STANFORD HEARINGS BEFORE A SUBCOMMITTEE OF THE XORARY JUL 1940 SUMENT DIV. COMMITTEE ON BANKING AND CURRENCY UNITED STATES SENATE SEVENTY-SIXTH CONGRESS THIRD SESSION ON S. 3509 A BILL TO REDUCE PERMANENTLY THE INTEREST RATES ON THE TAKING OF DEFICIENCY JUDGMENTS; MAY 7, 8, 9, 10, 16, 17, AND JUNE 7, 1940 Printed for the use of the Committee on Banking and Currency COMMITTEE ON BANKING AND CURRENCY ROBERT F. WAGNER, New York, Chairman CARTER GLASS, Virginia ALBEN W. BARKLEY, Kentucky FRANCIS T. MALONEY, Connecticut WILLIAM H. SMATHERS, New Jersey SHERIDAN DOWNEY, California JOHN G. TOWNSEND, JR., Delaware LYNN J. FRAZIER, North Dakota CHARLES W. TOBEY, New Hampshire JOHN A. DANAHER, Connecticut ROBERT A. TAFT, Ohio PHILIP LEVY, Clerk SUBCOMMITTEE ON AGRICULTURAL FINANCE, FARM MORTGAGES, AND RELATED MATTERS JAMES F. BYRNES, Chairman ALBEN W. BARKLEY, Kentucky II LYNN J. FRAZIER, North Dakota CHARLES W. TOBEY, New Hampshire CONTENTS Black, Hon. Albert G., Governor of the Farm Credit Administration, Cheek, Tom W., member of the National Board of Farmers' Union and Doak, W. B., representing the National Farm Loan Association, Goss, Albert S., Chevy Chase, Md... 187 189 153 134 195, 217 Hodgkin, George B., representing National Council of Farmer Coop- 241 Mayer, E. S., representing National Wool Growers Association, San 193 Mylander, Charles H., vice president of the Huntington National 259 Taber, L. J., master, National Grange. 137 Wallace, Hon. Henry A., Secretary of Agriculture, Washington, D. C. 269 EXHIBITS Copy of bill, S. 3509 Letter addressed to Hon. James F. Byrnes by Secretary Wallace in reply Memorandum on centralization of authority in Governor of Farm Credit Administration under provisions of S. 3509 Supplemental statement submitted by Senator La Follette on comparative costs of interest subsidies under present law, under H. R. 8450 (as it passed the House on March 18), under H. R. 8748 in its present form, and under H. R. 8748 if amended to fix the rate of interest payable by Information requested by Senator Miller from Farm Credit Adminis- Letter addressed to Hon. Robert F. Wagner by Mr. L. J. Taber, master, National Grange, Columbus, Ohio- Statement submitted by Farmers Educational and Cooperative Union of America, presenting information requested by Senator Miller - Statement submitted by Dr. Dickinson relative to estimated amount of Federal land-bank and land-bank Commissioner loan proceeds used for refinancing, May 1, 1933, to December 31, 1939__ Letter addressed to the Members of Congress entitled "Debunking the charges relative to the destruction of the Farm Credit Administration".__ Letter addressed to Senator Miller by Ezra T. Benson, executive secretary, National Council of Farmer Cooperatives, Washington, D. C., relative to major organizations which constitute the membership of council... Statement of A. L. M. Wiggins, chairman of the committee on Federal legislation, American Bankers Association, and president of the Bank Copy of amended bill and report of Department of Agriculture 1 36 37 FARM CREDIT ACT OF 1940 TUESDAY, MAY 7, 1940 UNITED STATES SENATE, SUBCOMMITTEE OF COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The Subcommittee on Agricultural Finance, Farm Mortgages, and Related Matters met at 10 a. m., pursuant to call, in room 310, Senate Office Building, Senator James F. Byrnes, chairman of the subcommittee, presiding. Present: Senators Byrnes (chairman), Bankhead, Hughes, Miller, Clark of Idaho, and Frazier. Present also: Senators Wheeler and La Follette. Senator BYRNES (chairman of the subcommittee). The subcommittee will come to order. This subcommittee of the Committee on Banking and Currency has under consideration S. 3509. The bill is as follows: [S. 35C9, 76th Cong., 3d sess.] A BILL To reduce permanently the interest rates on Federal land-bank and Land Bank Commissioner loans; to relieve Federal land bank borrowers of stock liability; to place the Federal land banks on a selfsupporting basis; to refund and guarantee the bonds of such banks; to increase the functions and responsibilities of national farm-loan associations and county committees of farmers; to provide for the adjustment and refinancing of farm-mortgage debts; to limit the institution of foreclosure proceedings and the taking of deficiency judgments; and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Farm Credit Act of 1940." INTEREST RATES SEC. 2. (a) The rate of interest payable on any loan made prior to the date of enactment of this Act, or made on or after such date and prior to June 30, 1946, by any Federal land bank under the Federal Farm Loan Act, as amended, or by the Land Bank Commissioner on behalf of the Federal Farm Mortgage Corporation, or otherwise, under the Emergency Farm Mortgage Act of 1933, as amended, shall be 3 per centum per annum for all interest payable on installment dates occurring after the date of enactment of this Act; and the interest payable with respect to any such loans made during any calendar quarter after June 30, 1946, shall be at a rate to be fixed for such quarter by the Governor of the Farm Credit Administration (hereinafter referred to as the "Governor"), with the approval of the Secretary of the Treasury, which may reasonably be expected to reimburse the Federal land bank, or such Corporation, as the case may be, for the cost to it of the capital required for such loans, plus 1 per centum per annum for administration and reserves against losses. (b) Notwithstanding the provisions of paragraph Ninth of section 12 of the Federal Farm Loan Act, as amended, the rate of interest payable after the date of enactment of this Act by any borrower from any Federal land bank or from the Federal Farm Mortgage Corporation on defaulted payments, or on taxes, liens, judgments, or assessments not paid by the borrower when due and paid by the mortgagee, skall be the same as the rate of interest payable by such borrower under the provisions of subsection (a) of this section. (c) If the average rate of interest estimated by the Governor to be payable during any calendar quarter prior to July 1, 1946, by any such bank, or by such |