Senator BARKLEY. Have you looked into the question as to the number of States in which the law provides that a tax on the personal property of the farmer on the land shall operate also as a lien against the land in case personal property is not available? Mr. ENGLUND. I do not have information on that, Senator. Senator BARKLEY. For instance, take a drove of cattle that are in existence at assessment time, and they may be sold before taxpaying time; in that case the land in some States would be held for the tax. Mr. ENGLUND. I know that is true in some States. Of course, if the personal property is sold off the farm there is ordinarily no income for that particular farmer out of which to pay his taxes on real estate. Taking then the figure which I gave and applying to it the decrease in the tax on farm real estate of about 20 per cent since 1929, we estimate that the total real-estate tax on all farms mortgaged in 1932 approximated $185,000,000. Senator HARRISON. That is annually? Mr. ENGLUND. That is annually. And tax for the present year, 1933, and the year 1934, would of course be twice the average for the two years. My opinion is that the tax levy on farm real estate will decline a great deal more by 1933 because of rather drastic reductions being made in many places. But how much that decline will be I have no way of telling at this time. There is a further differentiation which might be made, depending upon how this bill were to be applied. If it is intended to make the provisions of this bill applicable to farms that are operated by tenants, no matter what the situation of the owner may be, we have one figure to contend with. If it were intended to apply it only to the farms that are operated by owners and to the owned portions of such farms-I mean to the portions owned by the operator-we would have a greatly reduced figure. It has been very difficult to make anything more than the roughest sort of an approximation to show what would be involved in those cases. Coming back again to figures as of 1929 or thereabout, I have made a rough computation, which I would be glad to revise if we can make further refinements of it, showing that in the year referred to, namely, 1929, the tax against real estate in full-owner farms-that is, in the farms owned altogether by the operator-amounted to about $108,000,000. The taxes on the owned part of part-owner farms approximated roughly $30,000,000. By the owned part of a partowned farm I mean this: A farmer who owns, let us say, 80 acres of land, and rents from a neighbor an additional 40. The 120 acres constitute his farm. And we have attempted to arrive at a rough approximation of what the taxes would be on the 80 acres on the parts of such farms owned by the operators. Then of course we have taxes on rented farms and farms operated by managers, which probably amount altogether to $78,000,000 or $80,000,000. That is a rough computation. A still further refinement, the nature of which I can only call to your attention, but on which I have no data, would have to be made to arrive at the approximate amount involved here. There is no way of telling, as far as I know, how many creditors would consent to the granting of the first lien, contemplated in this measure, to the Reconstruction Finance Corporation in the event that corporation paid the taxes. Some one who represents the lenders on farm real estate could speak much more authoritatively than I on that subject. There is one further point, however, on which we do have some data. It does not follow by any means that all farmers owning mortgaged farms would apply for the loans here contemplated. I believe, that by and large, farmers whose properties are mortgaged at a low ratio of debt to value would be less likely to apply for the loan than farmers whose property is mortgaged up to nearly full value or even more than full value. Obviously the latter is more likely to be in distress than the former. We have some data that might throw some light on that subject. Senator STEIWER. Mr. Englund, before you get into that. Possibly I have not got the full force and effect of statements already made, but have you yet distinguished between these mortgaged farms where there is delinquency and mortgaged farms on which there is no delinquency? Mr. ENGLUND. No, Senator; I have not spoken on that point, but I will be glad to do so now. There is a great deal of tax delinquency, as all of you gentlemen know. It is very difficult to ascertain precisely what that tax delinquency is, for several reasons. One is that tax delinquency does not mean the same thing in every State, under the terms of the laws of the States; and, secondly, it has been difficult for us to get adequate data on this subject. The picture is changing very rapidly, and it would involve a good deal of expenditure not an enormous one, but more than we are able to make for the gathering of such data currently. I do have, however, certain material which might indicate what the problem is at the present time. Senator STEIWER. Well, would not this be a correct way to approach the matter? If you assume that there is an annual tax burden on the mortgaged owned farms of something like $185,000,000, would it not be correct to say that a certain percentage of that tax is delinquent? And then having arrived at the amount of delinquency, that a certain percentage, some other percentage, would apply for loan, and that still another percentage complementary to the one last named would not apply because the mortgagor could not get the consent of his mortgagee? Mr. ENGLUND. The last point, Mr. Chairman, as I see it, would be an assumption-at least it would be on my part if I should attempt to establish such a percentage showing the relation of the number of creditors who would not give the consent required in the bill. Those who are dealing in farm mortgages, however, may be able to say something about that. I do not know. But I know of no basis upon which to arrive at such a percentage that would be any more than a guess. Senator STEIWER. Well, do you have a basis upon which you can arrive at an approximate percentage of the delinquency in this total amount of $185,000,000? Mr. ENGLUND. We do have certain data on delinquency. We have data on the transfer of farms. That is, the farms put up for sale on account of delinquent taxes, and I shall be glad to give those in a moment. Senator STEIWER. Well, can you make an estimate as to the amount of the $185,000,000 which we will assume for the purpose of this 155934-33 discussion will be the total tax burden for the year 1932 upon mortgaged farms in America-can you make an estimate as to the percentage of that figure which would be delinquent? Mr. ENGLUND. No. It would be a very rough estimate, and perhaps I should call it a "guesstimate" if we made it. There is one statement I can make before I refer to that. We do have figures on tax delinquency. I think it is reasonable to suppose that a farmer whose farm is heavily mortgaged is more likely to be delinquent than the farmer whose farm is lightly mortgaged or not mortgaged at all. Estimated taxes on real estate in mortgaged farms, the farms being distributed among five groups according to the relation of debt to value; taxes as of 1929 and ratio of debt to value as of January, 1932 The United States total of taxes in this table in each group and in the aggregate of all groups has been arrived at by adding the figures computed for each geographic division. The proportion of the total number of mortgaged farms falling within each group according to ratio of debt to value varies among the geographic divisions. For the United States as a whole, however, the following is the distribution: Out of 100 farms, on the average, 18 were indebted below 20 per cent of their estimated value, 31 were indebted from 20 to 40 per cent of value, 24 from 40 to 60 per cent, 14 from 60 to 80 per cent, and 13 were mortgaged above 80 per cent of estimated full value. Our data on tax delinquency refer to all farms only, and we have no basis for a segregation. It may be that those who are handling farm mortgage loans, having been required many times to advance funds for taxes in order to protect the mortgage, might be able to give something useful to the committee on that point. Senator HARRISON. Mr. Bestor is here. He might be able to give us something on that. May I ask in that connection what percentage of the mortgages that are held on farm land in the country are held by the Federal land banks, the joint-stock land banks and the percentage by insurance companies, and what per cent by other financial institutions, if you have that data? can only give them The last estimate we 1928 which, our data Mr. ENGLUND. We have these data, and I from memory, as I do not have them with me. made rather carefully on that point was as of indicate, was the peak year in farm mortgages. At that time the life-insurance companies held slightly under 23 per cent of all farm mortgage indebtedness in this country which at that time we estimated amounted to $9,486,000,000. The joint-stock land banks, I believe, held about 7 per cent. The Federal land banks held slightly over 12 per cent. The mortgage companies I think held something like 10 per cent. Perhaps Mr. Bestor has the figure on that point. But I will correct the figure for the record from our data, which I failed to bring with me. Retired farmers, incidentally, at that time held a mortgage indebtedness amounting to slightly more than 10 per cent of the total. At that time retired farmers held a mortgage Senator STEIWER. Pardon me, Mr. Englund. Was it not more than that? Was it not about 16 per cent? Mr. ENGLUND. Of retired farmers? Senator STEIWER. Yes. Mr. ENGLUND. At that time, no. For all individual farmers that was about correct, Senator, but we have differentiated the figures among retired farmers, active farmers, and other individuals. These three classes of individual lenders at that time held roughly about one-third of the total farm-mortgage indebtedness. Mr. Bestor just handed me a copy of those figures. I shall repeat them in the order of their appearance here. The life-insurance companies held 22.9 per cent. Mortgage companies, 10.4 per cent. Joint-stock land banks, 7 per cent. Other individuals, 15.4 per cent. Other agencies, unclassified, 7.2 per cent. That was the status of the farm-mortgage indebtedness at that time, January, 1928. Since that time the volume of loans outstanding on farm real estate by the principal lending agencies whose reports are available to usthe Federal land banks, the joint-stock land banks, the 40 life-insurance companies who are important lenders in the field, they represent about 85 per cent of the admitted assets of all life-insurance companies, their holdings of farm mortgages declined slightly less than 10 per cent from 1930 to, I believe, November of 1932. That roughly gives an answer to the question of how much the various farmers' mortgage creditors hold of mortgages, as indicated in these figures. Going back to the question, if I may, of the delinquent taxes. We, anticipating that there would be a great deal of interest in the subject, attempted to get some data on it by questionnaire to county assessors and county clerks, who I would like to say parenthetically here in reference to what was said earlier this morning have been very good to us in doing without compensation a lot of things we need done. We have been unable to compensate them in any way for giving us figures on tax per acre on farm real estate or on tax delinquency. With very few exceptions they answered with very splendid cooperation, requesting no compensation. When it was requested we said we regretted that we could not compensate them, but hoped they would give us the help in the interest of the value to the public which the data would have. We have thus far received from 31 agricultural counties, selected because of being distinctly agricultural, and representing various parts of the country, data on tax delinquency for 1929, 1930, and 1931. Of all property taxes levied in such counties, in 1929 the delinquent taxes amounted to 11 per cent of the total taxes levied. In 1931 they amounted to 22 per cent in the same counties, the proportion having exactly doubled. The year 1932 was a year of much greater distress than 1931. When data are available on tax delinquency for 1932 I anticipate a very marked increase. One particular list on tax delinquency in a South Dakota county which we happened to receive, the list having been published in a newspaper, gave the exact number of acres offered for sale in 1932. The amount of land advertised for sale in that agricultural county in 1932 was approximately one-third of the acreage of all land in farms in that county in 1930, as shown by the census. We have received scattered reports from various sections of the country which would indicate the same general story, and which I have here, but which I presume the committee does not care to take time to hear at this point. They tell the same general story. Senator STEIWER. We are more interested in the general story, Mr. Englund, than we are in detail. Mr. ENGLUND. I am not sure I have answered the questions that were put to me. I would be glad to attempt to answer further if I can. Senator STEIWER. If you were to attempt to make an estimate of the amount of delinquency, putting it within a minimum and maximum range, what would you say it probably would be? Mr. ENGLUND. Well, I would hesitate very much, Senator, to make a statement offhand. I would be glad, however, to go into such figures as we have and attempt to show something on that subject if I may make it available to the committee later. (NOTE. See Mr. Englund's further statement on this point at the close of hearings.) Senator HARRISON. May I ask you, would there be more delinquencies or less delinquencies in the Federal land banks than there would in the other credit agencies that you enumerated? The reason I ask that question is this: If we could get the information as to the delinquencies in the Federal land banks, and knowing that their percentage is about 12 per cent of the total, we could arrive at some conclusion, perhaps. Mr. ENGLUND. Do you have reference, Senator, to delinquent taxes or delinquent loans? Senator HARRISON. Well, delinquent taxes was what the chairman inquired about. Senator HULL. By delinquent taxes do you mean taxes that have merely become subject to penalties before they have been sold, or taxes accruing under tax sales? Senator HARRISON. Well, I had understood the chairman to have propounded his question with reference to certain delinquencies that had been foreclosed, and where sales had not been made by the States to individuals. Senator HULL. In my State, for instance, taxes are due the 1st day of March; that is, they become delinquent the 1st day of March this year, 1933. After a few months they are put up and sold, being bid in either by the State or county or some individual. The taxpayer then has two years in which to redeem. Now, it is that class of delinquencies I think that is the real one, because there are so many |