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Mr. SHORT. It is desirable, however, to preserve the machinery that is on the statute books and permit its gearing in at a time when land values are more normal than at present. That refers, of course, to the tenant purchase program.

We strongly oppose the amendment of the Bankhead-Jones Tenant Act as proposed in section 5 of title I, on page 41, which would remove the present limitation of 5 percent for administrative expenses, and leave no limitation whatever on administrative expenses. We believe the present limitation in the act should be retained.

Seventeenth. What we had said above regarding land inflation and the operation of the tenant purchase program is certainly applicable to the establishment of a farm tenant mortgage insurance program at this time. The plan appears to us to have many and serious weaknesses. We very seriously doubt that a one-half of 1 percent charge for servicing is an adequate premium for carrying the risks incident to the insurance of 90 percent loans made at present land values. This program could result in encouraging private lenders to make $50,000,000 worth of credit available to prospective borrowers on very liberal terms; and thereby add that much more impetus to the inflationary trend in land values. I should like to state that we very strongly urge the elimination of the insurance provision.

Eighteenth. Section 8, page 53, is very drastic, a dangerous grant of discretionary power, and impractical of operation in too many instances. It would arouse local antagonisms in many instances. It is entirely too inclusive in its scope. It would include not only farm credit agencies, but any agencies and services under the supervision of the Secretary of Agriculture and the Governor of the Farm Credit Administration. For example, it would include such agencies and services as the national farm loan associations, production credit associations, direct lending agencies, Soil Conservation Service, Agricultural Adjustment Agency, county agricultural agents, home extension agents, 4-H Club leaders, R. E. A., and so forth.

It should be taken into consideration that many of the agencies referred to above do not have territories that coincide, and therefore it would be very difficult and inefficient in most instances to have the same central office.

Therefore, in conclusion, we wish to recommend that enactment of this legislation be deferred until such time as a complete study can be made of the activities of the Farm Credit Administration, after which a bill should be drafted, first, to consolidate the direct lending agencies mentioned in this bill, second, to strengthen the cooperative features of the agencies now administered by the Farm Credit Administration, and, third, to place the administration of both of these programs under a bipartisan board that would have staggered terms and be representative of the various agricultural regions of the country, whose functions would be to determine the over-all credit policies of both the direct lending agency and the separate divisions of the cooperative farm credit system in accordance with laws passed by the Congress, and to employ the necessary personnel to carry out the administrative responsibilities of both types of credit in accordance with such laws.

In collaboration with other farm organizations, the American Farm Bureau Federation, as a result of more than a year's study, has developed definite recommendations, which we will be glad to present

to this committee at any time to assist it in this undertaking. We pledge to this committee our full cooperation in this task.

Mr. FLANNAGAN. Mr. Short, what sized farm do you operate?
Mr. SHORT. I have a little over 2,600 acres.
Mr. FLANNAGAN. What are the principal crops you raise?
Mr. Short. Rice, some cotton, cattle, livestock, feed crops.

Mr. FLANNAGAN. How many tenants do you have on your 2,600 acres?

Mr. SHORT. I have 21 houses on the place, and they are all full, fortunately. I might say that much of this is very cheap land. The first part of it that I bought back after the last World War, was not so cheap.

Mr. FLANNAGAN. How long have you been connected with the Farm Bureau?

Mr. SHORT. Since 1936.
Mr. FLANNAGAN. You are president of the Arkansas Farm Bureau?
Mr. SHORT. Yes.
Mr. FLANNAGAN. How long have you been president?
Mr. SHORT. Since the fall of 1936.
Mr. FLANNAGAN. You went in as president?

Mr. SHORT. No; I went in shortly before that, but became president that fall. Mr. FLANNAGAN. How soon after you became a member? Mr. SHORT. About 6 months. Mr. FLANNAGAN. Now, Mr. Pace. Mr. PACE. Mr. Short, I am sorely disappointed with your paragraph 17, because you again, without any justification at all, attack the farm tenant purchase and the insured mortgage. You deliberately use language that would be most misleading when you say 90 percent of the present land values, for the bill says directly to the contrary. Why you come to the committee with a criticism of that type, when the bill expressly says that these loans must be made, not on present values, but on normal values over a long period of years?

Mr. SHORT. Well, we have in mind more or less the operation of that part of the program up to now, Congressman Pace. I know in my area land has been purchased-

Mr. PACE. You could not have had that in mind. You have in mind the bill that you are criticizing.

Mr. Short. But the bill does not say what factors should be taken into consideration.

Mr. Pace. It certainly does. I will read it to you again, in the hope that it will impress you:

The committee shall also certify to the Corporation the amount which the committee finds is the fair and reasonable value of the farm based upon its normal earning capacity.

Then, elsewhere it states that in no event can a loan be made in excess of that amount.

Mr. SHORT. You have not defined "normal earning capacity.” Mr. PACE. Why have you not made that criticism instead of saying that it is based upon inflated values? There is a definition of normal values. It has been in operation for years. There is no doubt about what that language means. If you search the practices that have been carried on for the last 10 years, you can very definitely

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find what "normal values” means. Thousands and thousands of loans have been made on that basis.

Now, Mr. Short, you come to this committee and attack loose farm credit; you defend the right of private enterprise.

This committee comes here with a provision on insured mortgages for two purposes. One is in order to set up a means whereby private capital and the money that is now lying idle may be employed in farm tenant transactions, rather than Government capital. We further provide that instead of a 100 percent loan, which you approve in your statement, it shall be only a 90 percent loan. Then, how can you consistently follow that by saying that the American Farm Bureau Federation asks that this provision be stricken from the bill?

Mr. SHORT. In giving our approval, Congressman Pace, to the 100 percent loan, we did so when land values were really low.

Mr. PACE. No; in the statement you have just made, at the top of page 11, you say it is desirable to preserve the machinery that is on the statute books.

Mr. SHORT. Yes.

Mr. PACE. With reference to farm tenant purchase loans, which are 100 percent loans. Then, you say in paragraph 17 that you are opposed to the insured mortgages, which are to use private capital instead of Government money. Are you not in favor of that?

Mr. SHORT. No. I do not think the Federal Government should ever come out and guarantee the loan on farms to any commercial lender—to me as an individual, to any commercial bank, or to anybody else.

Mr. Pace. So you are indicting the Federal Housing Administration's entire program; is that right? Mr. SHORT. But there is a lot of difference. Mr. Pace. What is the difference? Mr. Short. You are lending on a home in the city, Mr. PACE. You want to help the city folks, not the farmers?

Mr. Short. No, no. Let me make this point. When you lend on a home in a city, you are lending only on a man's place of residence, When you lend on a farm, you are taking a mortgage on that man's income; you are taking a mortgage on that man's job. It is more than a home; it is a place of business. There is a lot of difference.

Mr. PACE. I do not get the difference.

Mr. SHORT. The difference is that you are taking a mortgage on his income. You are taking a mortgage on his job.

Mr. PACE. But you are providing for him a means to make an income. You certainly are not doing that when you lend on a home, In other words, you would rather have the Government lend a man 100 percent than have the Government guarantee 90 percent; is that right?

Mr. SHORT. I certainly do not want the Government in the farmmortgage insurance business. I believe that that would be a very, very bad thing in the long-time best interests of agriculture. One of the things that got farmers into trouble, Mr. Pace, was the encouragement of financial institutions in rural America. I was asked not long ago why I went from Iowa to Arkansas. I went from Iowa to Arkansas because my banker wanted me to go in partnership with him and buy a farm at $400 an acre.

Mr. PACE. With the present condition of the United States Treasury, you come before this committee and advocate that we continue to appropriate funds out of the United States Treasury, increasing the national debt, in order to make a 100-percent loan, as against letting private capital employ its own money at 90 percent with Government insurance; is that your position?

Mr. SHORT. Yes, sir.
Mr. Pace. I think it is a bad one.

Mr. FLANNAGAN. I am going to suspend the hearing at 10 minutes of 12 in order to take up the matter of the extension of the land bank. If you will conclude your questioning in 3 minutes, Mr. Cooley, I will recognize you.

Mr. COOLEY. Mr. Short, do I understand that you are in favor of immediate consolidation of farm-lending agencies?

Mr. SHORT. Yes.

Mr. COOLEY. You are likewise in favor of prohibiting the socialistic lending policies which have been sponsored by the Farm Security Administration in the past?

Mr. SHORT. Yes.
Mr. COOLEY. You are likewise against 99-year leases?
Mr. SHORT. Yes.

Mr. COOLEY. You are likewise against resettlement projects and land-leasing and land-purchasing projects?

Mr. SHORT. Yes.
Mr. COOLEY. You feel that they should all be liquidated?
Mr. SHORT. Yes.

Mr. COOLEY. And that we should come back to the American position on land policy?

Mr. SHORT. Yes.
Mr. Cooley. That is, fee-simple ownership of land?
Mr. SHORT. That is right.

Mr. COOLEY. This bill provides for liquidation as expeditiously as possible of all those objectionable things I have just mentioned.

Mr. SHORT. I think you should be highly commended for those features.

Mr. COOLEY. You are in favor of the consolidation of the direct lending agencies of the Government?

Mr. SHORT. That is right.

Mr. COOLEY. This bill provides for the consolidation of all the vital functions of three direct lending agencies with which the bill deals, but you feel that after that has been accomplished, that is only one step in the final picture; you contemplate a consolidation of those three lending agencies coordinated under the Farm Credit Administration, which also administers the functions of cooperating lending agencies.

Mr. Short. That is right.

Mr. COOLEY. Just because this bill does not go all the way toward accomplishing everything you would like it to accomplish, why is it that you cannot support this measure as a step in the right direction, with possibly the coordination of the direct lending agencies and the cooperative lending agencies at a later date, after the Congress has had an opportunity to determine whether or not it should be placed under the Farm Credit Administration or should be left as an independent agency in the Department of Agriculture?

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Mr. SHORT. Under the provisions of your bill, you are setting up a gigantic institution.

Mr. COOLEY. Why is it gigantic?

Mr. SHORT. You cannot answer this question without relating to certain other features of the bill. But we do not consider it too great a job to go into those other features of the bill; we are prepared now to make recommendations. :

Mr. COOLEY. I understand that you are prepared to make recommendations concerning the entire farm picture, but our subcommittee was authorized by Congress to deal with only one thing, and that was the Farm Security Administration. Of course, this committee has authority to pass such legislation as it may deem proper, but I do not believe that this committee can deal intelligently with the entire subject of farm credit without further study.

This bill not only provides for a liquidation of the objectionable projects, but it provides for a continuation of the tenant purchase program, which you say you favor. It provides for loans in lieu of rural rehabilitation loans, which you also favor. Just because it is colossal, it does not mean that it is going to be abused at all, does it?

Mr. SHORT. You would certainly have to rewrite your bill in the light of the experience and testimony before your committee. You certainly ought to put a lot of safeguards in there, because it would be much more difficult for the Congress--

Mr. COOLEY. We might eliminate the revolving fund feature and make the bill dependent upon annual appropriations from Congress. That might still be done. I am not going to argue about that. Mr. SHORT. It certainly would.

Mr. FLANNAGAN. Further hearings on the farm owners' loan bill will be resumed tomorrow morning at 10 o'clock.

Mr. Cooley. You will be here, Mr. Short?
Mr. SHORT. Yes.

(At 11:55 a. m., an adjournment was taken until Thursday, April 20, 1944, at 10 a. m.)

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