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Mr. EVERSON. And will eventually break down those individuals so they will be unable to meet these taxes?

Mr. LEMKE. I think you are stating a fact, and I will state this: Unless something is done, civil government will break down in at least a half a dozen States within less than a year. They can not continue.

Senator NYE. Mr. Lemke, can you testify here as to what has been done in many school districts in North Dakota with relation to reducing teachers' salaries?

Mr. LEMKE. Many school districts have closed their schools or shortened their terms, and in many cases the teachers are not being paid, the same as in the city of Chicago where one-third of the property owners because of this condition have not been able to pay their taxes.

And I will say that in Divide County, N. Dak., this year they will not collect enough taxes to pay the salary of a single county officer outside of what they get from the railroads and corporations.

Senator Nye. Is it not true that a great many rural school districts advertise the jobs of teaching in their districts to the lowest bidder?

Mr. LEMKE. Yes.
Senator NyE. Who could qualify under the educational laws?

Mr. LEMKE. Who could qualify. And the others they do not know how to open at all.

Senator NYE. Do you know how low some of those bids were?

Mr. LEMKE. I have not followed that. I will say that we are getting back very quickly to where we were when we first moved out there on the prairies in 1881, when I was a youngster, when the only school teachers we could get and pay for were the members of the family, who were very poorly qualified as a rule, but became teachers at $15 to $25 a month and boarded at home.

Senator NYE. Is it true, do you know whether it is true, that some school districts under this bidding system have obtained the services of highly qualified teachers at $25 and $35 a month?

Mr. LEMKE. I say we have been losing some of our highly qualified teachers and are substituting others. I will make the further statement that in North Dakota now, especially in western North Dakota, the women and children are out working and driving binders in the grainfields under the present system. In the pioneer days when our fathers settled the Dakotas and filed on preemptions, tree claims, and homesteads, women and children worked in the fields; but then there was hope and aspiration. They got the lands free and were willing to accept the privations. But now that is gone,

their homes are being lost. The women are again driving binders, working in grainfields in western North Dakota and South Dakota, and in some other States. I am not just speaking of my own State.

Senator HATFIELD. Have your local taxing bodies, like the boards of education and county courts and so forth, contributed some to this distress and high levies?

Mr. LEMKE. I would answer that by saying that they contributed, but they do not know the war is over yet, and like all people who live on taxation, they always go higher and never come lower, and they lie awake night to find out new avenues of collecting.


Senator HATFIELD. How are you going to relieve that condition?

Mr. LEMKE. There is a very strong movement in North Dakota in which they will go to the other extreme. They will limit the amount of the levy according to the value of the property assessed, and take part of the load from the nonproductive property and place it on the income property.

Senator HATFIELD. Do you have a constitutional provision in your State on that?

Mr. LEMKE. We have four mills on a dollar for State purposes, but that has been gotten around.

Senator HATFIELD. Do you have for county?

Mr. LEMKE. For county we haven't any except by legislative acts. I will say in my city of Fargo we pay about 48 mills on the actual value of our property a year.

Senator FRAZIER. During the last year, 1931, there has been a general reduction throughout the State, has there not?

LEMKE. Only this fall. I would say there was very little reduction until here the last few months they are beginning to cut down, because it is simply a question of self-preservation. The people are forcing it down. They can not continue. I am not so sure that that is our trouble. If you can get something for the things you raise--you see, the schools—our big taxes in North Dakota, I will enumerate them: There is schools, roads,—we have gone crazy all over this Nation for building roads for all the future.

Senator HATFIELD. How do you build your roads there, gasoline tax?

Mr. LEMKE. Gasoline, partly; and also other taxes.

Then these last two years the poor; in my county last year it was thirty-two thousand. I believe this year it will go over a hundred thousand, in the city of Fargo and Cass County, for the poor relief.

For schools, poor relief, and roads, those are the three principal taxes. Our State tax is fairly low, 3.78 mills, for this year, in spite of the fact that we have quite a few State industries, and I want to say that the State industries take 2.1 mills.

Mr. C. C. TALBOTT (North Dakota). Mr. Chairman, I do not want to extend this, but I want to ask him a question here. I think we are getting into a question here that is absorbing the minds of the entire Nation to-day. Is it not a fact that the lowering of wages, of salaries of county officers, the general lowering of taxes, means a lowering of the standard of living of everybody? Isn't that what we are on the way to doing, lowering the standard of living of the American people?

Mr. LEMKE. That is correct, and I should say that the lowering of taxes under the present situation, especially in North Dakota, from the suggestions that have been made to me that I believe the high schools in my own city will have to close and the rural schools will have to close.

Mr. C. C. TALBOTT (North Dakota). Certainly.

Mr. LEMKE. And really it is beginning at the wrong end, although I believe in economy, and I believe a very thorough investigation ought to be and is being made in North Dakota.

Mr. C. C. TALBOTT (North Dakota). I do not think our standard of living has ever been too high in North Dakota judging from my experience there of over a quarter of a century, and I do not think taxes would be too high if our commodities brought an equitable price.

Mr. LEMKE. No, they would not.

Mr. C. C. TALBOTT. (North Dakota). And I will say that that does not give them a change to maintain a decent, honorable standard of living. We are just going at this wrong end to. Here is the place to start at it; put the money in circulation.

Mr. LEMKE. Of course, we all realize that your tax burden must be as large as your ability to pay on your income, and that self-preservation is the first law of nature, and if it becomes necessary we will close all of the schoolhouses and everything and preserve our lives. But I hope that will not be the desperate situation to which well be driven.

Senator HATFIELD. We are all in favor of educating the children. There is no question about that.

Senator FRAZIER. Any other questions? Thank you, Mr. Lemke.

I want to place a telegram I just received in the record. It reads as follows:

JAMESTOWN, N. DAK., February 3, 1932. Senator LYNN J. FRAZIER,

Senate Office Building: We understand your farm relief bill now before committee and we want to register our unanimous indorsement and urge all possible effort to secure passage.


By Rose HEER, Secretary. I also have here a number of petitions in favor of this measure which I want to list and place in the record, just giving a list of the petitions, who they are from, and so forth, without putting the whole petition in the record. Mr. LEMKE. May I suggest there, Senator, that I think that I have

I several, perhaps ten or fifteen thousand of those names, and as quickly as they get here I will see that they are filed also.

(The date referred to by Senator Frazier and Mr. Lemke will be furnished and compiled, to be printed in the record at this or other convenient place.)

Senator FRAZIER. The Governor of Minnesota is sending a special representative in the person of the man at the head of the rural credit system of that State. He will be on here to-morrow morning, and in order to hear him before the general agricultural committee meets at 10.30 in the Agricultural Committee room, directly below this, on the next floor, this subcommittee will meet at 10 o'clock tomorrow morning to hear this Minnesota man, and I think we can get through in time to adjourn to join the full committee meeting in the room directly below this.

We will meet here at 10 o'clock to-morrow morning to hear this Minnesota man, and the hearing stands adjourned until that time.

(Whereupon, at 5.20 o'clock p. m., the subcommittee adjourned, to meet the next day, Thursday, February 4, 1932, at 10 o'clock a. m.) TO ESTABLISH AN EFFICIENT AGRICULTURAL



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Washington, D. C. The subcommittee met, pursuant to adjournment, at 10 o'clock a. m., in room 424, Senate Office Building, Senator Lynn J. Frazier presiding

Present: Senators Frazier (chairman of the subcommittee), Thomas of Idaho, Hatfield, Smith, and McGill.

Present also: Senator Thomas of Oklahoma.

Senator FRAZIER. The hearing will come to order. Mr. C. F. Gaarenstrom, chairman of the Minnesota Rural Credit Bureau, of St. Paul, Minn., has expressed a desire to make a statement to the subcommittee.



Senator FRAZIER. Proceed with your statement, Mr. Gaarenstrom.

Mr. GAAREN STROM. The Minnesota Rural Credit Bureau, of which I am the chairman, is a loaning organization, organized under the laws of the State of Minnesota; and the information that I am about to give you is based on statistics of our own credit bureau and of the Department of Agriculture of the United States and of the agricultural division of the University of Minnesota.

If the experience of the Department of Rural Credit is a criterion, and may be used as a yardstick by which to measure the plight of the farmers of Minnesota on whose farms there are mortgages, then the new year saw approximately 32,229 borrowers, of which 22,000 were farmer operators who owed and were unable to pay a sum in excess of $8,203,221 past due interest on their mortgages and therefore threatened with foreclosure.

In the entire State there are approximately 99,600 farms mortgaged as computed on the basis of the number of owner farms mortgaged, or 53.8 per cent. Of this number 68,000 are owner farms as shown by the 1930 census.

I would like to make Table 1 a part of the record.
Senator FRAZIER. Very well.

(The table referred to and submitted by the witness is here printed in full as follows:)


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The Department of Rural Credit of Minnesota has mortgages on approximately 11,000 farms on January 1, 1932. Of this number, 3,581 were delinquent on that date in the sum of $911,469 in interest.

I have some statistics here, Senator, of the department of rural credit as to the number of loans closed, delinquencies, number of loans foreclosed and real estate owned, by years, and I would like to introduce it as a part of my statement.

Senator Frazier. It may go into the record.

(The statement referred to and submitted by the witness is here printed in full as follows:)

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If this proportion of the delinquency holds true for the entire State, there was approximately $5,640,000 unpaid on interest due from owner operators of mortgaged farms on January 1, 1932, and approximately $8,203,000 on all mortgaged farms in the State.

In addition to the enormous interest burden on a total of approximately $530,000,000 farm mortgages, the Minnesota farmer owes in the neighborhood of $200,000,000 to banks and in other ways on their stock, machinery, and other personal effects.

I would like to introduce a third table at this point.
Senator FRAZIER. Very well.

(The table referred to and submitted by the witness is here printed in full as follows:)

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