Senator NORRIS. It does not make any difference what the rate of interest is. If you have got no way of paying it, it will amount to the same thing; it simply can not be paid. If it is only 1 per cent, if the farmer can not pay that 1 per cent, it will finally end up with him losing his farm.

Mr. LEMKE. I may say that at the time the people of Texas came into this Union they passed legislation that your home could not be taken under a mortgage in that way, where you had a wife and children. That is something that should be done throughout the Nation.

Senator NORRIS. I am inclined to think you are right.

Mr. LEMKE. Let me give you another illustration on that same proposition. When the farmer went into debt, there were cash sales made on the Minneapolis market before our price fixing, and when the minimum price was made, the maximum came into operation, there were cash sales of No. 1 dark northern wheat on the Minneapolis market for $3.89 a bushel. In other words, 1,000 bushels would pay off an indebtedness of $3,890, whereas to-day one million won't do it, if you consider the cost of production, or ten millions won't do it, if you consider the cost of production.

Now, if the fellow who loans this money should be able to loan the farmer cheap money at that time, but not be allowed to wreck the home and destroy the farm of the farmer by asking a high rate of interest, simply because my friend Mills says it would disturb the monetary system and would wreck this Nation, I believe we should come out all right.

Our friend, the Secretary of Agriculture, appearing by letter before the committee, said this bill is hostile to the best interests of the farmer. I think the only thing I can say in favor of that statement is that the Secretary is wise in saying that it would be hostile to his interests. I would like to know how any man can say that reducing the farmer's interest from 8 to 12 per cent would be hostile to anybody's interest. If this bill is passed it will save this Nation from a financial collapse. We have got to get purchasing power out to the country. And I want to say on that issue at least there is one candidate who says there must be purchasing power put out to the Nation through the country, and I think he is right, and I think if he continues on that stand he will be the next president of the United States. But he has got to keep his feet firmly on the ground on that issue. You have got to have purchasing power out in the country or you can not survive.

I think I have gone over the principal objections. I think Senator Frazier has called attention to some of them.

Senator FRAZIER. One objection was the provision in regard to mortgages on chattels.

Mr. LEMKE. Those are temporary. It provides for mortgages on livestock, and not over 60 per cent of its actual value, with 3 per cent interest.

Senator FRAZIER. And one year at a time.

Mr. LEMKE. It has got to be reduced 10 per cent each year for 10 years. That proposition is only intended to be used where there is a farmer whose land values are not sufficient to take care of his existing indebtedness, and I feel it is essential for some of the stock

men out in our States, Montana, Wyoming, and some other Western States, to have that provision.

I feel the provision as to how much salary those men get in there is something that we are not concerned with particularly. I think the farmers are patriotic enough to donate their services, if necessary. I can not see any objection, but I think it is essential, if the farmers are to get this bill, that they have something to say about its operation, by being actually represented by the people they elect to act in a supervisory capacity. But the machinery we use is the existing machinery.

Senator NORRIS. Now, Mr. Lemke, I want to ask you this: Would it be possible to get material benefit to the farmer, in your judgment, if we eliminated from the bill that provision providing for the loaning of money on chattels and confined it entirely to real estate?

Mr. LEMKE. I will say that I think it would hurt the cattle man, but it would not hurt the farmer so very much, because, I will be frank with you, unless this bill is passed the other half of the people in my State, who are still hanging on to their homes, will lose them. Then the only way to do it is when the mortgage indebtedness is more than the amount the Government will loan, to call them in and say, "Come on, boys; who will bid on this piece of land?" and see how much it is worth.

Senator NORRIS. That is on the land.

Mr. LEMKE. That is on the land, yes.

Senator NORRIS. I confess I am just a little bit frightened at the proposition of loaning money on chattels by the Government and spreading it all over and making it general over the United States. Mr. LEMKE. Yes.

Senator NORRIS. That has been done some times in the case of an emergency, where there has been a tornado or drought, or something. Mr. LEMKE. Yes.

Senator FRAZIER. They have had the tornado and the drought both all over the agricultural districts. [Laughter.]

Senator NORRIS. Not all over. Congress has always been liberal about that.

Mr. LEMKE. Yes.

Senator NORRIS. And I think rightly so. I have always favored it, even though we lose our money in cases of distress, like a tornado or a drought, or something of that kind. But I see almost countless years of difficulty with the almost certainty of a great many losses if the Federal Government goes into the chattel loan business.

Mr. LEMKE. May I make this suggestion, Senator? It is already in, indirectly, through the Agricultural Credit Association, which boasted it was giving the farmer cheap money. But do you know how much it costs the man who borrows from that association? Seventeen per cent, because they charge him 10 per cent and they offer him stock for it, and that isn't worth 10 cents, and they tell him when he goes in that they will take it in payment, and then they juggle him out of the stock.

Senator NORRIS. They charge him in the first place a rate of interest which he can not afford to pay.

Mr. LEMKE. Yes.

Senator NORRIS. As a matter of fact, they will lose a whole lot of it, and they know it, and that is why they charge the high rate

and expect to get the high rate from those who can pay. I do not like that kind of treatment.

Mr. LEMKE. Let me make this further suggestion, Senator, that in this case it is only at the time that this act goes into effect. It is not for future indebtedness. It is only an emergency measure at this time, limited strictly to the emergency in the past. One Senator asked me if there was any real objection if we would say indebtedness existing six months prior to the passage of this act. That is up to Senator Frazier here. I have no objection to that, to avoid speculation. But I think in this emergency and crisis that exists, it is essential to give the farmer this necessary assistance. If he has sufficient real estate, the stock would not come in at all.

Senator NORRIS. In your case where he does not have sufficient real estate, that throws into a business man's mind at once some doubt. There are men-I feel sorry for them-whom we can not save, because they are too far gone. If you have a farm worth $10,000 with a mortgage of $20,000 on it, you could not expect the Government to loan you $20,000 on that farm. If a man has got his farm in debt so much the Government could not give him enough money to get out of debt, or, at least, it should not, that man has probably gone beyond the power of the Government or anybody else to save.

Mr. LEMKE. That is true in a few exceptional cases, which is true in any industry. For instance, the Federal land bank has made loans where that very thing has happened. One of the troubles in all of this, Senator, is that at one time these values were high, and the loan was only 40 or 50 per cent of its then value, but the deflation has destroyed the value.

Senator NORRIS. Yes.

Mr. LEMKE. I feel that if this loan is made and you put two or three billion dollars of new money out with the people, not with the banks, so that it gets real circulation and takes up obligations, that the values will come back.

Senator NORRIS. Do you suppose there would be any danger if we did that, like we did during the war, for instance, that this may become a fever and everybody get it, and go crazy again, and the farmer, as well as everybody else, buy land at two or three hundred dollars an acre that is only worth a hundred?

Mr. LEMKE. I think they have had some object lessons from what they have gone through that are sufficient. And in the next place, this is not the war hysteria, when most of us lost our balance, business men as well as farmers.

Senator NORRIS. There were a lot of fellows in the Senate who lost their balance.

Mr. LEMKE. So we just went wild. But that spirit does not prevail now, and the price will not go up to $3.89, even if this bill were passed. But I think it will go up, together with this other bill, to the cost of production, and by the cost of production, I mean allowing the farmer and his family wages for their work and interest and depreciation on their machinery and on land value.

It seems to me, with this other bill passed in conjunction with this one, you really have control of both ends of the situation. I feel these two bills should go hand in hand, with the exception that this one is an emergency measure, that while the other bill may help us,

it is the emergency that we need in our country, otherwise there will be no farmers left. This bill is of the more importance now.

As I say, if you took a referendum up in our State you would find, I think, that this was of the more vital importance, that while this other one is permanent, this is an emergency, a crisis that exists up there, and unless something is done the crisis will simply go ahead and the corporations will simply get all of the land, and in that way this permanent bill will help the corporations more than the farmers. They have gotten more now than they want, and if you pass this other bill, without this emergency, you will be helping them further.

I know the spirit of the people out our way. Up in North Dakota they are issuing three bills now. You know the people in our State have the right to make their own laws.

Senator NORRIS. Yes.

Mr. LEMKE. For instance, they are passing now around the people, in sufficient time for the June primaries, a proposal for a partial moratorium, allowing the mortgagor to foreclose his mortgage, but he can not get a title to it if the mortgagee will pay 1 per cent for the next five years, or until the Congress shall have passed the Frazier bill. You see, they have hopes in the Frazier bill.. Senator NORRIS. Suppose that happened and Congress passed the Frazier bill; that would end that up there?

Mr. LEMKE. That would end that up there; yes.

Senator NORRIS. And then the President would veto it and you would not have anything.

Mr. LEMKE. Excuse me for saying it, but we expect to have a new President next November. We are through with the present incumbent, as far as we are concerned.

Senator NORRIS. I don't know whether you are or not.

Mr. LEMKE. Well, we will try to be, because we feel the President of the United States is the servant and employee of the American people, and if he does not function for all of them he ought to be left at home. I do not wish, however to indicate that I think that he would veto it. I think he will sign it.

Senator NORRIS. I haven't any idea that he will sign it. I want to read you what one of the members of the President's Cabinet said last night. It seems there was a meeting of a lot of patriotic societies down here of various kinds, quite a number of them. They were all in favor of various things, and Secretary Wilbur was there and made a speech, in which he said this:

We find our ideal of majority rule "-that is one of the fundamental principles of democracy, as I understand it-"We find our ideal of majority rule in conflict with the need of control by an elected or selected expert who alone is capable of guiding our involved and elaborate governmental mechanism through its many difficulties."

Well, there is only one elected expert. That is the President. He was elected an expert, and according to Mr. Wilbur, we have got to modify our ideals of majority rule.

Mr. LEMKE. We have modified ours in North Dakota so much that we increased the Democratic vote 150 per cent in the last election.

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Senator NORRIS. It is a question in my mind whether you are not jumping out of the frying pan into the fire.

Mr. LEMKE. I may say that it is for the particular candidates that they did that, rather than for the party, because I might say we find the situation, regardless of party politics, where there is a growing feeling among certain people in a very limited class whose ideas Mr. Wilbur expresses, but they are not going to prevail in the United States of America.

Senator NORRIS. I mentioned Mr. Wilbur as a member of the President's official family because you said you thought the President would sign this bill.

Mr. LEMKE. I think he will,

Senator NORRIS. If he thinks that instead of a majority ruling, that when an expert gets in there, an engineer, that the people ought to have nothing to say except to acquiesce, do you still feel the same way?

Mr. LEMKE. But, fortunately, this export has to submit to the will of the people and an election is coming on, so I still feel that he will sign the bill, if for no other reason than that the demand is so universal.

Senator NORRIS. Suppose he is nominated by the Democratic Convention as well as the Republican Convention, how are you going to prevent his election?

Mr. LEMKE. Then you and I will have to form a third party.
Senator NORRIS. That would not do any good.

Mr. LEMKE. I will say, as a matter of fact, that unless there is a liberal candidate nominated, you will find a large sentiment expressed somewhere else than in either one of the old parties.

Senator CARAWAY. Senator Norris, do you think there is a likelihood of the Democratic Party nominating Mr. Hoover?

Senator NORRIS. Either Mr. Hoover or somebody just like him, so it does not make any difference whether it is Hoover orMr. LEMKE. Or Owen D. Young?

Senator NORRIS. Yes, Owen D. Young, or Raskob, for instance. Senator FRAZIER. Another question, that has been raised about this bill is whether it would not be well to limit the amount that could be borrowed by any one individual or any one farmer, under the principle of the Federal land banks, limiting the amount to $10,000 to each farmer. What do you think about that?

Mr. LEMKE. Well, Senator, that is not sufficient in this recent crisis, because the farms we have in our States up there, excepting Illinois and Iowa, perhaps, are large, and as long as the loan is safe and the Government makes a profit on it, why should we be so skeptical about letting the Government for once taking charge in a limited way of the money business rather than New York. It seems to me to be clear that if the security is good and ample, there should be no restriction to begin with, because in our States I know a lot of people that have farms, bona fide farmers, who have $75,000 in indebtedness outstanding, say, on five or six or seven thousand acres of land, that they actually farm. Why should those people be penalized just because they got into this situation any more than your Reconstruction Corporation allowed Mr. Morgan and Kuhn, Loeb & Co. five million and some odd dollars out of the first