I am discussing the problems we are dealing with here. They are very difficult problems, and we are carrying a big responsibility.

Senator FLETCHER. I think it would be fair to the Columbia Bank, since you have mentioned that several times, to say that the loss there was occasioned by forgeries and other rascality on the part of people who headed the organization that borrowed from the bank. Was not that true?

Mr. MEYER. But that does not alter the fact that a large loss has been taken.

Senator FLETCHER. It is a fact also, is it not, that that old board applied from time to time for appropriations to get more appraisers to examine property

Mr. MEYER. I do not know what the old board did or did not do. I told you I was not going to dig into the past. I told you also at, the last meeting that you had spent a lot of money and apparently had not gotten its full worth; as a result, it will now be necessary to spend more.

Senator FLETCHER. I did not object to that. I voted for every appropriation that the old board asked for.

Mr. MEYER. You made remarks on the floor of the Senate about the amount of money we are spending. I just want to tell you that for the appropriations you made and the money that was spent in the past you did not get your money's worth. I intend, as long as I am there, to see that you do get your money's worth.

Senator FLETCHER. The last deficiency bill voted by the last Congress carried an allowance, if I remember, of $15,000 for appraisal examiners. You have now asked that $85,000 be carried in the bill. Mr. MEYER. Yes.

Senator FLETCHER. That was the situation.

Mr. MEYER. Yes; but you made remarks about it on the floor of the Senate that would indicate your opposition to it.

I will just say this to you: I am willing for you gentlemen to satisfy yourselves of the justice and necessity of our requests in any way you like; but we have a very big and heavy responsibility; and at a certain point I want to know whether I am going to be confirmed or not.

Senator NORBECK. I want to say that we will call another meeting of the committee for the purpose of deciding what this meeting should do; and we will call it just as soon as we can get it together.

Mr. MEYER. We are being hampered in our work by this situation. Men we want to employ are not obtainable until they know whether their employment is likely to be permanent, whether they are going to stay on for a few weeks or whether we are all to be rejected.

As a specific instance, after a great deal of effort we had almost persuaded a man to accept a position at only $7,500 a man eminently fitted for the work in view. Then the question of the permanency of the employment came up. He has a family and he finally decided that he would not take the position until he could get some assurance as to its permanency. Just to-day he has accepted another position at $15,000 a year.

Senator NORBECK. The hour of adjournment, 5 o'clock, has been reached; in fact, it is after 5. The committee will stand adjourned subject to the call of the chairman.

(Thereupon, at 5.05 o'clock p. m., the committee adjourned.)

CONFIRMATION OF MEMBERS OF THE FEDERAL FARM

LOAN BOARD

THURSDAY, JANUARY 26, 1928

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met, pursuant to adjournment, at 10.30, a quorum being present. The committee was convened to order by the chairman.

Present: Messrs. Norbeck (presiding), Edge, Phipps, Frazier, Pine, Brookhart, Steiwer, Fletcher, Glass, Wagner, and Tydings.

Senator FLETCHER. For insertion in the record of hearings, I desire to offer certain additional letters and documents; two letters bearing on this subject from F. W. Huddleson, president of Fairfax Federal Farm Loan Association, of Fairfax, Va., reading as follows:

Hon. D. U. FLETCHER,

OFFICE OF THE TREASURER, Fairfax County, Va., January 19, 1928.

United States Senate, Washington, D. C.

MY DEAR MR. FLETCHER: I hope you will pardon this intrusion on your time, but I have been recently elected president of the Federal Farm Loan Association at this place and I am very desirous of becoming more familiar with the laws governing the Federal farm loan act. I am therefore asking if you will be kind enough to have sent to me copy of the Federal farm loan act and copy of the laws or by-laws governing same.

I have been very much impressed with the shocking attempt of the Secretary of the Treasury to wrench the control of this system from the hands of the farmer and place it under the control of New York financiers, and I sincerely hope that the appointment of Mr. Meyer and his two financial associates will be not approved by the Senate.

It certainly seems unfair that when the farmers own 99 per cent of the stock of this institution that they are to be deprived of the right to name its directors to manage same and that they must be selected to represent big business rather than the farmer.

There are several other features which are practiced by the Baltimore Land Bank that are detrimental to the interests of the farmer, or rather the members of this association, but when we appeal to them for a redress of grievances we are confronted with the statement "that the rules and regulations governing the Federal land bank justify their actions," hence you will understand why I would like to have a copy of the rules and regulations or by-laws governing the same, as we do not wish to be placed in the position of claiming or demanding anything to which we are not justly entitled, but do not wish to be silenced by mere statements of the authorities, unless we may know that they are within their rights.

Whatever expense there may be incident to the procuring this desired information will be gladly met if you will let me know the amount.

I have taken the liberty of appealing to you for this favor because I have known for some time that you have stood loyally for the defense of the farmers' rights and if you are not in a position to secure the information for me will

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you do me the kindness to put me in communication with some one who can supply me?

Thanking you in advance for the favor and hoping that I may at some time be able to reciprocate the same, I am,

Very truly yours,

F. W. HUDDLESON,

President Fairfax Federal Farm Loan Association.

Hon. DUNCAN U. FLETCHER,

U. S. Senate, Washington, D. C.

OFFICE OF THE TREASURER, Fairfax County, Va., January 21, 1928.

MY DEAR MR. FLETCHER: I am in receipt of your letter of the 20th, and thank you for sending me copy of the Federal farm loan act.

There are a few other matters connected with the Federal farm loan act which I think might be well for your committee to consider, I am especially interested in this, for I think the Federal land bank as organized by the Wilson administration is the greatest service ever received by the American farmer at the hands of Congress and if it be allowed to continue as established it is worth more to the farmer than all of the Agricultural Department and its agencies combined. Its wonderful and substantial growth, even through the last seven years of depression (which the Republican administration are responsible for in so far as the farmer is concerned by their favorite interests and big business) has established beyond a doubt the soundness of the Federal farm loan act, and it will continue to serve the interests of the farmer if it be left where it belongs, but if Congress ever allows New York financial interests and big business to get control of it as they have tried repeatedly to do and as the present administration has aided them in doing, then good-bye to the Federal farm loan and its advantages to the farmer, for it will be manipulated to the interests of the New York money market and not to the interests of the farmer.

The bold attempt made by the Secretary of the Treasury before the Committee on Banking and Currency of the House of Representatives, Sixty-sixth Congress, demonstrates beyond a shadow of doubt the determined effort on their part to wrench the system from the control of the farmer and place it under their own control and if you will examine that record you will see their effort was one of deception, they stating that their sole purpose was to aid in the auditing of the banking system, when in reality they were endeavoring to gain control of the entire system, deprive it of its vested powers, and place it in the hands of the Secretary of the Treasury.

Another matter which I think is of vital interest to the farmer is in the case of those who contracted loans at 51⁄2 and 6 per cent above the 1 per cent for amortization purposes, while their neighbors are now able to procure the same advantages at 5 per cent and it would seem only fair and just that those who are paying the high rate of interest should now be allowed to refinance their loans at the expiration of the five-year period at the then prevailing rate of interest if they desired to do so and not be held for the entire 30 years, as they have the right to pay any portion or all at the expiration of five years, then why should they be deprived the right to pay off and reloan? In my own case I have a loan laid at 51⁄2 per cent above the 1 per cent for amortization purposes, if I am required to pay the 52 per cent for the entire time, the extra half of 1 per cent will amount to $4,610, and what is true in my case is true in many others. Perhaps it would not prove to be quite as big a money-making scheme for the banks if I was allowed to refinance, but to make money for the banks was not the intent and purpose of the act, but rather to meet the requirements of the farmer at the lowest safe rates.

I wrote to the Federal Land Bank of Baltimore on this subject, but they decline to entertain any idea of refinancing, but remained silent on the paying off and reloaning at the expiration of the 5-year period. I also note that in a letter written to the Hon. R. Walton Moore by Mr. Eugene Meyer, Jr., the new appointee of the President, on this subject, does the same thing, that it declines to entertain any idea of paying off and refinancing at the present rate and he endeavors to justify his course by the statement "that the excess interest will be returned to the stock holders in dividends." That may all be true, but it does not return to the party paying it in the right proportion, he pays it all

besides paying the high rate and others who are paying the lower rate share the same as he in the dividend. Why take it out of the hands of a few and return it to all?

Another matter which I think should be brought to the attention of your committee, is the plan now followed by the Federal land bank of withholding all dividends due the stockholders of the Federal land bank association so long as any member of that association is in arrears with his interest, taxes, or insurance, thereby penalizing all of the members of the association for the failure of one or two to come up with their part, when neither the association nor any individual member of that association has the slightest power to compel the delinquent to pay up by any other means than moral suasion, when the land bank has every means at its command to compel the payment by the terms of the mortgage.

I fail to find any law or justification for withholding the dividends due the association, and since I have been a member, June, 1925, I have received but one dividend $35. on my 250 shares of stock, although the certificate or receipt for my stock states "that I am entitled to receive the dividends due" and there is no exception expressed as "if all have paid up."

I also notice by the financial report May 31, 1927, which is the last report that I have seen, among other items the following:

In my humble judgment this $327,066.62 should not be hoarded up in the vaults of the Federal land bank, but should be returned to the stock holders that they might have the use of it during these times of dire distress. The object of the Federal farm loan act was not to build up a strong centralized bank with surplus and undivided profits, but to require from the farmer only what is necessary to meet the demands and to give him his long time loan at the lowest possible expense to him. Neither do I understand by what authority the bank can 'charge off" in the same report $98,394 banking house of the farmers money. If their money is invested in banking house, which of course is necessary why not carry it as an asset? Why charge it off?

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Another point which I think should receive your careful consideration and be investigated is the 1 per cent that we are now paying for "overhead expenses." This might have been necessary and justifiable in the very beginning, while the loans were small and the machinery for the furtherance of the plan developed, but with the volume of business that is now being done it is certainly not necessary. I am informed that in several of the European countries where a similar system has been in operation much longer than ours, and has not reached the gigantic proportions that our system has, that they are able to conduct the business at a very much lower rate, in some instances as low as one-fourth of 1 per cent and in some cases lower than one-fourth of 1 per cent. If the business can be handled successfully there for one-fourth of 1 per cent it should not cost 1 per cent here. They may say that all over the actual expense will be returned in dividends, but the safer and more businesslike plan would be to leave it in the pockets of the farmer and only take what is actually necessary to meet the expense; then you are on solid ground; but where an excess amount is set aside for operating expenses the usual tendency is to "eat it up" in one way or another, and my experience in such cases there is usually some way of increased salaries or something devised which does eat it up.

Please pardon me for the length of this letter, but I am very much interested in the Federal land bank and its advantages to the farmer, and I do sincerely hope that Congress will continue to guard and protect the farmers interests and that you will continue your efforts, as you have done in the past, to see that the Federal land bank is conducted to the interests of the American farmer and not for the interests of New York financiers.

Very truly yours,

F. W. HUDDLESON, President Federal Farm Association, Fairfax County. P. S.-You may use this or any other letters of mine on this subject before the committee as you see fit.

85513-28- -7

F. W. H.

Mr. FLETCHER. I think it is only fair to Governor Cooper, who was formerly farm loan commissioner, to have a statement from him. I have such a statement, and ask that it be printed in the record of these hearings. Mr. Cooper's statement is as follows:

Hon. ROBERT A. COOPER,

822 Southern Building, Washington, D. C.

JANUARY 17, 1928.

MY DEAR GOVERNOR COOPER: The claim is made that when you and Mr. Jones and Mr. Landis were invited to resign as members of the Farm Loan Board the affairs of the board were in a very confused and unsatisfactory condition, evidencing_lack of administrative ability or energy, or both, on the part of the Farm Loan Board and its members.

It was claimed that there was need for a reorganization of the board, a clearing up of its work, reforms in administration, greater activity, and diligence and efficiency.

I would be glad to have you make a statement respecting these matters and authorize me to use it at the hearing before the Banking and Currency Committee on the confirmation of the appointees now pending, or in such other way as will give the public the benefit of the actual facts respecting the work of the Farm Loan Board while you were a member, and the administration of the system.

Very truly yours,

Hon. DUNCAN U. FLETCHER,

DUNCAN U. FLETCHER.

WASHINGTON, D. C., January 20, 1928.

United States Senator, Washington, D. C.

MY DEAR SENATOR FLETCHER: I have your favor of the 17th instant, in which you ask that I give you a statement respecting the claim that the affairs of the Farm Loan Board were in a very confused and unsatisfactory condition, evidencing lack of administrative ability, etc., on the part of the Farm Loan Board members at the time Mr. Jones, Mr. Landes, and I were requested to resign. I am very glad to comply with this request. In fact, I would like an opportunity to appear before a committee and answer any question involving board policies during the period of my membership.

By way of preliminary, permit me to state that I became a member of the Farm Loan Board on the 22d of May, 1922. The other members on the board at that time were Hon. Charles E. Lobdell, of Kansas, farm loan commissioner; Capt. W. S. A. Smith, of Iowa; and W. H. Joyce, of California. Shortly after I became a member Mr. Joyce resigned, and was succeeded by Hon. John H. Guill, also of California. The term of Captain Smith expired on August 6, 1922, and no one was appointed to succeed him until March of the year 1923. From the time I became a member of the board until July, 1923, my work had to do largely with the supervision of national farm loan associations. I, of course, took part in all of the board's deliberations respecting other matters. The agricultural credits act of 1923 increased the board membership from five to seven and provided for 12 Federal intermediate-credit banks, to be under the supervision of the Federal Farm Loan Board. On the day following the approval of the agricultural credits act Hon. E. S. Landes, of Ohio, was appointed a member of the board to fill the vacancy caused by the expiration of the term of Captain Smith, and Hon. M. L. Corey, of Nebraska, was appointed to one of the new positions created by the act of 1923. About June 1 Hon. E. E. Jones was appointed to the other new position on the board.

On July 2, 1923, Hon. Charles E. Lobdell resigned his position on the board and was succeeded by Hon. L. J. Pettyjohn, of Kansas. The resignation of Judge Lobdell made it necessary that some other member be designated as farm loan commissioner. I was designated for this position by the President on July 2, 1923. Immediately after my designation as commissioner, the Farm Loan Board adopted a resolution assigning each member to a particular division of work, as follows:

Federal land banks, E. E. Jones; joint-stock land banks, E. S. Landes; intermediate credit banks, M. L. Corey; appraisals, John H. Guill; farm loan associations, L. J. Pettyjohn.

The farm loan commissioner had no definite assignment, but it was understood that he would exercise general supervision of all the board's activities