Yes.

Senator STEIWER. What is your thought about that?

Senator HARRISON. That is why I suggested a while ago that if you did not want to employ the agency of the Agricultural Credit Corporation to perform this function you could strike it out and leave it in the discretion of the Reconstruction Finance Corporation.

What the States want and what the counties want now is money to operate them. There is no State or county in this country that is not in a bad way. And there could be complete cooperation, I am sure, between the tax collectors in each of the counties, and the tax agency in each State will work out this proposition without any great multiplication of offices, and so forth, thus keeping the expense down.

Senator STEIWER. You spoke of using the Agricultural Credit Corporation as an agency.

Senator HARRISON. Yes.

Senator STEIWER. I do not find that provision to which you refer. Senator HARRISON. That is in the beginning of the law. No, I did not put it in there. I left it entirely in their hands to do that. I have read some other bills that had that in it, and I thought about it, but I did not put that in my bill. I left the aaministration of the act entirely in the hands of the Reconstruction Finance Corporation. Senator STEIWER. Is it your suggestion now that it might be worth while to incorporate in the bill a provision that the loan should be made through that agency?

Senator HARRISON. No; I would leave it to the discretion of the Reconstruction Finance Corporation so that they could work it with the least expense.

Senator STEIWER. You have read the report of the Reconstruction Finance Corporation on the measure?

Senator HARRISON. Yes. They say it is a matter of policy for Congress as to what they want to do.

Senator STEIWER. They suggest, however, that special funds should be provided to meet the purpose of the bill in case the bill is enacted. In your opinion is that necessary?

Senator HARRISON. I do not see where much additional expense is necessary in the proposition.

Senator BARKLEY. How would you handle the matter in the different counties? Would you require them to deal through a State agency or directly with Washington, or would you have some sort of agency set up in the county?

Senator HARRISON. Each county has a record of delinquents, and there is an officer of the county who knows whether there is a mortgage or not. If a man wants to make application, he goes to that county tax collector and says, "I want to apply to the proper person, and here is the mortgagee who agrees to so-and-so," and there are appropriate blanks to be filled out in such cases, and I think that that tax collector would be glad to cooperate in the matter. Usually the tax collectors run for office and want to be as accommodating to the people as they can. The tax collector knows all the facts in the proposition. His records disclose how much taxes are due. I think through the tax collectors of the various counties they could work it with the agency of the Agricultural Credit Corporation located in each State.

Senator BARKLEY. Of course that would have to be voluntary on the part of the tax collector.

Senator HARRISON. Yes.

Senator BARKLEY. We could not compel the tax collector to serve in any capacity.

Senator HARRISON. No.

Senator BARKLEY. In my State where there are a great many delinquents and a great many tax sales there would be hundreds of them in each county. What I have in mind is the possibility of requiring the tull time of somebody who would be paid for that to act as the agency of the corporation or the Government or the farmers. I doubt whether any tax collector, even though he might be anticipating running for reelection, would devote all his time to looking up mortgages and certifying them. I am wondering whether it could be worked out unless you have some agency representing the Corporation down there.

Senator SrEIWER. Do you not think that the county employees would be so glad to get this money that they would cooperate without charge with the Government?

Senator BARKLEY. I have never seen a county official willing to do anything without pay. And I have been one myself.

Senator HARRISON. The county official is subject to the people's wishes.

Senator BARKLEY. I know he is.

Senator HARRISON. And generally runs for something. If this legislation is passed and I was a member of the Reconstruction Finance Corporation, I would write a letter to the governor of each State and I would say, "Is the State willing to cooperate in this matter through its tax commission? If you are, we are willing to come in and do a good job for relief." And if I were a governor I would write to each tax collector in the State setting forth the situation, and you would see public sentiment would compel them to cooperate in this situation.

Senator BARKLEY. I think that is a very ideal proposition. It seems to me something along that line ought to be put in the bill. I can imagine if there is a tax sale in my State that the county courts would be filled with farmers trying to make application for this loan, and unless there is somebody there with authority from the Federal Government, I mean to pass on it or to form a liaison between the county officer and the Federal Government, I am a little afraid that the slack would be so great there among the county officers that relief might not be effected.

Senator HARRISON. The Reconstruction Finance Corporation has agents and representatives in nearly every State. But that is a matter of detail. I think public sentiment would make the local officers act. I think if there was ever a time for any Red Cross organization or some kind of relief organization to be asked, if it was necessary to carry on this kind of work, this is a pretty ripe time. I suggest that you hear Mr. Englund.

Senator STEIWER. We will ask Mr. Englund to come forward.

STATEMENT OF ERIC
OF AGRICULTURAL
CULTURE

ENGLUND, ASSISTANT CHIEF, BUREAU
ECONOMICS, DEPARTMENT OF AGRI-

Senator STEIWER. Let the reporter have your name and your official connection, Mr. Englund.

Mr. ENGLUND. My name is Eric Englund. Assistant Chief of the Bureau of Agricultural Economics, Department of Agriculture.

Senator STEIWER. You may make such statement as you want, Mr. Englund, and we will interrogate you later if we have any questions to ask.

Mr. ENGLUND. I understand, Mr. Chairman, that I was expected to present certain information bearing particularly on the probable amount of taxes on mortgaged farm property. I regret to say that I have been unable to find any data by which we might approximate an answer to that question on urban homes. Therefore my material, as the Senator pointed out earlier in the morning, will refer to farm property only.

You will appreciate, gentlemen, that it is difficult to arrive at an exact figure. But I think we have one that is reasonably good as an approximation. We have data on the amount of taxes paid per acre and in relation to estimated value of farm property in all States as of 1929. And we have data for most of the States on the changes that have occurred prior to 1929, back to 1913, and the more recent estimate on changes that have occurred since 1929.

We also have data in the department on the approximate proportion of all farms that are mortgaged, and certain data on the value of such farms and on the relation of the mortgage indebtedness to value. On the basis of these figures, therefore, it has been possible to compute that in 1929 the amount of taxes levied on real and personal property in mortgaged farms for all purposes, exclusive of special benefit taxes, amounted to about $275,000,000. Of this, real-estate taxes amounted to $230,000,000 to $235,000,000. That is obviously an outside figure for the purpose of the problem the committee has under consideration.

Senator HARRISON. Is that amount on all farms or the farms that are mortgaged?

Mr. ENGLUND. It is the amount on farms that are mortgaged. We have segregated from these the unmortgaged properties.

An estimate just being issued, based on data from 30 States-not complete data, but we believe relatively adequate data for a general average shows that taxes per acre of farm property declined about 20 per cent from 1929 to and including 1932. Therefore, applying that percentage decline to the estimated amount of taxes in 1929 we get an approximation of the figure as of 1932, or about $185,000,000 as the probable levy on real estate in mortgaged farms in 1932. This of course does not include back taxes.

The $275,000,000 figure is of two classes, as already suggested: Taxes falling upon the real estate in the farm, the land and buildings, and taxes falling upon the personal property in the farm.

I am not sure whether Senator Harrison had in mind differentiating between those two, but since the real-estate mortgage is against real estate I assume that the committee might be interested in the tax figure resting against real estate, apart from the tax on cattle, machinery, products, and so on.

Senator HARRISON. They are intended toward lands. Not personal property.

Mr. ENGLUND. Of the total taxes on all farm property approximately 85 per cent consists of taxes against farm real estate in the United States as a whole, and about 15 per cent taxes against personal property.