and which the first of next week we think we will have in shape, at least in one and perhaps in two bills, for introduction. In fact, the slant or the phase of the farm-mortgage question which Senator Harrison's bill covers will not, except by an indirect method, be approached in the two bills of the various farm organizations. So that I am perfectly free to advocate this bill without any conflict being had with our general rural credits program, because it correlates that program without conflicting with it. Now, we expect the language of the bill to be so interpreted, as it reads, or if it can not be so interpreted, then changed, so that it will apply not only to land which is actually lived upon and operated by a farmer, but to land which is under a tenant system as well. Senator HARRISON. It was the intention that it should cover both. Mr. GRAY. I think the language covers it in the way I have explained, but if it does not we should desire to have it changed accordingly. I suggest that inasmuch as we can not have, seemingly, any reliable data even upon which an estimate can be made as to how this bill would apply to home property-where we can get somewhat of a general estimate as to how much money would be required if it should be applied to farm property-that it might well be limited exclusively to farm property. Now, I do not make that recommendation with any unkindness to home property as such, but when we go into a piece of legislation like this we want to know at least with some approximation the millions of dollars that it is going to entail. And I do not know that we can get that from home property as a whole over the Nation. Meaning by home property urban as well as rural. Now, as an estimate as to the amount of money which the Reconstruction Finance Corporation, through either its regional agricultural credit corporations or any other method that it chooses to employ, would be required to put in during each of the two years which the bill would be operative, we can proceed by method of elimination to get in some degree an accurate estimate as to the amount. We have just heard from Mr. Englund that an approximate $230,000,000 is the taxes on all real estate, farm real estate. Senator STEIWER. On mortgaged real estate. Mr. GRAY. On the mortgaged portion of the farm real estate. I take your correction. We have just heard also from Mr. Englund, and I can verify it from other data if it were necessary, which it is not necessary to do, that in 1930 the delinquencies in tax payments were 15 or 16 per cent. In 1931 they had practically doubled. In 1932 they had increased. We do not know just exactly what the amount is in 1931, but let us as a method of surmising take a percentage which will surely be as big as the delinquencies can possibly be in 1932, and say that in that year they are 50 per cent. Then of the $230,000,000 of taxes on farm mortgaged property that would bring us to an approximate $100,000,000 which this bill would require of the Reconstruction Finance Corporation, except that there are two other eliminations yet that would have to come in. One elimination is that the mortgagee must agree to renounce his foreclosure procedure in the 2-year period. Some will refuse to do that. And that will subtract somewhat from the $100,000,000. The other elimination is that farmers only are to come under the provisions of this bill who can not get loans from any other source to take up their tax burden. Those two eliminations are in my judgment wholly problematical in amount. But in my guess and in my judgment they would subtract half of the $100,000,000 which I first named as being a possible amount which the Reconstruction Finance Corporation might be called on annually to advance on the mortgaged property confined to farms which could not find money elsewhere to pay taxes. So as a guess, as an estimate, which is only in very round numbers, I should say by this process of elimination we might be asking the Reconstruction Corporation for $50,000,000 a year. Senator BARKLEY. Let me ask you there, upon what theory of justice as between home owners, rural and urban, who are about to lose their homes for nonpayment of taxes, do you eliminate the urban? Mr. GRAY. No basis of justice, but merely a basis that so far as I know we can not get for the home-owner class which is delinquent even as approximate estimates as we have dared give for the farm class. Now, if that data can be supplied, Senator, what I have said about eliminating the home owner could be stricken from our part of the record. Senator BARKLEY. Of course we realize that agriculture is the one fundamental industry of the Nation and the world. And yet as a matter of social conditions and trying to preserve the morale of home owners, it is just as disastrous to see large groups of people in towns losing their homes and being put out on the street as it is to see them being put out on the farms. Mr. GRAY. That is true. I would not qualify that statement at all except as I have already qualified it, that when we ask a Federal body like the Reconstruction Finance Corporation to stand guarantor, or in a similar capacity to advance money, for delinquent taxes it is at least wise to get an approximate estimate as to how much is going to be required. Now, may I conclude, because I do not have any desire to go into statistics on this any further than I have--may I conclude by saying that in my use of the term "delinquent taxes" I mean those taxes which have become subject to penalty by various State laws, whether or not proceedings have been instituted for foreclosure in order to secure taxes. Senator STEIWER. Do you have any idea how many States require sale immediately upon delinquency, and how many require a period of time before sale may be had? Mr. GRAY. No; I can not give you that data without looking it up and putting it into the record later. I could not do that offhand. My thought is that in most of our States the mere fact of delinquency, that is of going over the date where penalties accrue, is not ordinarily followed by legal processes to collect. Take in my own State of Missouri, because I live here and I pay my taxes in Missouri, several times in the last 10 years I have become delinquent, the date being January 1. I have had to pay a penalty. But nobody ever thinks about starting procedure against my land in Missouri. Senator STEIWER. What period must elapse before they may start a procedure for foreclosure after delinquency? Mr. GRAY. I know of cases where farmers in my own county have been delinquent for a period of two years and no procedure started. Senator BARKLEY. The procedure is simply a tax sale at the courthouse door with nobody there but the sheriff or the tax collector? Mr. GRAY. Yes. Senator BARKLEY. And he simply reports to the county clerk or somebody else that the property was sold, and that is the end of it. And he can come in later and pay his tax, or it may go over a year and he comes in and pays them. Mr. GRAY. May I conclude by saying that we want to give general support to the bill by Senator Harrison, and we shall be glad later to give similar support to other bills of the general nature which seek to correct the farm mortgage condition. Senator Hull has one, and various Senators have, and some Members of the House have. Most of those bills will integrate somewhere or another in the bill which the farm organizations are formulating, and some of the bills which the Senators and Members of the House are presenting touch upon phases like Senator Harrison's bill which our bill of the farm organizations does not touch. Therefore, we are supporting the measure. Senator HARRISON. Mr. Englund merely wanted to make one statement. Just one word before the committee goes. Mr. ENGLUND. Mr. Bestor made a statement which was very helpful, with respect to a question propounded to me by the committee but which I was unable to answer at the time, relative to the probable amount of tax delinquency. You will recall I stated that after allowing for decline in taxes since 1929 approximately $185,000,000 of taxes were levied against mortgaged farms in 1932. Mr. Bestor's statement was that approximately one-third of the number of farms in the Federal land bank system were delinquent with respect to taxes or insurance premiums or both in the past year. And now assuming that this ratio of delinquency prevails, approximately, with respect to all mortgaged farms, which I think is not an unreasonable assumption, it would appear that the total amount of delinquent taxes for 1932 levied as of that year on mortgaged farms would approximate $60,000,000. That figure at least would be suggestive of the present situation. Mr. GRAY. That does not differ very materially with the estimate that I hazarded here a while ago of $50,000,000. Mr. ENGLUND. I do not think it does in fact. Senator STEIWER. Thank you very much, gentlemen. The hearing is adjourned. (Thereupon the hearing on S. 4995 was concluded at 12.20 p. m., Saturday, January 14, 1933.) 155934-33-3 REFINANCING PAST DUE OBLIGATIONS ON FARMS AND HOMES TUESDAY, JANUARY 31, 1933 UNITED STATES SENATE, BANKING AND CURRENCY, Washington, D. C. The subcommittee met, at 10.30 o'clock a. m., in the room of the Committee on Banking and Currency, Senate Office Building, Senator Duncan U. Fletcher (chairman of the subcommittee) presiding. Present: Senators Fletcher (chairman of the subcommittee), Goldsborough, Townsend, Walcott, Carey, Steiwer, Barkley, and Hull. Present also: Senator Robinson of Arkansas. Senator FLETCHER (chairman of the subcommittee). The subcommittee will please come to order. This is a combination of two subcommittees appointed to hold hearings beginning today on Senate bills 5350, 5390, 5391, 5450, and 5515. A hearing was held on Senator Harrison's bill, S. 4995, for loans to pay taxes on mortgaged property on January 14th and the record thereof will be incorporated as a part of the hearings by the enlarged subcommittee. It is very difficult to separate these different subjects. The witnesses will discuss them separately. I think we might as well take in the whole field, as far as we can, and let those who wish to discuss them or present their ideas about them express themselves on any of these bills or all of the bills. So we will proceed in that way, if there is no suggestion to the contrary. (The bills under consideration and referred to the subcommittee from time to time are here printed in the record in full as follows:) [S. 5350, Seventy-second Congress, second session] A BILL Providing for loans or advances by the Reconstruction Finance Corporation, through its regional credit corporations, to farm mortgagors to enable them to lower the rate of interest on their farm mortgage loans and to secure the postponement of the foreclosure of farm mortgages for a period of two years, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Reconstruction Finance Corporation is authorized and directed to make loans or advances through the agency of its regional agricultural credit corporations in the amount of $1,000,000,000, or so much thereof as may be deemed necessary, to farm mortgagors, to enable them for a period of two years from the date of the enactment of this act, (1) to make payment of interest on loans made to them and secured by their mortgages in an amount equal to the difference between the rate of interest agreed upon at the time such mortgage loans were made and 3 per centum per annum, and (2) to secure the postponement of foreclosures upon the mortgages securing such loans in each and every instance in which the farm mortgagor is exercising reasonable diligence to meet his accruing interest and installment payments, and (3) to make payment of any delinquent taxes accrued against his mortgaged premises and in |