(The statement follows:) Federal land bank and land bank commissioner Amount loaned per acre in States included in Great Plains area 1 1 Partially estimated. Represents a first-mortgage loan by Federal land bank and a second-mortgage loan by Land Bank Commissioner. Senator MILLER. Now, referring to subsection (b) of section 14, page 22 of the bill, that subsection is, to my mind, a rather singular one. Mr. BLACK. Here is what we find. We find that in some of the areas where we are meeting with the most difficulty, the difficulty is caused by an apparent required change in the farming in the area. That is, loans may have been made on the basis of wheat farming, for example, whereas the prolonged drought makes it apparent that wheat farming is not a stable business there, and perhaps livestock farming should be the prevailing enterprise. The result is that farmers on those very small farms-small for that area-get into trouble. They do not have holdings large enough to carry on the type of farming that they should carry on; and when the banks get those quarter and half-section farms they have property that is substantially without value. That is, it is just not a farming unit under present conditions. This section was put in, I presume, to give the banks authority to establish a farming unit Senator MILLER. The Farm Credit Administration would establish a unit? Mr. BLACK. Yes; and resell the whole unit. Senator MILLER. The action would be determined largely by the Farm Credit Administration, and as to the type of farming, as to what the purchaser or mortgagor will undertake to do on that unit? Mr. BLACK. Yes. In that western country the people seem to think that perhaps two sections are about as small a piece of land as a family can farm with any reasonable expectation of making a living on it. Senator MILLER. Might that lead to a requirement that before a man can become eligible, say, for a production credit loan, he would have to meet the requirements laid down by the Farm Credit Administration as to the type of his farming? Mr. BLACK. No; because the land banks do not dictate conditions of production credit loans. If there is a production credit association operating in that territory it probably has found out by experience long ago that it can only extend credit in such territories on the basis of the type of farming that can be made to go there, and I think it would make the requirement itself without any prompting from the Farm Credit Administration. Senator MILLER. I would be very loath, Governor, and I know that you would be, to enact a statute which would enable any farm agency of the Federal Government to direct the nature of the farming operation and further limit the activity of agriculture in this country and to take it, in a measure, out of the control of the farmers. That section looks to me like a good long step in that direction. I do not know; I may be entirely wrong about it, but that is the thought I had in mind. Mr. BLACK. In the good farming areas where there is a good deal of flexibility as to the type of farming which a farmer can follow successfully, that would be true. In some of the marginal areas of the West, where they have plowed up hundreds of thousands of acres of range land and put it into wheat, I am not so sure but what it would be a good thing, from the standpoint of the country and the farmers, to prevent their raising wheat on some of that land. Senator MILLER. Of course, as Senator La Follette suggests, that applies only to the refinancing. But, in my opinion, that is the reason why it is all the more important, because the Government agency will find itself owning certain land which may increase in value or which may not increase. But as to any dictation from an agency of the Government as to what kind of farming should be carried on, I have my doubts as to whether or not that is what you desire or that anybody else may desire. Mr. BLACK. NO; there should be a minimum of that, certainly. You will find that any loaning agency, however, in those territories will prescribe the type of farming that is to be carried on, pretty carefully. Some of them are going pretty far in it. Senator MILLER. I am sure the local banks would prescribe it. They do that everywhere, I am sure. This is the only section of the bill that I know of that goes that far. Mr. BLACK. I think it might be well for the committee to consider it from that point of view, to see if there is something in there which proposes the type of authority which should not be given. Senator LAFOLLETTE. If the law is not amended, the properties in those marginal areas will continue to come into the possession of the system, will they not? Mr. BLACK. Yes. They will continue to come in. Senator LAFOLLETTE. Through foreclosure. If you are going to refinance them, the question is whether or not they should be given any proper safeguards and the authority to say to anyone that if they are to be refinanced there should be an opportunity to put them on a more economical basis in view of changed conditions. Mr. BLACK. A number of the areas complain that a quartersection or even a half-section farm is worth nothing as a unit. Senator BYRNES. If the statement of Senator La Follette is correct, this power could be exercised only as to those lands which, under this section, are eligible for refinancing. Senator LA FOLLETTE. Or with the consent of the mortgagor. Senator BYRNES. If I read that section aright, it is only where the mortgagor who becomes the lessee has complied with the terms of the lease, and then at the end of the term you determine whether or not you are going to refinance him, and you would fix the conditions upon which you will refinance him. Is not that the theory of it? Mr. BLACK. Yes. Senator WHEELER. As a matter of fact, you do not need to put it into the bill, anyway, that you are going to tell him how he has got to operate the farm. Mr. BLACK. No. Senator WHEELER. If the farmer went to a banker and wanted to borrow money to refinance his farm, the first thing the banker would want to know would be what kind of farming he had been doing and whether or not he was likely to make a success; otherwise he would not be willing to let him have the money. Mr. BLACK. In some of those areas, however, it would be desirable, for the banks to have authority, to purchase adjoining land in order to build up a farming unit. Many farms are not a farming unit now, and the banks will not realize anything on them. They simply have to write them off as a hundred percent loss. Senator WHEELER. I can see the point that it may be that if someone wanted to criticize it he could say, "You are trying to tell the farmers how they must raise their crops.' I I think you can strengthen the bill by changing this language to the effect that if they want to make a success, instead of having a half-section of land, for instance, they purchase a full section, or perhaps two sections without specifying in the bill what kind of farming they should do. Mr. BLACK. I would certainly raise no objection to that. Senator HUGHES. In our part of the country we do not have quartersections or half-sections. Senator BYRNES. I think the confusion is due in a measure to section 14 (a). I know that the first impression that was made upon me-and Senator Frazier tells me that it was made upon him— referring to the language in line 6, "or of any loan heretofore or hereafter made under the Federal Farm Loan Act"-I thought it had reference to loans hereafter made. As I read it more carefully I found that it bad nothing to do with subsection (b). Mr. BLACK. No; it has not. That refers only to the refinancing of a loan made eligible for refinancing. Senator BYRNES. In accordance with section 10? Mr. BLACK. Yes. Senator MILLER. Can you furnish the committee with the approximate value of the mortgages outstanding; that is, the book value or, I will say, the face value of the amount outstanding which would probably be refinanced immediately? Can you tell that sufficiently from reports of the Federal land banks or the Federal mortgage corporations? Mr. BLACK. I do not think so. There are a lot of loans that are delinquent at the moment that should not be considered for refinancing; that is, there are temporary causes of such delinquency, and perhaps the only reason for the delinquency is that the number of dollars required to be paid each 6 months is too large, and it could be lowered by extending the loan over a little longer period. Senator MILLER. You do provide for variable payments? That is a very good provision. Mr. BLACK. Yes; by using variable payments there would be a lot of those loans which it would not be necessary to refinance. Senator MILLER. That is one of the difficulties in the Federal Land Bank System now: They do not provide variable payments in accordance with the income of the farmer. Senator BYRNES. I have a question that has been submitted to me by Senator Taft. He desired me to ask the witness the question [reading]: I understand there were about 15,000 people at the Wallace farm-credit meeting recently held at St. Paul. Can you tell us whether or not a great many of them were A. A. A. committeemen? Did any of these committeemen attend the meeting at Government expense? That is, were they paid for a day's work? Did they receive mileage or travel allowances? Do you know of the meeting that the Senator has in mind? Mr. BLACK. He is conservative in his number. There were probably 20,000 there. Senator BYRNES. What was the meeting? Mr. BLACK. It was a meeting where the Secretary made a speech on the farm-credit situation. Senator BYRNES. By whom was the meeting called? Mr. BLACK. It was called by the National Farmers Union and certain affiliated cooperatives. Senator BYRNES. His question is, "Can you tell us whether or not a great many of them were A. A. A. committeemen?" Mr. BLACK. That I do not know. Senator LA FOLLETTE. There are not that many committeemen in that area, are there? Mr. BLACK. Oh, I think there are probably about 100,000 over the United States. Senator LA FOLLETTE. Yes; but they did not all come to St. Paul to hear the Secretary's speech. Senator BYRNES. If so, he is a pretty good drawing card for the committeemen. Senator BANKHEAD. You are not connected in any way with the A. A. A., are you? Mr. BLACK. No, sir. Senator BYRNES. I am asking the questions inasmuch as Senator Taft is not present. The next question is [reading]: Did any of these committeemen attend the meeting at Government expense? That is, were they paid for a day's work? Did they receive mileage or travel allowances? Mr. BLACK. I have no information on that. Senator WHEELER. I might say that I spoke, a very short time ago, at a Farmers' Union meeting, with the Secretary, similar to the one that the Secretary spoke at in St. Paul, I am sure, and they all came in voluntarily. They were members of the Farmers' Union. Senator BYRNES. These questions I have asked for Senator Taft. On my own account let me say that if Senator Wheeler was present they would be willing to come without travel allowances. Senator LA FOLLETTE. In fairness to the Farmers' Union which sponsored this meeting I would like to suggest that that question be directed to the Secretary in order that we might have a prompt. answer. I am not sure when he will be here. Senator BYRNES. I am submitting the question, Governor, which is in writing, and you might ask the Secretary if he cares to answer it in writing. Or you can put the answer into the record as part of your statement. (Questions were referred to the Secretary for reply and the following information was submitted for the record.) Hon. JAMES F. BYRNES, United States Senate. DEPARTMENT OF AGRICULTURE, DEAR SENATOR: The Farm Credit Administration sent in to me a copy of the question submitted to you by Senator Taft at the time Governor Black appeared before your committee. The original question as submitted is returned to you herewith, and I am making the reply you requested that we give you for transmittal to Senator Taft. Our records would never disclose whether or not members of community and county Agricultural Adjustment Administration committees were in attendance at the meeting in St. Paul, because if they so attended they did it entirely as citizens, at their own expense and on their own time. These committeemen work for the agricultural conservation associations on a per diem or part-time basis, and of course have a great deal of free time. We have a record of their activities only insofar as those activities are involved in the local administration of the program. Certainly no persons who are county or community committeemen were authorized to attend the St. Paul meeting in connection with their official duties or to do so at Government expense. Certainly no proposal so to attend the meeting ever came up for consideration administratively in any quarter. No salary, travel, or mileage allowance has been authorized for any committeeman for attendance at the meeting. We audit expense accounts for all county and community committeemen monthly and if in the course of that audit there should be found at any time any salary, travel, or mileage allowance submitted for time or expenses in connection with attendance at the St. Paul meeting or any other nonofficial activity, exceptions will be made and the amounts disallowed. Sincerely yours, H. A. WALLACE, Secretary. Senator BYRNES. Are there any further questions? Senator WHEELER. I was going to suggest this. On page 22 of the bill, paragraph (b), it seems to me that if you would strike out, beginning on line 20, after the word "farming," "of a type which the Governor deems can be successfully carried on in the locality in which the property is situated," that would really strengthen the legislation. Mr. BLACK. Yes. Senator WHEELER. So that it would read [reading]: Whenever the Governor finds that any property otherwise eligible for refinancing or repurchase under the provisions of sections 10 to 13, inclusive, of this act, is either too large or too small to constitute an efficient farm-management unit or requires land or building improvements necessary to enable a diligent farm family to carry on successful farming, he is authorized, on behalf of the Corporation, to make the improvements and so forth. Senator BYRNES. If it is not the wise thing to do, he should not refinance. It just lays you open to criticism if you are telling the farmer what he should plant and how he should plant and how much he should plant. Mr. BLACK. Yes; there is one other comment which I would like to make. There has been some doubt raised as to the sphere of the proposed committees and of the national farm loan associations. I |