strongly feels that we should vigorously proceed to develop the Federal land-bank system into a truly farmer cooperative system. Incidentally, that same thought should be carried over into the other banks within the farm-credit system. For instance, the bank for cooperatives is, as the name implies, a bank for cooperatives. The cooperatives have very little control over the bank. It is not, strictly speaking, a bank of cooperatives. Recently we have been holding meetings out in California discussing ways and means of giving the cooperatives who borrow from the bank more control and interest in the bank. Frankly, we discontinued our discussion when the companion bill came up in the House, because we figured that if that thing was going to be more centralized in the land bank the next step would be to centralize it more so far as the bank for cooperatives was concerned.

We believe that to accomplish this it is necessary to strengthen national farm-loan associations and provide them with some adequate source of income. We believe further that it is necessary to decentralize Federal land-bank operations into these local farm-loan associations and to make the Federal land banks themselves subject to a greater degree of farmer control.

In the Berkeley district at the present time we have gone pretty far in the direction of turning over to the local associations practically all of the servicing of loans, getting new loans, the servicing of delinquents, the collections and original appraisements. Of course, the recommendation for the loan and the amount of the loan-that is, the maximum amount-is fixed by the associations. They also take an active part in the sale of the real estate. Generally speaking, they take care of practically all the contacts with the borrowers. Some 95 percent, I believe, of the loans in the Berkeley district are now handled by the national farm-loan associations.

Senator HUGHES. Do they not feel sort of an interest by reason of the fact that if the loan turns out bad and they have to make a sale and there is a heavy loss, they are the people who are losing because their stock is in jeopardy?

Mr. HODGKIN. That is correct.

Senator HUGHES. And therefore they are the people who ought to be very much interested in the foreclosure sales and things of that kind where a possible loss is going to be brought about.

Mr. HODGKIN. And also interested in the maximum amount that should be loaned on a particular farm in the beginning.

Senator HUGHES. I think so, too.

Mr. HODGKIN. And they are, very definitely. We find some instances where the local association feels that the maximum should be considerably less than the Farm Credit Administration appraiser suggested. There are not a great many of those, but some.

We think that if the number of farmer-elected directors were increased, as suggested, and if provision were made for regular conferences of the president and directors of farm-loan associations, that we would have taken a long step in this direction. Thirdly, but by no means least important, we feel that the whole system should be placed under a nonpolitical bipartisan board, whose sole function is not to run but to supervise and assist in the development of this cooperative farm-credit system. To assure continuity of policy, freedom from political considerations, and the full-time attention of the best men.

available for the job, we urge as strongly as we can that the Farm Credit Administration be restored to its former independent status under a bipartisan board with staggered terms of office. It would be our suggestion that the foregoing features be incorporated into S. 3480 and that S. 3509 be not passed.

Mr. CHAIRMAN. I would like to make a personal comment at this time, a suggestion that has not been passed upon by the National Council of Farmer Cooperatives. It is purely personal

Senator HUGHES. Would it disturb you if I asked you a question before you make that statement?

Mr. HODGKIN. No, sir.

Senator HUGHES. Í have in mind what you said at the end of your paragraph 5, and it has been repeated over and over in these hearings, to the effect that you urge that the Farm Credit Administration be restored to its former independent status under a bipartisan board with staggered terms of office.

I do not know that anybody could find fault with that as a broad statement, and I do not, except as to this: How are you going to restore it? The cooperatives let it get away from them. In some way the system got out of their hands. It has got into the Government's hands. It is the Government's money that is in it now.

Mr. HODGKIN. On the contrary, I think it was going the other way, Senator. It started out with more control here and less interest in the country. Finally it built up to where many of the banks were almost a hundred percent owned by the borrowers. Then came the depression, and the Government had to come in and help it again. At the present time they are again crawling out of that situation. Of course, in 1933, when we had to make so many loans and refinance many others, the thing was done in a rush and there was no time to work toward informing the local groups and getting them to do the job. But since then they are becoming informed and they are becoming more interested. In our district, at least, they have come to the point where they are doing practically the whole job; and as I said a moment ago, the associations in that district now own 65 percent of the stock. If you give them a little more time we hope that they will own 100 percent of it.

Senator Hughes. I wish I could think that about all the districts. Mr. HODGKIN. That is one of the more fortunate ones; but there are others as fortunate, I understand, four or five of them, at least. I do not know just how many.

Senator MILLER. That information is in the record.

Mr. HODGKIN. If you should see fit to adopt legislation providing for a board, I would like to suggest that the board be at least partially farmer elected or nominated, and that the board be a policymaking board only, and not an administrative body; and, finally, that the board be a part-time board receiving a per diem rather than a regular and substantial salary.

My reasons for this suggestion are that the farmer-control features of the Farm Credit Administration should start with the farmer on the farm and extend through the local national farm-loan associations and district boards right to the central Board in Washington. That is the only way that you can convince the farmers and their business organizations that the system is truly cooperative.

I believe that the board should be a policy-making board, because I do not believe that a board can administer or execute as efficiently as the usual type of business organization headed up by one man responsible to the board for carrying out the policies which it adopts. I believe that the board should be part time and paid a per diem rather than full time and substantial salaries, because a part-time board would necessarily have to continue to have its feet on the farm and would bring to the meetings the point of view of the farmer rather than the point of view of the officeholder with a desirable job to protect.

I believe that is the only way that you can keep our governmental business institutions free from the draw-backs of bureaucracy. My experience on the Berkeley board and with the boards and marketing associations leads me to conclude that such boards keep the official personnel on their toes and in touch with what is going on in the country.

Thank you, Mr. Chairman.

Senator MILLER. Mr. Hodgkin, the suggestions made by you revolve around a determination of whether or not the borrowers, the farmers themselves, have a sufficient interest in the business to operate it and whether or not they have the ability and the desire to operate it? Mr. HODGKIN. Yes, sir.

Senator MILLER. You take the position, and cite figures in your district as evidence, that it can be done?

Mr. HODGKIN. Yes, sir.

Senator MILLER. And you leave with us the question of whether or not we want to give the farmers another opportunity to take over as a cooperative, or whether we are going to transform it into a Government agency?

Mr. HODGKIN. It seems to us that that is the chief issue in this proposed legislation.

Senator MILLER. You said in the first part of your statement that you had about 4,000 associations and that they extended into every State in the Union. Could you, without too much trouble, file a list of the cooperative associations, together with their addresses, as a part of your testimony?

Mr. HODGKIN. Yes; we could.

Senator MILLER. I was just wondering whether there were any of those cooperative associations in Arkansas.

Mr. HODGKIN. I think they are in all the States.

Senator MILLER. We have cooperative marketing associations, and I would like to know whether you are speaking for any of them.

Mr. HODGKIN. As I recall, the council represents about half of the farmers who are in these various cooperatives in the country, and that is, roughly, half of all the farmers in the country. So I presume the council represents over a quarter of all of the farmers in the United States. Those are, however, rather "horseback" figures, but more accurate figures can be furnished.

Senator MILLER. Do you want to ask the witness any questions, Senator Hughes?

Senator HUGHES. There are so many things that I would like to know that I hardly know where to begin. It is getting so tangled up and so confusing. It has not been simplified.

Senator MILLER. We are going to have to simplify it by reading the record.

Senator HUGHES. We start out with a plan and it drifts along, and in a little while it becomes something else. But in this particular situation it seems to me that I cannot get away from the thought that farm credit is getting away from the cooperatives.

Mr. HODGKIN. I think it is going back.

Senator HUGHES. I thought that they were not moving very much in the direction of taking control, because so many of the borrowers have no interest in it.

Mr. HODGKIN. They are becoming definitely interested in our district; I am positive of that.

Senator HUGHES. We will have to inoculate the other districts in some way or other.

Mr. HODGKIN. I do not think our district is unique. It may be along with the best of them, but I do not think it is unique.

Senator HUGHES. Of course they wanted to get loans. They got them, and things did not do so easy, and times were hard and they could not keep up their payments, and of course they either lost interest in it because they became hopeless about keeping up their payments, or the farm was taken away from them. Getting on their feet is so far off, so remote, so unlikely, that they are not very much interested as they were at first.

Mr. HODGKIN. That only applies, though, Senator, to a relatively small percentage of the farmers, when you realize that two-thirds of them have no mortgage on their farms at all.

Senator HUGHES. I am not speaking of the farmers generally. I am speaking of the farmers who found themselves overburdened with debt at one time. I talk to quite a lot of them, because in one way or another I have made myself interested, whether I had any official connection or not, with the Federal land bank, with the local associations, and so forth. I find that they take very little interest in it.

Mr. HODGKIN. That is not unique with national farm-loan associations, Senator. I wonder how much interest the policyholders in an insurance company take, or the stockholders in any corporation. I know that so far as our cooperative marketing associations are concerned, our biggest problem is to keep the interest of the farmer and the member and keep him informed as to what the association is doing and trying to do and the problems it has to meet, and trying to get him to attend meetings. In some parts of our district we have some rather old associations that have functioned very successfully in small districts, and for years they have never had a quorum at their meetings. You cannot get them to come. They are satisfied. They say, generally speaking, among the cooperatives, that you have to have a fight or a feed to get anybody out. The national farm-loan associations, as I understand, have an attendance at their meetings of something like 18 or 20 percent, which is surprisingly good as compared with most of our marketing cooperatives that I am familiar with. We have taken as an example the production credit associations who have had some 30 percent attend their meetings. We have used their methods and have discussions in our meetings trying to work out ways of getting our members to attend the meetings.

232712-40--17

Senator MILLER. Mr. Hodgkin, we are very much obliged to you. NATIONAL COUNCIL OF FARMER COOPERATIVES, Washington, D. C., May 17, 1940.

Hon. JOHN E. MILLER,
United States Senate,

Washington, D. C.

MY DEAR SENATOR MILLER: Complying with your request made of Mr. George B. Hodgkin, who represented this council at the hearing on S. 3509 this morning, I am pleased to enclose herewith list of the major organizations which constitute the membership of this council.

You intimated that you would like this list for insertion in the record following the council's statement.

Sincerely yours,

EZRA T. BENSON, Executive Secretary

CITRUS AND SUBTROPICAL FRUITS DIVISION

Calavo Growers of California, 4803 Everett Avenue, Los Angeles, Calif. California Fruit Growers Exchange, box 530, station C, Los Angeles, Calif. (including 225 cooperatives).

Florida Citrus Exchange, Tampa, Fla. (including 55 local affiliated units).
Mutual Orange Distributors, Redlands, Calif. (including 30 cooperatives).
South Lake Apopka Citrus Growers Association, Oakland, Fla.

COTTON DIVISION

American Cotton Cooperative Association, 535 Gravier Street, New Orleans, La.:
Alabama Cotton Cooperative Association, Montgomery, Ala.
Brazos Valley Cotton Cooperative Association, Bryan, Tex.
California Cotton Cooperative Association, Bakersfield, Calif.
Georgia Cotton Producers Association, Atlanta, Ga.
Louisiana Cotton Cooperative Association, New Orleans, La.
Mid-South Cotton Growers Association, Memphis, Tenn.
Mississippi Cooperative Cotton Association, Jackson, Miss.

North Carolina Cotton Growers Cooperative Association, Raliegh, N. C.
Oklahoma Cotton Growers Association, Oklahoma City, Okla.
South Carolina, Cotton Cooperative Association, Columbia, S. C.
South Texas Cotton Cooperative Association, Corpus Christi, Tex.
Southwestern Irrigated Cotton Growers Association, El Paso, Tex.
Texas Cotton Growers Association, Dallas, Tex.

West Texas Cotton Growers Association, Abilene, Tex.

DAIRY DIVISION

National Cooperative Milk Producers Federation, 1731 Eye Street, NW., Washington, D. Č.:

Berrien County, Mich., Milk Producers' Association, Benton Harbor, Mich. California Milk Producer's Association, 145 East Firestone Boulevard, Downey, Calif.

Cedar Rapids Cooperative Dairy Co., 560 Tenth Street, SW., Cedar Rapids, Iowa.

Central Ohio Cooperative Milk Producers, Inc., 12 North Third Street, Columbus, Ohio.

Challenge Cream and Butter Association, 925 East Second Street, Los
Angeles, Calif.

Champaign County Milk Producers, 31 Main Street, Champaign, Ill.
Chattanooga Area Milk Producers Association, Chattanooga, Tenn.

Connecticut Milk Producers' Association, 990 Wethersfield Avenue, Hartford,
Conn.

Consolidated Badger Cooperative, Shawano, Wis.

Consolidated Milk Producers for San Francisco, 593 Market Street, San Francisco, Calif.

Cooperative Pure Milk Association of Cincinnati, Plum and Central Parkway, Cincinnati, Ohio.

Dairy and Poultry Cooperatives, Inc., 173 Duane Street, New York, N. Y. Dairymen's Cooperative Sales Association, 451 Century Building, Pittsburgh, Pa.