FARMERS' HOME CORPORATION ACT OF 1944 THURSDAY, APRIL 20, 1944 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10 a. m., pursuant to adjournment, Hon. John W. Flannagan, Jr., presiding. Mr. FLANNAGAN. The comimttee will come to order. When we suspend the hearing yesterday, Mr. Short was on the stand. I am going to ask Mr. Short if he will defer the resumption of his statement at this time in order to give the Honorable William Lemke an opportunity to make a statement. Congressman Lemke has to leave in a few minutes, and we are anxious to hear from him. I hope Mr. Short will not object to the interruption at this time. Mr. SHORT. Certainly not. STATEMENT OF HON. WILLIAM LEMKE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH DAKOTA Mr. FLANNAGAN. Mr. Lemke, we shall be glad to hear from you. Mr. LEMKE. Mr. Chairman and members of the committee, I am very much interested in the bill that is under consideration and am wholeheartedly for it, but I feel that an improvement can be made in that part in which you provide that the Corporation may adjust the old feed and seed loans. I think you will recall that we canceled the franchise pacts for the railroads and the Federal Reserve banks years ago, but we forgot to do it for the farmer. Now, these old feed and seed loans some of them-although they started in at small amounts, have piled up with accumulated interest in some cases in my State to $2,000 and even more for one farmer. The rate of interest, whatever the debt, was generally rather high. The unfortunate thing about this is that the statute of limitations does not apply. I have letters from district judges in my State showing that in some cases the Federal collectors, and especially the legai department, when it gets into its hands, claim in case of death every cent, including even the money for the coffin or the money that is necessary for burial, because the Federal Government has no limitation, and there are no exemptions as to its claims as to feed and seed loans. Therefore, I feel that in addition to the provisions you have made in the bill, which are good, we should wipe out all those that are over 7 years old and be done with them. In the future you will have your readjustment. The same is true of the old barnyard loans. I am sure that every member of this committee knows that the barnyard loans were intended-and I am not criticizing it-to bail out the bank. That is exactly what it did in my State. The reason they were called barnyard loans was that they generally took the farmer behind the barn door, so his wife would not see what he was doing. Then they got him to sign the notes. The banker came out. He had them in his pocket. He was the agent of the Federal Government. In some cases they would even give him back $50 or $25 if he would make the switch and have the Federal Government substituted for the bank. In that way hundreds of banks were saved from closing. I have no fault to find with that at all. The law of survival is still of the fittest, perhaps of those who are perhaps most able to manipulate. That is still in existence. But why continue these old loans? Therefore, I propose the following amendment: That the Farmers' Home Corporation is authorized and directed to cancel, or cause to be canceled, all unpaid emergency crop, feed, and seed loans made by the farm emergency crop and feed loan offices, which loans remain incollected, or unpaid, for more than 7 years after the original due date. Six years should be sufficient, but I am willing to concede an extra year. Then, the amendment continues: And it is hereby further authorized and directed to cancel, or cause to be canceled, all unpaid loans known as barnyard loans made by the Regional Agricultural Credit Corporation prior to 1936, this regardless of whether any of such loans have been partially paid, renewed, or secured. I have put in the last provision because some years ago this committee and the lower House of Congress passed a bill outlawing these loans if they were unpaid for more than 6 years and not renewed. The Senate forgot to act on it before it adjourned, and the bill died in the Senate committee. But immediately that was done, the Farm Credit Administration, or at least the local office, got busy and had the farmer pay as much as 50 cents, so as to renew and continue those loans. I shall not take any more of this committee's time, but I do hope that you will give this suggested amendment your very careful consideration and fit it in in the proper place in the bill, not in place of what you already have there, but in addition. Mr. COOLEY. Which agency of the Government made the loans you referred to as barnyard loans? Mr. LEMKE. The Agricultural Credit Corporation-the regional Agricultural Credit Corporation. Mr. COOLEY. I wonder if the Farm Security Administration does not also have some outstanding loans past due for more than 7 years. Mr. LEMKE. I imagine it does. Mr. COOLEY. Would you not think that this should be applicable to all other agencies? Mr. LEMKE. I do, especially at this time. I feel that there is a misunderstanding about agriculture among people who honestly do not know anything about it. Many of my city friends, whom the farmer feeds, think the farmer is rolling in wealth. Do not believe it; it is not true. It is unfortunate again, that prices and values of land are being boosted, and so forth. But when this war is over, we will have the same collapses we had before, if we are not careful. We ought to know, in fact, about what happened, because the time has been so short that our memories ought to extend back that far, at least. I would appreciate it if your committee would include all of them—all farmers' loans over 7 years. Mr. COOLEY. If these obligations were owing to some individual or private corporation, the statute of limitations would bar them anyway? Mr. LEMKE. It would, absolutely. Mr. COOLEY. But owing to the fact that they are owed to the Government, they are running on forever ? Mr. LEMKE. They are running on forever. As I said, I can produce a letter from a district judge in my State saying that the Federal Government, in case of death, comes in and takes even the money that is needed to bury the poor farmer. Mr. ANDRESEN. Did we not pass a bill in the House that canceled all those feed and seed loans? Mr. LEMKE. That was in 1940, but the Senate did not act on it. It was not intentional on the part of the Senate. The bill was passed here just shortly before the adjournment, and it was lost in the shuffle over in the Senate. I talked with Members of the Senate Committee on Agriculture at that time, and they admitted it was lost in the shuffle but would have been passed if it had not been that the Senate adjourned before they got to it. That was in 1940. Mr. FLANNAGAN. Have you read the draft of the proposed farmsecurity legislation? Mr. LEMKE. Yes. Mr. FLANNAGAN. H. R. 4384. With your amendment, do you approve of the draft? Mr. LEMKE. I absolutely do, and I think it is a great improvement over the existing law. I feel that it should be passed at this session of Congress, before we go back home. Mr. ANDRESEN. What do you think of section 43 on page 25? Mr. ANDRESEN. In the bill introduced on March 13, 1944. Mr. LEMKE. This is the one-H. R. 4384. Yes, I have read this one. Mr. ANDRESEN. I shall not go into detail with you on that paragraph. Mr. LEMKE. I have read it. While I think it is a great improvement, I realize, of course, that there will be some amendments to the bill. But it is a great improvement over what we had. Mr. ANDRESEN. You favor, then, setting up a new corporation? Mr. LEMKE. To absorb the others. Mr. ANDRESEN. To handle all these things and to have a new set-up throughout the country for farm security? Mr. LEMKE. Yes, and have these others merged into it, because I believe we ought to have fewer farm agencies doing the same work. There should be more consolidation of the work. Mr. ANDRESEN. Do you think it is a good time to start farmers in farming at the present time and to lend them 100 percent of the money? Mr. LEMKE. I will say this: I think it is a good time if you see that the values are kept down, because it is always a good time to start the race when you are young rather than when you are so old that you cannot run any more. If you give them a good start, and the land values are not too high, and the Federal Government has considerable land-especially the Federal land bahk-that it got far below what the present market value is, and if they will not profit at the expense of the farmer, I think it is a mighty good time to get them started. Mr. ANDRESEN. It will be necessary to see that they get good prices after the war is over, so that they can pay out their loans. Mr. LEMKE. I agree with the Congressman absolutely; and I think that before the war is over we will pass my cost-of-production bill. Mr. FLANNAGAN. Thank you, Mr. Lemke. STATEMENT OF R. E. SHORT, PRESIDENT, FARM BUREAU OF ARKANSAS; MEMBER OF THE BOARD, AMERICAN FARM BUREAU FEDERATION-Resumed MI. FLANNAGAN. Mr. Short, we are ready to have you resume. Mr. Cooley, you may proceed with your questioning. Mr. COOLEY. Mr. Short, yesterday I was asking you about some of the provisions of this bill, which provided for a liquidation of resettlement projects, collective farm projects, 99-year leases, and so forth. I understood you to say that you favored that part of the bill. Mr. SHORT. I said I favored the liquidation of those projects. I would suggest some changes. Mr. COOLEY. That is right. In other words, you favor the liquidation of collective farm projects, 99-year leases, and resettlement projects. You favor also a consolidation of the direct lending agencies. Mr. SHORT. Yes, sir. Mr. COOLEY. Mr. Pace asked you yesterday if you thought you would be able to improve upon the language contained in the liquidation provisions in this bill. I wonder if you are now in a position to make any suggestion regarding such changes. Mr. SHORT. Well, I have not had an opportunity to prepare anything, because I am not a lawyer. I am not qualified to prepare legal language to go into a bill. But I might suggest that on page 25, in line 11, of section 43, you include homestead associations. Mr. COOLEY. Do you mean subsistence homesteads? Mr. SHORT. A lot of this property, after Congress directed that it be liquidated, was put into or transferred into what are known as homestead associations. Mr. COOLEY. Are you familiar with the provision of the bill dealing with subsistence homesteads? Mr. SHORT. Well, I think I am. Mr. COOLEY. Do you know which agency of the Government is now administering those homesteads? Mr. SHORT. The Farm Security; is it not? Mr. COOLEY. I thought perhaps you were in error on that. All those subsistence homesteads were transferred by Executive order from the Farm Security Administration to the Federal Housing Agency, and they are now being administered by that agency. We provide in here that they shall be transferred back to the Farmers' Home Corporation, for immediate liquidation under the provisions of this bill. Mr. SHORT. I just wanted to be certain that it was in there. Mr. COOLEY. Well, it is in here. We provide for the liquidation of the labor camps which are now being maintained throughout the country by the War Food Administration immediately upon the termination of the present emergency. Do you agree to that provision? Mr. SHORT. No. We feel that property of that type that has through Executive order, been transferred to the War Food Administration; is that correct? Mr. COOLEY. That is right. Mr. SHORT (continuing). Should be held as all other war property concerned and be liquidated according to plans that Congress may work out for the liquidation of war properties of that type. Mr. COOLEY. We are working that out. Congress is working that out. But in this bill we provide that all the collective farm projects shall be immediately and forthwith liquidated. We provide that all the resettlement projects, land-leasing projects, land-purchasing projects, and 99-year leases shall be terminated whenever possible. Then, at the end of the emergency, all labor camps will be liquidated and all subsistence homesteads will be liquidated. Certainly you agree to that. Mr. SHORT. Yes; I agree that they should be liquidated, except that I feel that that type of property necessarily ought not throw a burden on this Corporation, because the Federal Government owns a lot of property that is really not considered farm property, and owns a lot of property of like character incident to the war effort. Therefore, whoever is responsible for the liquidation of war property could liquidate that just as well. Mr. COOLEY. Are you familiar with the provisions of the law relating to the disposition of surplus property at the present time? Mr. SHORT. Not in detail. Mr. COOLEY. The situation is that property must be declared surplus property and turned over to the Treasury for final sale and disposition. That situation has handicapped the Farm Security Administration in liquidating property which it now holds. In this bill we have given very broad powers regarding liquidation. I am wondering if you approve of the powers we have conferred upon this Corporation in the present bill. Mr. SHORT. We approve of the provisions in the bill authorizing and directing the liquidation of these projects. If there is any way in the world for you gentlemen to make them stronger than they are now, do it. I would make one further suggestion. In the light of the experience. that you and other Members of Congress have had in having your will carried out by the Farm Security Administration, I suggest that you insert in the bill a prohibition against using any of the funds that might come into the hands of this agency for setting up any similar projects. Mr. COOLEY. Do you not understand that the provisions of this bill prevent any recurrence of that type of activity? Mr. SHORT. Yes; and I think you have tried to safeguard it. But in the light of the experience and testimony before your committee on this subject, just as it was either last year or the year before, you gentlemen, I am sure, thought that you had safeguarded that activity or prevented a continuation of that sort of conduct on the part of an agency of the Government in the appropriation bill, and you put restrictions around the funds appropriated for resettlement and rehabilitation. As soon as that went into the bill, they transferred |