Mr. LEMKE. Well, as I say, T. Cushing Daniels, and I think, Senator, perhaps I can furnish you with copies of the book Real Money and False Money, by T. Cushing Daniels, and that is as good authority as we can get, from somebody who was connected with the United States Treasury, to give us the amount of money that should be in circulation to prevent bank failures, and then we also have John Skelton Williams. He may have been a little peculiar in some ways, but I will say this, that on the money question he certainly knew what he was talking about.

Senator MCGILL. They have to have some scientific method of arriving at the conclusion.

Mr. LEMKE. Yes.

Senator MCGILL. And that is what I would be interested in, is knowing just how that figure was arrived at.

Mr. LEMKE. I would say that most of the economists you will talk to will perhaps arrive at it something like this: That no dollar should be redeposited more than 10 times, and whenever you have $5,000,000,000 in actual money and then have $50,000,000,000 on deposit you are getting to a very dangerous point. I think that there is some method by which they figure that, the amount of money activity.

Take, for instance, suppose we would say that every dollar, just in order that it be real safe, be redeposited only five times. That is, for every dollar that is in the bank there should not be over $5 on deposit. Now, you take that as your standard. Then if you had $5,000,000,000 of actual money in the banks you could have $25,000,000,000 on deposit, in order to be perfectly safe.

Now, the question of runs on, and lack of confidence in banks is due to the fact that they have not sufficient reserves; that when a run is made the other banks do not come to their assistance, and if they haven't got enough money to satisfy the people that are skeptical, why, they will have to close their doors.

The leading economists, I am sure will tell you that a dollar should be redeposited in the banks 60 times there should not be more than $10 deposited for every dollar actual money in the banks to make it safe.

Mr. SIMPSON. Mr. Lemke, I want to get one thing corrected, because I am sure you are wrong. You say at 112 per cent on the principal, amortization plan, it would take 47 years to pay it. Now, the Federal farm land loans are on a basis of paying 1 per cent on the principal each year, and they get through in 36 years.

Mr. LEMKE. Yes; but here is the difference there: They are charging 52 per cent interest and we are just charging 12, and you see each year that switches. We pay $30 each year, and under their provision on a thousand they pay 55 each year, and I think that makes up the difference.

Mr. SIMPSON. That might account for it, the difference in interest. Mr. LEMKE. In the interest.

Mr. SIMPSON. They still pay interest on the total amount?

Mr. LEMKE. Total amount each year.

Mr. SIMPSON. Yes; and of course, paying such interest reduces the principal?

Mr. LEMKE. Yes, sir. When it gets over on that side. I am satisfied that is correct, because I have got these figures out of this book here.

Mr. SIMPSON. I knew that if that was correct, there was something that had to be explained, and I can see that might.

Mr. LEMKE. You get that in the annuities and amortization tables, and it is something over 47 years at 12 per cent interest, and 12 per cent principal. You see, it makes a difference.

I have this book. I am not very familiar with looking_up these tables, and I will tell you what I will do: To make it clear I will try and get somebody-there must be a table in existence some place that shows it. This simply shows at what rate a dollar would finally pay itself off. At 12 per cent interest it takes 47 years on the amortization plan, but those tables are not worked out in a way that I am familiar with them. There is usually so much in interest and so much in principal, and the principal gets less each time-no, the interest gets less each time and the principal more.

Now, take section 10: From section 10 on is machinery, and I simply wish to state without any criticism I am satisfied if any of us were at the head of the Federal land bank or the Federal Reserve Board we would function just the same as they do, but they do not function satisfactorily to the people who are interested in the agricultural end of it. They always have, and they undoubtedly always will, show a hostile attitude, and from section 10 on in the bill is the machinery. Now, do you wish me to read that section by section or just describe it briefly.

Senator HATFIELD. Just describe it, I think would be well, Mr. Chairman.

Senator FRAZIER. Yes, just describe it.

Mr. LEMKE. According to this set-up the Federal land bank calls conventions in each county and parish in the United States of America, sends out notices, and the people who wish to take advantage of this act may send delegates selected by these conventions to the State conventions, and the Federal land bank calls the State conventions at the capital of each State and these delegates meet there, and they select one man to represent that Sate on a board of agriculure. His salary is $4,000 per annum and 5 cents per mile for travel.

Senator HATFIELD. You have 48 of them?

Mr. LEMKE. We have 48 of them, though that may be changed. That is our set-up. Of course, there are some States where there is not much agriculture. Maybe you can make some other arrangement about that. At any rate, we have 48 of them. Those 48 meet here at the Capital of the United States.

Mr. SIMPSON. Section 14.

Mr. LEMKE. "Upon call of the Federal Farm Loan Board." You see, we are not trying to put the Federal Farm Loan Board on the shelf at all. We are trying to cooperate with them, as our friend expressed here this morning. He calls these meetings at Washington, and then they select the executive committee of three, and that executive committee of three's business is to assist and cooperate with this board of agriculture, with the agricultural colleges, with all the farm organizations, and with the county and State governments to carry on and get a speedy refinancing of this entire farm indebted

ness, and I feel confident that I can state to this committee that if this bill becomes a law there will be a crusade on doing that, and these people in the State and county will all cooperate to make this agony a thing of the past because we are all willing to work; and I am sure my friend here, John Simpson, will have the whole farmers' union organization doing everything they can and bring this thing to a head and to a close under the supervision of this Federal farm land bank system, local associations, and all that, the set-up as it is at present, only they will be supervised by the people who are taking advantage of this.

If this executive board finds that any member of the Federal reserve bank blocks it or tries to hinder or delay, they can report him to the President of the United States and he gives him a hearing, and if there is cause shown, if he is deliberately trying to block the program, the President removes him and appoints some one else in his place, by and with the advice and consent of the Senate of the United States.

Now, it seems to me that that gives the people who are to get advantage of this act the supervision; at least puts them in the position that they know what is going on, and I believe there can be splendid cooperation. I can see no reason why there would not be.

Now, that is the working end of it. If there is any better plan to be suggested, although we are pretty well sold on this plan, we would be glad to hear and consider it. But it seems to me that the farmers who make these loans, who are interested vitally in it, should be allowed to have something to say about it, at least be put in a position where they can see what is going on, and the expense as a whole will be very insignificant.

Now, the question was raised this morning whether an amendment of the Federal land bank act or the Federal reserve act is necessary. I say, absolutely, no; there is no need of amending anything, with the possible exception of the part that deals with the postal-savings account, but there is nothing in any of these other laws that is in conflict with this act excepting that the Federal reserve bank and Federal land bank get their direction from their boss, the directors of these great corporations of the United States of America, and the Congress, and you can tell them you can not let the poor people starve while there is plenty to eat in this land and while there are plenty of the things that they want, and while they are out of employment.

Senator FRAZIER. There is a provision in section 19 in regard to that, line 20.

Mr. LEMKE. Yes; excuse me. There are two other sections that may be important. They are sections 18 and 19.

SEC. 18. The executive committee of the board of agriculture shall have power in case of crop failures and in other meritorious cases to extend the time payments due on loans made under this act from time to time for a period not exceeding three years, provided that the mortgagor keeps up the payment of all taxes on the mortgaged property.

So in the case of a complete failure of the kind we had in eastern Montana and western North Dakota

Senator HATFIELD. Does that include extension of interest as well as principal?

Mr. LEMKE. It does, and we put that in when we were repeatedly requested to; when they said, "How can we find a way to make these payments during dry years without anything at all?" But it is left. to the board.

Senator HATFIELD. Of course, the interest would be accumulated. Mr. LEMKE. Yes; it would be accumulated, and it is left up to the board.

Then section 19:

This act shall be liberally construed, and no technicalities or limitation shall be imposed or permitted to interfere with the speedy carrying out of its purposes; and the provisions of the Federal farm-loan system, the Federal reserve banking system, and the postal-savings system shall apply as far as applicable in the carrying out of the provisions of this act; and all laws or parts of laws in conflict herewith are for the purpose of this act repealed. The persons charged with the duty of carrying out the provisions of this act are authorized and directed to do all things necessary or convenient to accomplish its purpose with expedition.

Now, if this act is to do any good at all it must be promptly put in operation and carried out, because the situation is such that, as I have shown you by these facts, and I will say by mortgage foreclosures the number of mortgage foreclosures have been reduced by prior foreclosures and by the farmer quitting and giving the mortgagee a deed, and in those cases we provide if this farmer wishes to he can buy his own farm back, if it is for sale, or can buy a similar farm and get the advantage of this act.

Then we also provide that where a tenant has been an actual farmer on a farm for three years prior to the date of this act, he can get advantage of the act and buy that particular farm.

So we are not creating new farmers. We are simply keeping on the farm those that are or have been there.

Now, if there are any further questions?

Mr. E. B. SCHULTHEISS. Mr. Chairman, may I ask a question of Mr. Lemke?

Senator FRAZIER. Certainly.

Mr. SCHULTHEISS. Under this system, provided this becomes a law, will it be possible for him to pay up his full indebtedness before the expiration of this mortgage at 62 years, if he is so able to do it anytime?

Mr. LEMKE. The bill does not say so, but I see no reason why under the broad powers which we have given the board and the executive committee they can not make those rules and regulations, because it says all rules and regulations shall be worked out by the board. And, answering your question further, I will state that I believe this law should be passed without hobbleskirts. The administration should be allowed to act freely. It has been my habit and practice in drawing legislative acts to draw them on a broad principle, believing that the person in charge of the administration of the law should be permitted some latitude to work it out. I will state that as an illustration I drew the first soldiers' compensation act in the United States of America for North Dakota, and that act was originally expressed in less than a page, and our Adjutant General came to my room in the McKenzie Hotel in Bismarck and said, "What do you mean, Mr. Lemke, by this act, is the administrator to pay out $8,000,000 under a law a few inches long?" I told him, "The reason I made it short was because you are the administrator.

You are undoubtedly going to make a lot of mistakes, and we are not going to tell you how to correct them, because we do not know so very much about it ourselves. We know just about as much about it as you do, and that is not very much. And experience will teach you what to do."

Later, Adjutant General Frazier told me that but for those broad terms he would have had a lot of trouble, and I will say this, that there has not been another soldiers' compensation act that has been worked out more satisfactorily or with less complaint than in North Dakota, because the administrator had broad powers, and we did not hobble him, but we nevertheless held him responsible for performing his duty.

And that has been the attitude and aim in this bill. I believe all legislation should be drawn that way and that some responsible person or persons should be put in charge to work it out, and I may say that some of the acts drawn in the same way were studied a few years ago by Harvard University, and some professors-not perhaps because of the principles contained in these laws, but because of the broad powers contained in them for their administration-felt that that was the proper form for legislation.

Senator NYE. Mr. Lemke, what is apt to be the effect of legislation of this kind, should it become law, upon interest rates in other lines of industry separated from agriculture?

Mr. LEMKE. I would say it would have the tendency to lower them unquestionably, but it would not bring them down to the same level, because other industries can not get it. You just get it for these farm lands, and these other industries would have to depend on their ability to get the money through their local banks, and so forth.

Mr. E. H. EVERSON (South Dakota). Mr. Chairman, I would like to ask Mr. Lemke, isn't it true that under the present basis of loaning money to farmers, their being unable to meet their interest payments, this farm-loan system has to take over this property, and it becomes the burden of the farm-loan system with this basis we are operating under and that also the burden of meeting the taxes on that property is their burden now

Mr. LEMKE (interposing). I will answer your

Mr. EVERSON (interposing). And also under your plan it would make it possible for this farmer to continue to pay interest at a fair rate and also meet the taxes on that property and relieve the system of that burden?

Mr. LEMKE. I will answer you by saying that I called at the Federal land bank here last week, or the week before, at St. Paul, and there I was informed that some of the Finlanders in northern Michigan were leaving their lands to the Federal land bank and moving to Russia. That came from the president of the Federal Land Bank of St. Paul. I think it is a disgrace to this country to say that we have farmers leaving it and moving over to Russia.

Mr. EVERSON. Just one more question, Mr. Chairman. Isn't it true that this great big tax list that you showed us a while ago, when this land is taken over by the counties-and I think it is in most cases unless the mortgagee meets the payments-that that automatically throws the burden of government in that community on those who continue to hold onto their property?

Mr. LEMKE. Absolutely.