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 moneyI 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 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. 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 ing from 180 such counties in 1880 to 890 counties in 1935. Thus in the East North Central States of Ohio, Indiana, Illinois, Michigan, and Wisconsin-to show you that this is not confined entirely to the South-farm tenancy has increased to almost 30 percent. In the West North Central section the percentage has increased from 20.5 percent in 1880 until in 1935 it was 42.6 percent. Senator MILLER. I think this is very important. Farm tenancy has increased to almost 30 percent of the farms; that is what you mean, isn't it? Mr. DICKINSON. No; I mean the tenancy has increased that much-30 percent. Senator BANKHEAD. To 44 percent of the farms? Mr. DICKINSON. Yes; I believe you are right about that. I get the Senator's point. From 1880 to 1900 there was an increase from 25 to 35 percent of the farms. Senator BANKHEAD. In what year was it 35 percent? Mr. DICKINSON. That was back between 1880 and 1900; but from 1920 to 1935 it went from 38 to 42 percent, which is the percentage today. Senator HUGHES. The farm owners have decreased; the farms tenants have increased? Mr. DICKINSON. Yes, sir. Senator HUGHES. Farms that were owner-operated have now passed into tenancy. Senator MILLER. The only thing I wanted to be certain about was that the figures apply to the number of farms and not just the number of people. Mr. DICKINSON. Yes. In the Mountain States-that you may still know that this condition is general and is not localized in the South-where the tenancy problem is overlooked, the percentage has increased from 7.4 percent in 1880 to 26.6 percent in 1935; and to indicate how rapidly this menace is increasing, 15 points of the increase date from 1910, and 11 from 1920. The increase has been more marked probably in the South than in any other area except that extending from North Dakota down through Kansas. In 1935 we find the following percentages of tenancy in the Southern States: Virginia, 29.5 percent; North Carolina, 47.2 percent; South Carolina, 62.2 percent; Georgia, 65.6 percent; Tennessee, 46.2 percent; Alabama, 64.5 percent; Mississippi, 69.8 percent: Arkansas, 60 percent; Texas, 57.1 percent; Oklahoma, 61.2 percent; Louisiana, 73.7 percent. FORECLOSURES SERIOUS IN ALL REGIONS Taking a look at foreclosure figures down to 1935, we find that the numbers of farms in the different States lost through forced sales are an indication that the condition of farmers was much the same in the different sections. Of all farm transfers made-including voluntary sales and trades, forced sales, inheritance and gifts, together with miscellaneous and unclassed the percentage that were foreclosures or forced sales in the various parts of the country was as follows for the period from 1927 to 1934: 232712-40--11 New England, 22.8 percent; Middle Atlantic, 27.0 percent; East North Central, 39.7 percent; West North Central, 50.7 percent; South Atlantic, 44.0 percent; East South Central, 41.4 percent; West South Central, 41.0 percent; Mountain, 49.5 percent; Pacific, 39.1 percent. These figures have been taken from circular No. 354 of the United States Department of Agriculture for April 1935. Senator BANKHEAD. In view of the fact that the West North Central States had the highest percentage of foreclosure, do you have available the names of the States that that division includes, so that you could list them right here? Mr. DICKINSON. No; but I can furnish that information to you. Senator BANKHEAD. Supose you furnish it for the record and carry it down to 1939. Mr. DICKINSON. I shall do that, Senator. (The information requested appears as follows:) FARMERS EDUCATIONAL AND COOPERATIVE UNION OF AMERICA, The SECRETARY, c/o FARM RESEARCH, 1343 H STREET NW., Senate Banking and Currency Committee, Washington, D. C., May 14, 1940. Senate Office Building, Washington, D. C. DEAR SECRETARY: During the testimony of Dr. M. F. Dickinson on S. 3509, on Friday, May 10, Senator Miller requested Dr. Dickinson to furnish for the record of the hearings certain figures for the individual States in the West North Central region. The request referred to two tables appearing at the bottom of page 5 and top of page 6 of the mimeographed statement Dr. Dickinson submitted in which figures were given only by regions. Therefore, these figures for individual States should follow respectively the two tables. A. Percentages that forced sales were of all transfers, 1927-34: (Calculated from circulars No. 261, January 1933, and No. 354, April 1935, United States Department of Agriculture.) B. Forced sales per 1,000 farms, 1938 and 1939: We believe this fulfills the Senator's request, as we understand it, but if it included additional figures, we shall be glad to furnish them. Sincerely yours, ROBERT HANDSCHIN, Secretary, Farmers Union Legislative Committee. FARMERS EDUcational and Cooperative UNION OF AMERICA, Washington, D. C., May 18, 1940. The SECRETARY, SENATE BANKING AND CURRENCY COMMITTEE, DEAR SECRETARY: A further examination of the record of the hearings informs us that Senator Bankhead requested Dr. M. F. Dickinson to furnish figures through 1939 to complete one of the tables submitted. We presume that Senator Bankhead also wanted these recent figures for the West North Central States individually. They are as follows: C. Average annual percentage, 1935-39, that forced transfers were of all transfers (Calculated from Circular No. 548, October 1939, U. S. Department of Agriculture.) Percent 28. 2 32. 1 42. 7 30. 5 D. Average annual percentage, 1935-39, that forced transfers were of all transfers, West North Central States (Calculated from Circular No. 548, October 1939, U. S. Department of Agriculture.) We believe this completes the Senator's request. Sincerely yours, Percent 53. 1 64. 1 51.0 ROBERT HANDSCHIN, Secretary, Farmers Union Legislative Committee. During 1938 and 1939 farmers continued to lose their homes throughout the country through forced sales, as shown by the following figures. First, let me say that the point I am trying to get over is that the trouble of the American farmer is not limited to drought-stricken areas but is general, and emergency relief to take care of some section of the country will not do the job. These are the forced sales per thousand farms [reading]: Those figures are taken from circular No. 548 of the United States Department of Agriculture, published in October 1939. You will see that the trouble is pretty well generalized throughout the nation and is not a local situation. DELINQUENCY IS NOT LOCALIZED Now let me cite some figures to show the critical situation facing many borrowers from the land banks and Federal Farm Mortgage Corporation. These figures again show that this is not solely a problem of one area of the country, but rather a more or less general problem throughout the country. The 24 States having the greatest percentage of delinquencies considering both land-bank and Commissioner loans are to be found in 8 of the 12 land-bank districts, as follows: First, Springfield district, the States of Maine, Vermont, New York, and New Jersey. Third, Columbia district, the States of North Carolina, South Carolina, Georgia, and Florida. |