think there has been some doubt raised as to whether it might not be possible under this legislation to use committees to the exclusion of the national farm loan associations and, in that way, put the national farm loan associations out of operation. In reading this I should think there was no such intention. But if the committee desired to change the wording of the bill to make that clear, I think it might be desirable to do so. Senator BANKHEAD. I would like to have it done, I am sure. Mr. BLACK. In reading the proposed legislation I did not get that idea, but there does seem to be some doubt with respect to it. Senator LA FOLLETTE. It would be easy to allay that fear. Mr. BLACK. For my part I should be glad to see some language which would require that the associations be used. Senator BANKHEAD. And the board of directors? Mr. BLACK. Yes. Senator MILLER. Governor, do you have any figures on the number of farm bankruptcies that are now pending under the present law which may be applicable in this bill? Mr. BLACK. We have figures on the number of foreclosures that are pending or in various stages. Senator MILLER. I am not talking about the foreclosures. I am talking about cases where the farmer is now seeking to avail himself of the provisions of the Frazier-Lemke Act. Mr. BLACK. No; I do not have those figures. Senator MILLER. I would like to have those figures in the record, for this reason. That is the law today, but we are providing in this bill for suspending the operation of that law and substituting in lieu thereof a system of adjustment as provided in this bill. I should like to know the number of farmers who are now seeking to take advantage of the act, which is more or less cumbersome and I say that with due deference, because I worked on it myself. Mr. BLACK. I am not sure we can get that information. BANKRUPTCY CASES PENDING UNDER SECTION 75 OF THE BANKRUPTCY ACT AS OF JUNE 30, 1939 According to the Annual Report of the Attorney General of the United States to Congress for the fiscal year ended June 30, 1939, there were 4,372 cases of bankruptcy pending under section 75 of the Bankruptcy Act. Of this number 2,215 represented amended petitions filed under the Frazier-Lemke Act. (See table 3c, p. 230 of the Attorney General's Report.) Senator MILLER. What is the status of the debt-adjustment committees? Mr. BLACK. I do not think they are very active now. They are still in existence in some areas. Senator MILLER. Do they report to the Secretary of Agriculture? Mr. BLACK. Through the Farm Security Administration. Senator MILLER. Don't you think you could get the information from them? Mr. BLACK. It is conceivable that they might have it. We will see if we can get any information bearing on that. Senator MILLER. I do not want you to go to any expense, but I would like to know, if possible. Senator BYRNES. It would be difficult to get it from the courts. Senator BANKHEAD. The suggestion has been made to me that the financing part of the bill should be limited to mortgages now outstanding and not cover future mortgages. Have you any thought about that? Mr. BLACK. I have not given any thought to that. Senator WHEELER. It has not been suggested to me, but I am not at all sure but what it would be a good thing, because, after all, you are dealing with the present situation. Senator BANKHEAD. One that has been brought about by facts already occurring. Senator WHEELER. That is right; and I am inclined to think that it might strengthen the bill. Senator MILLER. On the other hand, if there is any justification for taking this procedure as to existing mortgages, it is because of conditions over which the borrower had no control, and those same conditions may apply to a borrower today or tomorrow with equal force and with the same disastrous effect. Senator BANKHEAD. That might be covered by an amendment. Senator BYRNES (chairman of the subcommittee). Suppose we recess until 10 o'clock tomorrow morning. We will use this same room. (Whereupon, at 11:55 a. m., a recess was taken until tomorrow, Wednesday, May 8, 1940, at 10 a. m., to meet in room 310, Senate Office Building.) FARM CREDIT ACT OF 1940 WEDNESDAY, MAY 8, 1940 UNITED STATES SENATE, SUBCOMMITTEE OF COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The Subcommittee on Agricultural Finance, Farm Mortgages, and Related Matters met at 10 a. m., pursuant to the recess, in room 310, Senate Office Building, Senator John H. Bankhead presiding. Present: Senators Bankhead (presiding), Radcliffe, Miller, Clark of Idaho, and Frazier. Present also: Senators Wheeler and La Follette. Senator BANKHEAD (presiding). The hearing will come to order. I sent a telegram, by authority of the chairman of the subcommittee, to Mr. O'Neal, president of the Farm Bureau Federation, inviting him to be here this morning or to send a representative. I received word from Mr. O'Neal stating that Mr. R. E. Short, president of the Farm Bureau in Arkansas, would be here to appear for the Bureau. Come around, Mr. Short, please. STATEMENT OF R. E. SHORT, REPRESENTING AMERICAN FARM BUREAU FEDERATION, BRINKLEY, ARK. Mr. SHORT. Mr. Chairman and gentlemen of the subcommittee, at the request of President Edward A. O'Neal, in response to an invitation from Chairman Byrnes, I appear here today to present a statement on behalf of the American Farm Bureau Federation relative to S. 3509. First of all, may I state for the record that the American Farm Bureau Federation is a national organization of farmers, supported by membership dues of farmers representing in its paid membership approximately 1%1⁄2 million persons in 39 States. The policies of our organization are democratically determined by the voting delegates elected by the several States on the basis of membership. During the past 20 years, we have given special attention and study to farm credit problems. Last year a special national committee was set up by President O'Neal with representatives of every region of the United States, to give special study to farm credit problems and make recommendations to our annual meeting in December. It was my privilege to serve on this committee representing the southern region. This committee held two conferences in Washington and another meeting in Chicago. While in Washington we conferred with Governor Hill. Land Bank Commissioner Goss and other officials of the Farm Credit Administration, W. W. Alexander, head of the Farm Security Administration, Secretary Wallace, Dr. A. G. Black (now 39 Governor of the Farm Credit Administration), then chairman of a special credit committee set up by Secretary Wallace, Chairman Marvin Jones, and others. This committee reported to and conferred with a National Conference on Rural Credit held in conjunction with the annual meeting of the American Farm Bureau Federation in Chicago last December, which conference was participated in by representatives of the Farm Credit Administration, Dr. Alexander of the Farm Security Administration, and various farm leaders. The recommendations of our committee and of this national conference were submitted to the resolutions committee of the federation. Base upon these findings, the resolutions committee drafted resolutions which were adopted by the voting delegates. The resolutions adopted were as follows [reading]: RURAL CREDIT The present cooperative system of rural credit, including land-bank loans, production loans, loans to cooperative associations and intermediate credit, has been built up through almost 25 years of struggle and experience of farmers in an endeavor to attain and preserve a fair, effective, sound, permanent, and independent faim credit system. This achievement must not be compromised in any manner. We urge that the cooperative features of this system be expanded in the interest of economy, effective administration, and service to its member borrowers. Until the parity position of farmers is greatly improved, we further recommend continuation, subject to congressional review, of the present emergency interest rates on Federal land-bank loans and Commissioner loans; extension of the authority to make land bank Commissioner loans and an amendment to the Bankhead-Jones Farm Tenant Purchase Act to extend the same consideration to worthy distressed farm owners now extended to tenants. ADMINISTRATIVE COORDINATION Throughout recent years there has developed from the enactment of laws and amendments thereto the several lines of agricultural credit and the various types of action programs and administrative agencies for the improvement of agricultural commodity prices and rural conditions generally. They are well merited and have accomplished much for the betterment of agricultural conditions. Being developed at different times, it was only natural that what appears to be more lines of administrative machinery than are necessary have been put into operation that now reach into the respective States and the various counties therein. In the interest of greater economy, a higher degree of efficiency, the removal of duplication of effort, better understanding, and permanency, we recommend that the board of directors give careful consideration to the advisability of securing such modification of law or laws as seems necessary to provide for placing the full administrative responsibility of all lines of cooperative farm credit and all types of agricultural commodity programs under the direction of two independent Federal boards operating within or properly correlated with the Department of Agriculture. On January 11, 1940, the following recommendations were submitted to the President and to Congress on behalf of the board of directors of the federation [reading]: For 25 years farmers have struggled to build up a sound, effective, permanent, and independent farm credit system, including the Federal land banks, the intermediate banks and banks for cooperatives, and the production credit system. The ultimate objective is complete farmer ownership and farmer control. The objective we believe can best be achieved by placing a complete administrative responsibility in the hands of a Board of Governors, as an independent Government agency, members to be appointed by the President of the United States and confirmed by the Senate, with terms of members so staggered as to insure continuity of administration. The federation will aggressively support legislation directed toward this objective. Since the introduction of S. 3509 in the Senate, and H. R. 8748 in the House, the Board of Directors of the federation met in special session in Chicago on April 26-27, to give special consideration to farm credit legislation pending before Congress. I shall endeavor to the best of my ability to present to this committee the views and recommendations of our organization with respect to farm credit legislation pending before this committee. It is my understanding that Governor Black has already presented to the committee a detailed explanation of the various provisions of S. 3509. In a recent hearing before the House Committee on Agriculture with respect to H. R. 8748, which is a companion bill to S. 3509, I pointed out a number of dangers in various provisions of this legislation as originally introduced. In order to conserve the time of the committee, I will not attempt to analyze the bill, section by section, nor repeat any more than necessary my testimony before the House committee. Since those hearings were held, we have had further opportunity to study this legislation, and I believe we can offer some constructive suggestions to accomplish the desirable objectives without incurring these dangers. In weighing the relative merits of various proposals that have been suggested, it is fundamentally necessary to consider first of all, what kind of a farm credit system do we want. Do we want a cooperative credit system, farmer-owned and controlled under proper governmental regulation, or do we want a centralized government credit system, owned, controlled and operated from Washington? As stated in the resolutions which I read a moment ago, farmers through their organizations for the past 25 years have struggled to build up a sound, effective, permanent, and independent farm credit system with the ultimate objective of complete farmer ownership and farmer control. Most of the national farm organizations have steadfastly and consistently worked toward that objective. It is true that we have not fully attained that goal, but we have made a great deal of progress. If we can agree, however, upon this fundamental approach and objective, I think it will serve to clarify our thinking and assist in reaching sound judgments upon some of the proposals involved in this legislation. Apparently, there is rather widespread agreement that the cooperative plan is preferable to a direct governmental lending agency, although there may be some disagreement as to what constitutes true cooperative principles and methods. Let us consider some of the important issues involved in this legislation. First, the question of interest rates. The American Farm Bureau Federation has consistently favored and aggressively fought for the lowest interest rates to farmers consistent with the cost of money and the maintenance of a sound credit system. We are still fighting for this policy. Our record is very clear on this point, both in our resolutions adopted and our recommendations to Congress throughout the years. We have taken a leading part in securing the emer |