Mr. LINDSEY. The act under which we operate authorizes the Governor to make loans to farmers who are unable to obtain credit from other sources.

Mr. GRANGER. I understand that.

Mr. LINDSEY. In which the security requirements will be on the crop that we are financing, or on the livestock to be fed. It is just a straight crop lien.

Mr. GRANGER. Why cannot the local banks handle a deal like that? Mr. LINDSEY. I am unable to answer that, sir. Some of them do. Mr. GRANGER. Do you limit your loans to these kinds of people? Mr. LINDSEY. Yes.

Mr. GRANGER. The record will show that it is limited to that type of borrower?

Mr. LINDSEY. Yes.

not.

Mr. POAGE. I want to get straight whether I understand you or As I understand what you said, you believe that we ought to consolidate all these lending agencies into one lending agency; is that right?

Mr. LINDSEY. Yes.

Mr. POAGE. As I understand it, you would consolidate both the direct Government lending agencies and the cooperative agencies into one?

Mr. LINDSEY. Under one common head.

Mr. POAGE. The production credit and the land bank, those agencies, with the exception of certain money that the Government has in their capital structure ostensibly at least as a result of the continuing emergency with the exception of that money, they are lending their own money; they are not lending Government money, are they? Mr. LINDSEY. That is right.

Mr. POAGE. But this agency that you represent, the Farm Security Administration and these regional credit corporations, they are lending Government money; is that right?

Mr. LINDSEY. That is right.

Mr. POAGE. It seems to me there is a considerable distinction between the two. It seems to me that there is an actual difference between an agency that lends Government money and an agency that belongs to farmers and lends farmers' money, and it seems to me there ought to be a different type of management for it, because if you are going to lend my money, it seems to me that you owe a responsibility to me. If I am a farmer and a member of one of these cooperatives, and if you lend my money, you owe responsibility to If you lend the Government's money, you owe a responsibility to the Government. Do you not think there is a difference in responsibility on the part of those lending Government money and those lending private money?

me.

Mr. LINDSEY. With your direct lending agency and your cooperative credit agency under one head, there is greater opportunity to coordinate the activities of the cooperative institutions and those of the direct lending agencies, such as is reflected in the statement that I made a moment ago, showing our relationship for the past 10 years with the production credit associations. We worked with the secretaries of the production credit associations to the extent of even clearing the applications for emergency crops and seed loans with the production credit associations so that they may determine whether

or not they can make a loan to that applicant or feel that he is eligible for a loan.

Mr. POAGE. I do not want to commit myself as to the future, but as far as I can see it would seem to me to be desirable to have an agency head such as the Farm Credit Administration having general charge over both branches of credit; but to consolidate the two into one agency would seem to me would be trying to consolidateMr. LINDSEY. Do you mean merge them?

Mr. POAGE. No.

Mr. LINDSEY. I am not saying that we should merge them. I am saying to put your direct lending and your cooperative lending under one common head.

Mr. PoAGE. That seems to me to be desirable. I do not raise any issue on that. We cannot determine that until such time as we have had time to go into the question of the whole farm credit, which I hope we will be able to do this fall. At the present time, as I understand it, we are concerned only with what we are going to do momentarily with the direct Government lending agencies. I understand you sympathize with the view that these agencies should be merged. That certainly is the view that is behind this Cooley bill.

Mr. FLANNAGAN. He is against merger.

Mr. LINDSEY. I am not speaking about merging the two. I am speaking about the two being placed under one common head.

Mr. POAGE. You say that they ought to be consolidated. Do you mean to say that we ought to retain all these various agencies and establish another layer on top of them? That, to my mind, has been the reason that we have made absolutely no progress in the last 12 years in abolishing anything, because we have never actually wiped out anything, that I know of. We have simply piled something on top of it and said we have a coordinator; now we have a system where, instead of having three independent agencies, we have the same three agencies, and then they have somebody on top of them. Then, sooner or later, we establish a supercoordinator to effect further coordination among the agencies and to create liaison and good will in public relations and that sort of thing. We do not, however, actually consolidate anything. Do you see any way in the world of wiping out this tremendous growth of bureaus without actually consolidating functions, management, and operations of some of these agencies?

Mr. COOLEY. If I understand what he has said, you are in favor of consolidating and merging all three governmental agencies which are engaged in making direct loans to farmers; that is, to put the emergency feed and seed loan, the rehabilitation loan, and the regional agricultural loans all together because they are direct loans in the making of which Government money is used; is that right? You favor that?

Mr. LINDSEY. If those agencies could be consolidated so that they would be placed under one common head who is also supervising the cooperating institutions, I would be in favor of it.

Mr. FLANNAGAN. And would be a separate loaning agency?

Mr. COOLEY. You are willing for them to lose their identity and come into one consolidated or merged organization, but you want to coordinate that with the cooperative lending agencies which are now being administered by the Farm Credit?

Mr. LINDSEY. That is right.

Mr. COOLEY. That will all head up under one agency.

Mr. FLANNAGAN. As to these direct loaning agencies, you want them to be merged and consolidated, or do you want to bring them in under the Farm Credit as independent agencies to operate more or less as they have in the past?

Mr. LINDSEY. No; that these three direct Government lending agencies we have been discussing be consolidated and placed under the supervision of the same persons who would supervise the cooperative credit institutions.

Mr. FLANNAGAN. Would you merge them just as we do in this bill? Mr. LINDSEY. Yes.

Mr. FLANNAGAN. Then you approve the merger as provided for and included in the Cooley bill?

Mr. LINDSEY. For all direct Government lending agencies to be placed under the Governor of the Farm Credit Administration so that these agencies could be properly coordinated, properly supervised, to avoid any overlapping and to avoid any duplication and to avoid any confusion that would exist at the district or county level.

Mr. FLANNAGAN. Then you approve the Cooley bill, but think that Farm Security should be brought in under Farm Credit; is that it? Mr. LINDSEY. Yes; consolidating the three agencies.

Mr. COOLEY. Would you mind pointing out to the committee the advantages which would accrue under a coordinated head; in other words, you mentioned something about the duplication and overlapping at the county level and the district level. If I understand it, in the Farm Credit Administration there is a very distinct and separate division which you are the head of, charged with the responsibility of administering these emergency crop and feed loans; is that right? Mr. LINDSEY. Yes.

Mr. COOLEY. If we took this Farmers' Loan Corporation which we are clothing with certain authority and certain powers and placing upon it certain restrictions and moved that into the Farm Credit structure, would it not take exactly the same place in the Farm Credit structure that is now being occupied by the Emergency Feed and Seed Loan and the R. A. C. C.; in other words, it would come in and take the place of those two agencies?

Mr. LINDSEY. That is right.

Mr. COOLEY. It would be coordinated under the head of the Governor?

Mr. LINDSEY. That is correct.

Mr. COOLEY. What is the advantage of that?

Mr. LINDSEY. I think the advantage of that, Mr. Cooley, is just like I outlined here a moment ago. We could then have coordination and avoidance of duplication. With the number and amount of loans that Seed Loans was making back in 1933 and 1934 and 1935, by working with the cooperative units, we were able, as our borrowers made progress, to shift them over to the cooperative institutions.

Mr. COOLEY. All right. In other words, what you do in these operations is you submit to the local P. C. A. a list of your borrowers and they select from that list anyone they want to make loans to?

Mr. LINDSEY. No, sir. Our supervisors sit down and discuss those applications with the secretaries of the associations.

Mr. COOLEY. Then the secretaries of the associations make such selections from that list?

Mr. LINDSEY. That is right.

Mr. COOLEY. Then, if we required in this bill here that all applicants for loans should first be rejected by the local P. C. A. and must first show they are unable to obtain that credit need from P. C. A., or local bank, or from any other source, would there be anything more you could do? That is as far as you go now with your emergency feed and seed loan?

Mr. LINDSEY. We are able to use the services of the employees of the other units and vice versa.

Mr. COOLEY. We have that in the bill.

Mr. LINDSEY. But with it separate and apart from the Farm Credit Administration.

Mr. COOLEY. What is the disadvantage about that? We have it in this bill if the Farmers' Home Corporation wants to designate a P. C. A. agent to do something, or even a local bank, or any other individual, they can do it. I think it is a right broad authorization to use the personnel of other agencies upon a compensating basis.

Mr. PACE. Mr. Lindsey, I want to get your views entirely clear. As I understand it, you endorse the provisions of the Cooley bill abolishing the Regional Agricultural Credit Corporation, abolishing the Farm Security Administration and abolishing the Emergency Seed and Feed Loan offices, and you are in favor of setting up a new agency, the Farmer's Home Corporation, to make direct loans, provided the new organization is put under Farm Credit. Am I right in that? Mr. LINDSEY. Yes.

Mr. PACE. Then, under such action what is your suggestion as to what would become of the personnel of your organization, Emergency Feed and Seed Loans?

Mr. LINDSEY. I assume that qualified personnel would be retained along with the qualified personnel of the other.

Mr. COOLEY. You would not need the personnel of all three agencies if you coordinated them and consolidated them.

Mr. LINDSEY. The question was what would you do with the personnel of all three agencies.

Mr. PACE. I asked you directly what you would do with the personnel of the Emergency Feed and Seed Loan Agency.

Mr. LINDSEY. We would keep the qualified personnel.

Mr. PACE.. Why?

Mr. LINDSEY. The bill provides, does it not, for the personnel of the three agencies to be transferred into the Farmers' Home Corporation?

Mr. PACE. I do not think it is quite that broad.

Mr. COOLEY. You do not have any complaint with our personnel provisions in this bill, do you?

Mr. LINDSEY. No. As I recall, Mr. Cooley, it transferred the personnel and assets of these three agencies into the Farmers' Home Corporation.

Mr. COOLEY. You have no complaint about the consolidation of the three agencies. You have no complaint about the section dealing with personnel, but you are merely suggesting that we go one step further and take the Farmers' Home Corporation and put it into the Farm Credit structure?

Mr. LINDSEY. In that way I believe you would get a much better and more efficient agricultural credit structure.

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Mr. COOLEY. As Mr. Poage said a moment ago, we are not going to argue that question with you because the committee is really going to look into the advisability of placing this agency where it belongs. Mr. PACE. Is your permanent personnel under civil service?

Mr. LINDSEY. Yes. All our personnel is under civil service with the exception of the temporary employees that are mentioned here and these war-service appointments that we are now receiving. Those 300 temporary persons that we use, Mr. Pace, would not be civil service.

Mr. PACE. The provision of the act is:

There shall be transferred to the Corporation such of the personnel available on the effective date of this act, for the discharge of the functions, powers, or duties abolished or transferred by this act, as the Secretary of Agriculture determines are qualified and necessary to carry out the activities of the Corporation. That language has your approval?

Mr. LINDSEY. Yes.

Mr. PACE. You think that is adequate to take care of your personnel?

Mr. LINDSEY. If it is under the supervision of the Governor of the Farm Credit Administration.

Mr. PACE. It would not be in this bill. This would be under the supervision of the Secretary of Agriculture, and of course under him the Administrator of the new Farmers' Home Corporation.

Mr. LINDSEY. As I review the language there, it would take care of that.

Mr. GRANGER. It seems to me that we ought to get the record straight and be fair in this matter. The chairman indicates that we are making this consolidation for the purpose of weeding out some of the personnel of these agencies. Who is it going to be?

Mr. COOLEY. Those that are not qualified. The act says that he shall take those qualified and necessary.

Mr. PACE. Have you anybody in your organization now that is not qualified? Do you have anybody that you consider not qualified? Mr. LINDSEY. There may be a number of employees down at the county level or in the office that are not qualified, I do not know, but by and large most all our field men are qualified and most all of the employees in the regional offices are qualified for the positions in which they are employed.

Mr. PACE. You figure Mr. Hancock would have the same view about his employees?

Mr. COOLEY. I do not know why you would have any right to make that statement.

Mr. FLANNAGAN. Mr. Hancock has already gotten rid of a pretty large percentage of the old Farm Security personnel.

Mr. PACE. That is why I said I assumed those he had were qualified. Mr. Hancock has shown that since he has been in office he has dispensed with the services of several thousand.

Mr. FLANNAGAN. Mr. Pace, as a practical proposition, if this consolidation is brought about the Administrator will use common sense as to whom he is going to weed out, and he will weed out those wild theorists and put this thing on a common sense, workable basis. That is what this legislation is for, as far as I am concerned, and that is what it contemplates.