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we cannot get enough backing for anything of that kind, even from the farm organizations, to make it a real farmers' bank.

Mr. TABER. We are for any system that gives the farmer lower interest rates.

Senator FRAZIER. The real problem is farm income. That is true, of course. With their present income the farmers cannot pay any rate of interest.

Mr. Taber. The farmer paid last year about $120,000,000 more taxes than interest. He paid more than twice as much in transportation as he paid in interest. Therefore taxes and transportation are three times as heavy a burden on his pocketbook. The difficulty is that the farmer's dollar is only worth 80 cents, and until we restore farm purchasing power we can talk about interest until doomsday and it will have no effect. We want the farmers to own their farms, but they cannot do it at present prices and under present conditions.

Senator FRAZIER. I agree with you on that. A lower rate of interest will help, of course.

Mr. TABER. We are for the lowest possible interest rate.

Senator FRAZIER. But we have got to have higher prices for our products in order to give us an income before we can get on our feet.

Mr. TABER. The issue is a larger participation of farmer ownership and control, and toward that I hope we can work together.

Senator FRAZIER. I hope so. There are a number of bills pending, the purpose of which is to give better prices to the farmers, and we

, are interested in getting something of that kind passed-at least I am-in order to restore purchasing power to the farmer and to give him an income and a profit.

(The additional data requested of the witness will, when furnished, be inserted in the record at this point.)

THE NATIONAL GRANGE,

Columbus, Ohio, May 13, 1940. Hon. ROBERT F. WAGNER, Chairman, Banking and Currency Committee,

United States Senate, Washington, D. C.

SUGGESTED CORRECTIVE AMENDMENTS

DEAR SENATOR WAGNER: In response to the request of Acting Chairman Senator Miller of Arkansas of the subcommittee of Banking and Currency, I offer the following specific suggestions to improve legislation pending before your committee:

1. Reduce interest rates by providing 342 percent interest to July 1, 1946, and the lowest possible rates thereafter.

2. Strengthen the cooperative features of the National Farm Loan Associations, increase their income, and strengthen their financial structure.

3. Retain the 5 percent capital stock provision.

4. Decentralize both operations and authority. Check all efforts toward overcentralization in Washington.

5. Increase farmer representation on land bank boards by increasing the board of directors to nine and provide that six shall be elected directly by borrowers.

6. Assure constant close contact between the banks and the farm loan associations and establishment of a practical system of allocation by the use of advisory committees chosen by associations from among association presidents.

7. Restore the farm-loan system to an independent status under a bipartisan board.

8. Give to Federal land banks rediscount privileges with the Federal Reserve Board.

9. Permit the land banks to refinance certain of their bonds now held by the Federal Farm Mortgage Corporation and make provision whereby the savings will go directly to farm loan associations to provide either dividends or to restore the impairment, if any, of legal reserve and capital.

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10. Provide a definite income for national farm loan associations up to threefourths of 1 percent for servicing loans and real estate, to enable them to conduct their affairs on a sound and profitable basis.

11. Make the system genuinely, cooperative and permanently independent of political or organization pressure so that it can render greater service to rural life than any one-man system, managed in Washington, can render regardless of the ability of the administrator.

By taking $. 3480 and adding the necessary amendments, the above objectives could be reached and American agriculture greatly served.

On behalf of the National Grange, I want to thank the committee for giving opportunity to file the objections of our organization relative to S. 3509, and also your courtesy in listening to our statement on a former occasion favoring the main features of S. 3480. Yours sincerely,

L. J. TABER,

Master, National Grange. Senator BANKHEAD (presiding). We have now heard from the authorized representatives of the American Farm Bureau Federation and the National Grange.

We shall next hear from Mr. M. F. Dickinson, who is the authorized representative of the National Farmers Union and the National Federation of Grain Cooperatives. With his statement, we shall have heard the viewpoints of the three largest farm organizations.

You may proceed, Mr. Dickinson.

STATEMENT OF M. F. DICKINSON, LITTLE ROCK, ARK., REPRE

SENTING THE LEGISLATIVE COMMITTEE OF THE NATIONAL
FARMERS UNION AND NATIONAL FEDERATION OF GRAIN
COOPERATIVES

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Mr. DICKINSON. Mr. Chairman and gentlemen of the committee: That you may know my background, I desire to state that in addition to being president of the Arkansas State Farmers Union, I am chairman of the Arkansas State Farm Debt Adjustment Committee, a voluntary organization serving without pay under the supervision of the Farm Security Administration. I became connected with the Federal Land Bank system soon after it began its operation in 1917, serving as a Federal appraiser until 1922, and then as director and treasurer of the St. Louis 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. In January, 1935, I again became a director of the St. Louis Bank, being elected by the Production Credit Association, and served 3 years, retiring voluntarily at the end of that term.

I have been authorized by the legislative committee of the National Farmers Union and of the National Federation of Grain Cooperatives, through its chairman, Mr. M. W. Thatcher, of St. Paul, and Mr. Tom W. Cheek, a member of the National Board of the Farmers Union, to testify in behalf of our two organizations on the bill before the committee, S. 3509, introduced by Senators Wheeler, Bankhead, and La Follette. In doing so, I am representing approximately 350,000 unduplicated farm fainilies in 25 States, representing 10 land bank districts.

Our organization is unqualifiedly behind this proposed legislation. In fact, we have been fighting for several years for modification of the Farm Credit Administration, that would make it responsive in serving the credit needs of the farmers of the Nation. We believe that with

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present farm prices and the outlook for prices during the next few years, the farmers cannot be expected to pay more than 3 percent interest. We believe, too, that when the provisions of this bill are put into operation, thereby enabling the Government to refinance high priced bonds, it will be possible over a 5- to 10-year period to have a system financed without any subsidies from the Public Treasury. While we, too, are strong for a cooperative system of credit, providing same can be worked out without serious impairment of a sound credit system, we are not bankers, and are not so much interested in becoming bankers, but are much more interested in building and maintaining a long-term credit system that will adequately serve the farmers of America.

Second, we realize that many farmers now have loans on their property above the producing ability of the farm to carry, making it mandatory, if the farmer is to retain his home, to have an adjustment of his indebtedness down to the point of enabling the farm to carry the debt. So, we are very much interested in that section of the bill providing for farm debt adjustment. It has been claimed by the opposition that this legislation is not needed, but, for example, speaking as chairman of the farm-debt adjustment committee of my State, we have been unable to secure any relief in the way of scale-down for borrowers through the Farm Credit Administration. This is true throughout the territory represented by our organization; in fact, the Government has been in a rather ludicrous position because they set-up through the Farm Credit Administration the farm-debt adjustment committees, asking private lending agencies, insurance companies, and others to scale down their holdings, while the F. C. A., which was fostering farm-debt adjustment, was itself taking the position that it could not under the law permit a scale-down.

We have felt that inasmuch as industry has written off its losses, along with the private-lending agencies, insurance companies, investment bankers, and others, it would only be good business for the land bank system to do the same thing; yet it is a well-known fact that the Federal land banks cannot under the present law scale indebtedness of their borrowers except through foreclosures and resale, a method costly both in monetary and human values.

Senator BANKHEAD (presiding). May I interrupt you to ask a question?

Mr. DICKINSON. Certainly, Senator.

Senator BANKHEAD. Is it not a fact that all during the depression in fact, ever since the Land Bank System was organized-the land banks have declined, even after foreclosure, to sell a farm back to the same farmer until very recently?

Mr. DICKINSON. I will say this, that at every national convention of our organization during the last several years we have had folks rise on the floor of the convention, complaining that the banks were refusing to sell back.

The bank at St. Louis has, I think, had a fairly good policy-a fair policy-of selling back where it was satisfied that the man could make it; but there are a number of districts where the banks have simply refused to sell back.

Senator BANKHEAD (presiding). That was true in the district where I live.

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Senator FRAZIER. They have not alone refused to sell back but have even refused to rent back.

Senator BANKHEAD. The people were made to get off.
Senator FRAZIER. Yes.
Senator BANKHEAD. Please proceed, Mr. Dickinson.

Mr. DICKINSON. It is true there have been a few isolated cases: where the land banks have permitted a farmer to deed his farm to the bank and then have sold it to some other farmer for less money, I am speaking of scale-down; but whether the farmer deeded his property voluntarily or suffered the loss of his home through foreclosure, the scale-down did him no good except to prevent a deficiency judgment. He lost his home.

Third, we are enthusiastic for that section of the bill that writes into the law the requirement that the Farm Mortgage Corporation and the Federal land banks shall follow a general policy of reamortization of loans. Especially do we feel this necessary for the 10-year Commissioner loans made at 5-percent interest. It would save many homes mortgaged to the Federal land banks if the proper reamortization of all of the indebtedness over a longer period of time at 3-percent interest were carried out.

I want to say that at the time I was Director, from 1935 to 1938, I I took up at different times, with both the Commissioner and the Governor of the Farm Credit Administration, the question of establishing a rather general policy of reamortizing Commissioner loans. It was a very serious problem in my State because a large majority of the loans made after 1933, when this new legislation came in-emergency legislation came in-were Commissioner loans. They were 5-percent loans made on a 13-year basis, during 3 years of which they had to pay

only interest, and beginning at the end of that time to pay one-tenth of the principal a year plus 5 percent-in other words, retire the whole of the principal and interest in 10 years, making the payment 15 percent.

I knew that because of the farm prices and general farm conditions. the farmers in my State could not retire those debts that rapidly, but I was told both by the Commissioner and the Governor that the greatest. service the Government could render the farmers of the Nation was to get them out of debt as quickly as possible, and that they were going to continue to insist that they pay then, and when the time came that, the man could not go any further, and they were convinced he was doing his level best and could not go any further, they would consider that as an individual case.

My argument was that in theory they were right but that in actual practice they were wrong, for the reason that if he were a good manassuming he were a good man-he loved that home and wanted to save that home and was going to make every sacrifice possible to make those payments when he was being threatened with foreclosure. He would start out by selling his livestock, by milking his soil. In other words,

, by the time he had reached the point where he just had nothing else to sacrifice in order to make payment, it was then too late to help him because his working capital was gone.

Fourth, we are wholeheartedly for that section of the bill providing for the elimination from the law of the requirement that each farmer borrowing through the Federal land banks must subscribe for 5 percent of his loan in stock. As will be stated later in my testimony, we feel this is entirely unjustified, does not create more interest in the system on the part of the borrowers, and does not strengthen the system with additional collateral. We believe present stockholders should be reimbursed as set forth in section 6 (b) of this bill.

We are also in favor of the other major provisions of the bill, but will refer to them further on in this statement.

With this brief statement of our position before the committee, let us now turn to discussion of the tragic situation that faces the farmers of America today.

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DEFLATION FALLS ON MORTGAGED FARMERS

Let us consider, first, the farm debt situation. I believe any discussion of this bill should begin with the farmers' credit needs, and not with the secondary problems of the credit system itself. Farmers have faced a tragic situation during the last 20 years. We should remember that the farm debt jumped from $3,300,000,000 in 1910 to $9,600,000,000 in 1930.

Senator BANKHEAD. You mean by that, farm mortgage indebtedness?

Mr. DICKINSON. Yes, sir.

Farm values, including farm lands and buildings, in 1910, were a little more than $35,000,000,000, but by 1926 they had jumped to $66,000,000,000. Following the panic in the early thirties these values dropped from $66,000,000,000 to $35,000,000,000. But that was not all that happened. In 1919 the total income of farmers was nearly $17,000,000,000, but by 1932 it had dropped to 5% billions.

Yet while farm values had dropped one-half, and the income of farmers had dropped two-thirds, the mortgage debt was still $9,000,000,000, having fallen but one-half billion dollars from that of 1920. This debt was reduced from $9,600,000,000 in 1930 to $7,100,000,000 in 1939, a 25 percent reduction which was almost entirely the result of forced selling. There was an increase of about 500 percent in forced sales through foreclosures during the last 25 years. In 1930 40 percent of the 6,288,000 farms were mortgaged, and the great burden of this deflation fell heaviest upon this 40 percent of the farms. In 1932 the interest charge against the total farm income was 11.4 percent, but the interest charges against farms that were mortgaged were approximately 35 percent of the cash income from such farms.

FARM TENANCY IS PART OF THE PROBLEM

Farm tenancy, which is the other half of the problem of expropriation facing our farmers, has been increasing at a terriffic rate. One of the witnesses has said that less than 1,000,000 of these tenants are outside the South; therefore, tenancy, he says, has but little place in this discussion. But I believe these figures will convince you that it is a serious problem all over the Nation.

In 1880 we had approximately 1,000,000 tenant farmers in the United States, but by 1935 this number had grown to 2,865,155, an increase of 180 percent. From 1880 to 1900 it increased from 25 to 35 percent, and from 1920 to 1935 it increased from 38 to 42 percent. During this time the number of counties in which at least one-half the farms were tenant-operated has increased fivefold, spread

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