unconditionally not to foreclose a loan no matter what happened. And the fact that under the farm loan act there is a grave question as to whether the banks would be justified in permitting a third party to become a first-mortgage holder in place of themselves.

Senator BARKLEY. Of course, there is this thing about that, that if the mortgage holder does not agree to waive his rights for two years and the property is sold for taxes

Mr. BESTOR (interposing). He would have to protect it.

Senator BARKLEY (continuing). He is no better off than he would have been by waiting for a couple of years.

Mr. BESTOR. He is in a better position to protect himself.

Senator BARKLEY. He may go right in and may go ahead and foreclose and let the court sell it, and if anybody buys it take out whatever prior liens, including the taxes, exist, and let him get the

rest.

Mr. BESTOR. The terms of the mortgage of the Federal land bank provide that any taxes shall become a part of the lien when they are paid.

Senator BARKLEY. In that connection are you foreclosing any now?

Mr. BESTOR. I think the number of loans in process of foreclosure, Senator Barkley, is only about 2.7 per cent of all delinquent loans. According to the reports of the banks a very large per cent of those are on farms that have been abandoned or where the owner himself has gotten so desperate that he says, "Here, come and take it; I don't want it," and offers to deed his farm to the bank.

Senator BARKLEY. Are any purchases being made at foreclosure sales?

Mr. BESTOR. Do you mean by outside parties?

Senator BARKLEY. Yes.

Mr. BESTOR. I would say very, very few.

Senator BARKLEY. So that the result is that the bank acquires the farm?

Mr. BESTOR. The result is that the bank acquires the farm, and the only possible reason for acquiring the farm is to keep it from running down, to keep it in cultivation.

Senator HARRISON. And when they acquire the farm of course they have to pay the taxes.

Mr. BESTOR. Yes; pay the taxes and keep it up.

Senator BARKLEY. Are you willing to sell them pretty cheap?

Mr. BESTOR. Well, I think you can buy a farm pretty cheap most any place. Although there seem to be quite a good many people who have the feeling that their investments in farm land after all were about the best investments they have had from the standpoint of losses. In other words, a great many of those who have lost their money in stocks and bonds and other investments, and even in city real estate, have come to the conclusion that after all a good farm is the best property to hold, at least when the commodity prices come back, as they must do.

Senator BARKLEY. Of course the land will still be there, unless an earthquake comes.

Mr. BESTOR. Mr. Chairman, frankly I have very little to offer in regard to this bill, except to point out some of the things that might make its operation difficult. I think we all recognize the tax

situation is one of the most serious problems before the American farmer. In fact, in many cases, with the present commodity prices, it is just impossible for borrowers to pay, as I have said.

Senator STEIWER. You are not able to make an estimate of the amount of taxes on American farms that might come under this bill? Mr. BESTOR. No; I could not, Senator.

Senator STEIWER. In other words, where they are unable to pay the taxes?

Mr. BESTOR. No. Of course, if you figure it out on this basiswe could get a more accurate figure-$14,579,000 plus $1,600,000, would be $16,179,000, which includes some few insurance advances. But if we had a more accurate figure than that, and similar figures for loans of other companies I suppose you could arrive at some approximation. I will be glad to get such figures as the land banks have.

Senator STEIWER. We would be glad if you would get those figures, Mr. Bestor, and submit them to us, even though you put it in in the form of an estimate, because this committee may desire to know the approximate amount of money that would be required from the Reconstruction Finance Corporation to carry this loan in case the bill was enacted into law.

Senator BARKLEY. May I ask this question? You said that about 2 per cent of your delinquencies were foreclosed?

Mr. BESTOR. About 2.7 per cent.

Senator BARKLEY. Was that about 2.7 per cent a year?

Mr. BESTOR. No; I mean that are in foreclosure now.

Senator BARKLEY. The total delinquencies?

Mr. BESTOR. The total foreclosures that have been carried through to completion in the 16 years of the existence of the system is about 7 per cent.

Senator BARKLEY. What was that 2.7 per cent of?

Mr. BESTOR. Two and seven-tenths per cent of the delinquent loans.

Senator STEIWER. Are now in foreclosure?

Mr. BESTOR. Are now in foreclosure.

Senator BARKLEY. And that regardless of the length of the delinquency?

Mr. BESTOR. Yes. Now, I made the statement before that a large percentage of loans that are in foreclosure are on farms that have been abandoned or in which the borrower offers to give a deed. From our investigations of other cases which have been foreclosed, it appeared that the borrowers were so hopelessly involved that they had very little chance to work out.

Senator BARKLEY. Where that exists you do not have to go into court? You can get your deed without it?

Mr. BESTOR. Not in all cases. There is one thing that I might suggest to the committee. It will be necessary for the Reconstruction Finance Corporation to make some examination of the titles to the farms on which the taxes are to be paid before the actual advances are made. In many instances, as you know, the taxes are not assessed against the true owner of the land. Furthermore, it would be necessary to get the consent of all his holders to the advance before the Reconstruction Finance Corporation could pay the amount

involved. Examinations of this character are at times rather expensive. That might be a question that the committee would like to consider.

Mr. Chairman, in accordance with the committee's request we have prepared a statement showing the amount of taxes advanced for borrowers by the Federal land banks. We have also prepared some other information regarding the tax situation which may be of interest to the committee. I would like to insert these statements in the

record at this point.

Louisville.

New Orleans.

St. Louis..

St. Paul..

Omaha...

Wichita..

Houston..

Berkeley..

Spokane..

1 Column (2) divided by column (3).

Can not be estimated.

Estimated total gross income, farm property taxes, and interest on farm mortgages for all farms in the United States, and per cent of gross income required for taxes and interest, 1909-1932

1 Includes interest on real-estate mortgages only.

2 A subsequent publication gives a revised figure of $6,955,000,000.

3 Computed as follows: A Department of Agriculture press release dated January 14, 1933, stated that partial returns from 23 representative States indicated that farm real-estate taxes per acre in 1931 were 6 per cent less than in 1930, and in 1932 were 19 per cent less than in 1930. It was assumed therefore that all personal farm property and farm real-estate taxes followed the trends reflected by these percentages and the total tax for 1930 was reduced accordingly.

From Crops and Markets, November, 1932, p. 439.

In recent testimony before a Senate committee Mr. Englund expressed a belief that the total mortgage debt was now about $8,500,000,000. At 6 per cent, the rate used in making above estimates of the total interest since 1927, the total interest in 1932 was $533,000,000.

NOTE.-Except when otherwise indicated the above data were taken from a mimeographed pamphlet of the Department of Agriculture entitled "Tentative estimates of gross income from farm production, current value of agricultural capital, and selected expenditures, 1909-1931," issued in July, 1932.

Senator STEIWER. Mr. Gray.

STATEMENT OF CHESTER H. GRAY, REPRESENTING AMERICAN FARM BUREAU FEDERATION

Mr. GRAY. Mr. Chairman, if it will be any help to the committee I can just briefly record a general support to this measure, and file a statement for the record, unless you want to hear in detail one or two thoughts that I have to present. I do not want to detain the members of the committee from the Senate session.

Senator STEIWER. We have a few minutes, Mr. Gray. You may proceed.

Senator HARRISON. I think it would be a good idea if Mr. Gray would give his indorsement to it, if he favors it, because this record will be read, and then he can go into it more fully.

Mr. GRAY. In a general way we want to go on record for S. 4995 by Senator Harrison in behalf of the American Farm Bureau Federation. This bill does not conflict with the general program of rural credits which the various farm organizations are now working out,