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Mr. COFFEE. Then how many steps would we have to go before the Federal Government would control all loans to all business, agriculture, industry, and individuals ?

Mr. SHORT. Well, that is one of the primary objections we have to this bill, because it does permit that. With all of the authority vested here, if it were under improper administration, it might lead to just what you are talking about.

Mr. COFFEE. State capitalism?
Mr. SHORT. That is right.

Mr. COFFEE. I wanted to bring that matter out in the open. We talk around the edges, but we do not come right out any say what we think, sometimes.

The CHAIRMAN. We desire to thank you, Mr. Short.

Mr. SHORT. There is just one thing, Mr. Chairman, that I would like to call attention to that in this bill, in the refinancing, the calling or refinancing of bonds now in Government hands. You referred yesterday to this, that it would not have any effect on the production credit system set-up. It would materially affect the production credit corporation unless some provision were made in the bill, because those institutions have investments in Federal landbank bonds, and it would materially affect them, and I would like to state for the record, or ask the chairman of this committee about that.

The CHAIRMAN. Of course, it would not have any adverse effect, because that would not injure the bonds that they have. That would insure that they would be paid. It would not have any adverse effect on them.

Mr. SHORT. It would not, so far as having the bonds insured are concerned, but it would affect their income.

The CHAIRMAN. It might have that effect.
Mr. SHORT. I wish you would check that.
The CHAIRMAN. We desire to thank you, Mr. Short.
Mr. SHORT. Thank you.

The CHAIRMAN. Judge Miller, is there someone else here from your organization that you want us to hear?

Mr. MILLER. Mr. Chairman, Mr. Benson, executive secretary of the National Council of Farmer Cooperatives would like to make a statement, but unfortunately, however, he was the first witness to be called before another committee on another bill this morning. I think that his statement will be comparatively short.

The CHAIRMAN. Mr. Benson has come in.
Mr. MILLER. Mr. Benson is now here.

The CHAIRMAN. We will be glad to hear you, Mr. Benson. STATEMENT OF EZRA T. BENSON, EXECUTIVE SECRETARY,

NATIONAL COUNCIL OF FARMER COOPERATIVES, WASHINGTON, D. C.

Mr. BENSON. My name is Ezra T. Benson. I am executive secretary of the National Council of Farmer Cooperatives, 1731 I Street NW., Washington, D. C.

The National Council of Farmer Cooperatives is an organization composed of farmer-owned and farmer-controlled associations distributed in 48 States and representing over 1,500,000 farmers.

The organization operates on the basis of unanimous consent of its 13 voting commodity divisions.

The council has not established a policy with reference to all phases of the pending bill, H. R. 8748. However, from the very inception of legislation leading to the establishment of the present Farm Credit Administration, the member organization of the Council have been vitally interested and have played an active part.

Commencing with the year 1934, and since adhered to, the policy of this council has been to urge (1) the maintenance of the independent status of the Farm Credit Administration, (2) concerning itself with financing by cooperative means, the permanent and not temporary or emergency needs of agriculture, and (3), with a progressively increased measure of farmer control. Such policies have been reaffirmed time and time again by our council delegate meetings, consisting of delegates from coast to coast, the council's latest statement being that of its executive committee on March 8, 1940.

In obedience to these instructions we must now oppose the provisions this bill, H. R. 8748, the effect of which would be to destroy or seriously impair the cooperative features of the respective units of the Federal Land Bank System.

May we also make it clear that in taking this position we are not opposing lower interest rates or any other sound means of aiding farmers now financially embarrassed, but urge that this be done in a way that will not destroy or seriously impair the cooperative credit system that for years farmers have sought, with the assistance of the Government, to build.

After some effort our executive committee is now scheduled to meet on Tuesday of next week, April 9, at which time other provisions of H. R. 8748 will receive our careful consideration.

We respect fully request that we be given an opportunity, following our executive committee meeting on April 9, to appear before this committee or be permitted to file a statement on H. R. 8748 embodying any action our executive committee may see fit to take.

The CHAIRMAN. Without objection, you are given that privilege. We desire to thank you.

Mr. BENSON. Thank you.

Mr. ANDRESEN. Let me ask you if you know any farm organization in the country which is for this bill, H. R. 8748.

Mr. BENSON. I have not been able to attend all of the meetings of this committee, but I understand that one farm organization did appear in support of it.

Mr. ANDRESEN. Except that one, do you know of any other organization? Mr. BENSON. I do not, Mr. Congressman.

Mr. FULMER. Did I understand you to say that you had an association in South Carolina?

Mr. BENSON. I beg your pardon?
Mr. FULMER. Do you have an association in South Carolina?

Mr. BENSON. Yes, we have a State-wide cotton cooperative in South Carolina that is a member of this council.

Mr. FULMER. They have about 3 or 4 percent of the farmers in that State.

Mr. BENSON. I could not give you the exact farmer membership. I have it in the office.

The CHAIRMAN. We desire to thank you, Mr. Benson.
Mr. BENSON. Thank you.

STATEMENT OF FRANK S. BOICE, VICE PRESIDENT AND CHAIR

MAN OF THE LEGISLATIVE COMMITTEE OF THE AMERICAN NATIONAL LIVE STOCK ASSOCIATION

The CHAIRMAN. Mr. Frank S. Boice, vice president of the American National Live Stock Association desires to be heard very briefly.

Mr. BoicE. Mr. Chairman, my name is Frank S. Boice and I reside at the Empire Ranch, Sonoita, Ariz. I am vice president and chairman of the legislative committee of the American National Live Stock Association which has its headquarters at Denver, Colo. This organization represents primarily the range cattle producers of the western part of this country although we have many cattle feeders among our members. We have affiliated with us over 100 State, regional, and local livestock associations which make up our principal membership. I have been for 7 years and am now an appointed director of the Farm Credit Board of Berkeley.

I am here by authorization of our legislative committee to oppose certain provisions of H. R. 8748, on which you are holding hearings today.

When we look back to the old, inadequate method of financing the range livestock industry and then trace through the development of the present method, beginning in 1917 with the establishment of the Federal land banks, followed in 1923 with the Federal intermediate credit banks and culminating in 1933 with the establishment of the Farm Credit Administration, it is easy to understand why the livestock producers are deeply appreciative of and loyal to the Farm Credit Administration. Under the old system our loans were called whenever there was trouble in the financial centers, not because the loans were sour, but because the commercial banks from whom we borrowed, were faced with shrinking deposits and had to have the money. This would completely demoralize the entire industry. Twice within recent years Congress enacted emergency legislation to relieve our financial distress; in the early twenties with the creation of the War Finance Corporation and again in the early thirties with the Regional Agricultural Credit Corporation. There should never again be a need for this kind of emergency legislation, if the Farm Credit Administration continues on a sound financial basis so that money is available to it in the financial centers of the Nation.

Stockmen want a continuation of the sound, adequate, dependable source of credit which has been made available to them by the Farm Credit Administration in the past.

If it is to be adequate at reasonable cost it must be sound so as to retain the confidence of the investing public which buys the bonds and debentures of the system. This, we think, is a self-evident fact. If it is to remain dependable, the cooperative features, whereby the borrower has a financial interest in the system, must be retained. In 1929 the capital originally put into the land banks by the Federal Government had been almost completely retired; the farmers and stockmen practically owned them. Due to the emergency of the early thirties there is now a large amount of Federal funds in the capital structure of the Farm Credit Administration. But we who use farm credit have not lost sight of the desirability, the necessity even, of retiring this Government capital, and we look forward hopefully to the day when we will again own the system. The lending of Government money to farmers and stockmen during the emergencies of the past has served us well during the emergencies but as a permanent source of credit it is not dependable. It is always subject to the ever-changing attitude of Congress toward agriculture.

The bill under consideration here today destroys the cooperative features of the land banks. It provides for the guaranty by the Government of the land-bank bonds, for the retirement of the financial interest of the borrowers in the land-bank system, and it fixes the rate of interest that the borrowers shall pay. When that is done, the banks are no longer cooperative institutions. If an institution is truly cooperative, the members share in the benefits and they must also share in the liabilities and the risks. Charging a $10 membership fee will not make a cooperative.

As citizens and taxpayers, we are very much disturbed by the proposal that land-bank bonds be guaranteed by the Government. In effect this makes the land banks the lenders of Government money. If those who wrote this legislation are sincere in their desire to continue the land banks as sound credit institutions, why the guaranty of the bonds? They sell readily and at low interest rates now. It seems to us that the authors of this bill anticipate, as we do, that the changes proposed in the land-bank set-up will make for soft and easy credit, that this will make the sale of unguaranteed land-bank bonds difficult even at high interest rate, and that the Government will ultimately stand the loss occasioned by unwise lending to farmers.

It is also important to remember that this bill, if it becomes law, will be administered by a farm credit administration under the control of the Department of Agriculture which is to a considerable degree concerned with the granting of subsidy to farmers. It is so easy to extend relief by easing up on collections that we are convinced that the Department of Agriculture will not long resist the temptation to grant relief through a credit institution which it controls. Credit and relief cannot be mixed in the same institution; when tried it inevitably becomes all relief.

I know that this committee is interested only in legislation which will be of real benefit to the farmers and stockmen of the country. We, therefore, make the following suggestions. First, keep the land banks and the entire farm credit system sound cooperative credit institutions and if there is to be relief for those farmers who are overburdened with debt let it be clean cut, administered by an agency outside the farm credit which is set up for that purpose alone; and, secondly, restore the Farm Credit Administration to its former status as an independent agency under a nonpartisan board.

I thank you.
The CHAIRMAN. We desire to htank you, Mr. Boice.

Mr. ANDRESEN. Just one question. I understand from your statement that you are somewhat fearful that the credit system may become a political agency.

way?

Mr. Boice. I am; yes, sir.
Mr. ANDRESEN. That is all.

The CHAIRMAN. Do you not think it would be less of a political agency to have it under one department than to have it under the President direct? If it were under the President it would be under an elective official, and if it is under the Department of Agriculture it is under an officer appointed by the President. Why would one be more political than the other?

Mr. BOICE. Well, what we have in mind, of course, is the so-called Gillette bill, which puts it under a board of long-term appointees.

The CHAIRMAN. In other words, you want to change the present system?

Mr. BOICE. That is right. The CHAIRMAN. Even from what it was before? Mr. Boice. What it was before, I think, is preferable; but the board, I believe, is better.

The CHAIRMAN. Now, you say if you are going to have it, you want a credit system which is to remain on its own, and that if you are going to make any donations have them in the form of charity or relief. What about this $500,000,000 that the Government has put into the land-bank system up to the present time? You think that that was a mistake; do you?

Mr. Boice. No, sir; I'think that it was necessary in an emergency.

The CHAIRMAN. What is the difference between taking $500,000,000 and putting it in the present system and having it done in a different

Mr. BOICE. Well, Mr. Chairman, I look at the capital contributions to this system as an effort on the part of the Government to establish a system for the farmers which they will ultimately control. I look at it as a partnership between the Government and the farmers, with the Government hoping and the farmers hoping that the Government will finally be out and that they will control the system under proper supervision,

The CHAIRMAN. They have not made so much progress along that line.

Mr. FERGUSON. Mr. Chairman.

The CHAIRMAN. There is one further question that I would like to ask there. You realize that the Government, having put this money into the system, that it is not going to let the bonds go to default? The Government, in other words, is behind these land-bank issues.

Mr. BOICE. Morally; yes.
The CHAIRMAN. Do you not think that is true!
Mr. BOICE. I think that is true.

The CHAIRMAN. Do you not think that it would be wise to formally guarantee them and save the Government that difference?

Mr. BOICE. No, sir.
The CHAIRMAN. Why?
Mr. BOICE. Well, it is a contingent liability on the Government.

The CHAIRMAN. Well, there is just as much contingent liability here if we do not do it. And, we do the same thing.

Mr. BOICE. I do not look at it that way.

The CHAIRMAN. If the Government is going to pay any losses that the land banks have. I am talking about the land banks. I am not

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