We are not finding any fault with what Uncle Sam is doing for the rest of his family, but we do feel that he has neglected his 6,000,000 farm families, representing 30,000,000 people, who are just as important to Uncle Sam and the prosperity of the nation as the bankers.

You understand, gentlemen of the subcommittee, I am not questioning the motives of anybody. It has been going on for years. But it has now come to the point where there must be a change because existing conditions demand it.

I want to say that the president of the University of Wisconsin has been giving us some pretty good advice lately. I think in one of his statements recently he said, in substance, that the present condition had no business to exist; that it could only be explained by a breakdown of economic leadership. I feel that the people generally must agree with that proposition.

Here we are in a land of plenty, and yet a farmer at Thompson, N. Dak, last fall raised the finest potatoes known in the market, and he had to sell them at 15 cents a bushel. And on top of that he had one-third of them thrown back on him under the strict rules of grading. And on top of that he paid 9 cents for the sack, and he had to take back the one-third that the purchaser would not take, and pay 3 cents a bushel for picking, and other expenses. I say there is something wrong with a situation of that kind. It can not, it should not, it must not continue. And I will suggest to you that I am satisfied the American people, when they discover what the situation really is, will knuckle down with a determination equivalent to devotion, and will grapple with the evil, because it must be corrected if this Government of, for, and by the people is to continue for all time, and I am confident that we have the intelligence and the will to correct it.

Now, then, this bill provides, and we believe it to be one of the things requisite for correction of the situation, first, that farmers be enabled to refinance their existing indebtedness at 112 per cent interest. And what does that mean to them? Well, I want to be very frank with the subcommittee, and will say that means the farmer can pay out his indebtedness at about two-fifths of what he will be able to pay out under the present régime. At the present time he is paying 6 per cent and 7 per cent on mortgages; and at 12 per cent for amortization, by the time he pays it, he will reduce his indebtedness by three-fifths. And that must be done if we are to have an agricultural class in this country, because the present existing indebtedness under present conditions means that that is out of the question for him. He will either have to go through bankruptcy or try to get out in some other way. He must have relief. There must be some readjustment of his tremendous burden. By giving him cheaper money it will hurt no one, except perhaps those who live on a high rate of interest. I feel that the condition of the farmer is worthy of your most serious consideration, especially in this time when millions of our people are starving.

This bill provides further that existing indebtedness shall be taken up to the full amount of the present fair market value. I will explain that some criticism has been made to me of that. It has been said, "If you make the loan to the full amount of the present fair market value you virtually sell the land to the Government." Well,

the Government and the Indians owned the lands at one time, and I am not very much alarmed at that, but I am satisfied that that will not happen.

The first limitation in the present bill is present fair market value. I asked the governor of one of our States recently what fair market value land was. He said it has not got any. I replied, then you do not expect him to take less than that. I asked him the question, What put it down to that point? He said, deflation and manipulation of foreign bonds. I think he is correct.

The next limitation is, that the existing indebtedness was only 40 or 50 per cent of its actual value. I asked him if that was correct, and he said absolutely. I said then, there is a limitation— that is, for the existing indebtedness-and that is the way this bill is limited, to the existing or actual indebtedness. He said, yes; that is a limitation.

As to the next limitation, I system the farmer pays 6 per this he is to pay 112 per cent. indebtedness under this bill he as under your rural credit.

said to him, under your rural credit cent interest on his money, while on By the time he pays up his existing would only pay two-fifths as much

And I said, secondly, we are requesting that the present values be refinanced at a low rate of interest, and if Congress will do that it will render the farmer a real assistance and help him.

Suppose you were to sell me a farm near your beautiful city here at $1,000 an acre, and that you sell it to me without any interest, and give me plenty of time in which to pay for it. Then I and my children and my children's children will ultimately pay for that farm. But if you sell it to me at $500 an acre and charge me 6 per cent interest, then, under present conditions, I will have no farm in a short time; because in the first instance I will be able to hold my own and come up slowly but surely, while in the other instance I will constantly go down hill. That should convince any person who wants to be fair about this proposition that this farmers' refinancing bill is a real remedy for present conditions which are holding the farmer down.

Now, then, as far as refinancing the farmer is concerned, if you will do what is necessary and what is requested here, he will pay off his banker; if you will give him that opportunity you need not worry about the $2,000,000,000 corporation. These farmers will take care of this situation if you will refinance them. They will pay off their debts, which means that they will also pay the lawyer and the doctor, and everybody they do business with, and things will start out right again. If we regain our purchasing power, the people out in the country, you will see that conditions will change quickly for the better. We will then have a condition whereby everybody will have some money with which to do business, and there will be no question about the reviving of their hopes and aspirations, because then the people will be able and will again begin to spend money. And we need not be told by ex-Presidents or others to buy more. When the people have money with which to buy, they will buy without any urging. But under existing conditions we have bought too much already.

Many have lost their homes and many are losing their telephones. Every once in a while, in my city, you see a suspicious-looking char

acter looking in to the back door of a garage, and pretty soon he will reach in there and yank out an automobile, because the man bought an automobile that he has not been able to pay for. There is no hoarding about that, I assure you. It is simply inability. When the system broke down the farmers did not buy any more automobiles. Our whole fabric has broken down.

I was informed the other day that there are 600,000 people out of employment, that have to be taken care of in Chicago. They have called a special session of the legislature up there to take care of the situation. Is it not time to take some measures to relieve that situation, other than the dole system, which is simply temporary, and can do us no good?

I wish to comment on the machinery set up in this bill. I think your chairman here, Senator Frazier, will agree with me, because he has had considerable experience in connection with law enforcement and law administration as Governor of North Dakota. No matter how good a bill is, if we let the people who are not in sympathy with it take care of the baby, it will not thrive. We feel that the machinery at Washington is too far removed to function for the best interests of the farmer, unless the farmer, who is to get the advantage of this bill and whose ills are supposed to be remedied by this bill, is at least in a position where he can check up on it once in a while. So, we create an agricultural board, which consists of one man from each State, and an executive committee of three to check up on this thing. We use the existing machinery of the Federal reserve bank, the postal savings bank, to a limited extent, and the Federal land banks, but we are not satisfied that you can depend upon that machinery unless some farmer, or some committee which represents the farmers, and not the business people, can check up on it. Therefore, we provide that the farmers shall elect one man in each State to check up on it.

What business have I, as a lawyer, or my people in the city of Fargo, to tell the farmers who they should have to check up on their own business. The bankers do not do business that way. The lawyers do not do business that way, and the city people do not do business that way. They have their own commercial clubs, and if there is a bill for their interest, they expect to be represented in the administration of it to see that it is carried out.

That is why this bill gives the farmer a square deal. It says, "You select your representatives, and if any man delays in the performance of his duty, or does not act promptly in the refinancing, you report him to the President; and if there is cause for his removal the President will remove him and, with the advice and consent of the Senate, he will appoint some suitable person."

I am not criticizing the Federal land bank. I think it has troubles enough of its own. I do feel that they "knuckle " to the orders they get from the higher chiefs in Washington. In fact, our poor Federal land bank in St. Paul reminds me somewhat of our friends the Japanese in the present situation. They tell us that we are misled and the things we hear about them are not true. At the same time, I have with me, and before I get through I will leave with you, letters where threats of foreclosure, one after another, are being sent

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out to those farmers who are not able to pay their taxes under the present situation; but if you call on them they say, "No; we don't foreclose on any farmer unless he has left the State." Unfortunately, some of those farmers are still there, and the bank is making a lot of mistakes and sending these notices to the wrong parties, to farmers that are still there. They have no place to go. They have not gasoline enough left to get into their Fords and get out of the State.

The fact is that the Federal land bank can not meet the situation. They have sold these bonds. I understand there is some appropriation that they could call upon, but apparently those who are in control of the Federal land bank in the city of Washington have not seen fit to make use of that remedy, and they seem to think that everything is all right out there in the outlying country. But I would like to have them make a trip. I wish they would make the trip in conjunction with some of the farm organization presidents, rather than with the presidents of the banks in the large cities, or with the lawyers, because, after all, this is a farmers' problem and not a lawyers' problem or a bankers' problem, excepting that the farmer will refinance the whole group if it is carried out.

That is the sum and substance of the Frazier bill, to refinance the existing indebtedness of the farmers, at 112 per cent interest, and 12 per cent principal on the amortization plan. The plan is that the United States Government shall get the money with which to do it, by causing Federal reserve notes to be issued until there is enough money in actual circulation-not in circulation on paperto enable the people to buy these bonds at 12 per cent interest. The machinery to operate it is the machinery that already exists. No new machinery is created, except a board to watch it to see that it is properly carried out, and that board is elected by the farmers. I am sure no person can ask less consideration for the farmers under this condition.

There are a number of persons here representing the farmers' union and other farm organizations. I have considerable data as to the number of farms that are being foreclosed, and so forth, but when the examination is over and these other people have given you the picture-not as you are told in the newspapers that it exists, but as it exists out there in the country among their people that they are familiar with, and that they know-then I wish to take about five minutes more, and I shall be glad to answer any questions, unless there are questions now that some of the members of the committee wish to ask.

Senator FRAZIER. If there are any question by any member of the subcommittee, or any of the visiting Senators, please feel free to ask them.

Senator NORBECK. I was just going to suggest that in the opening of his remarks, when he made the comparison that 10,000 bushels would not do it now, 10,000,000 would be nearer right. If you operate at a loss, it does not make any difference how large your quantity is. You still lose out.

Senator THOMAS of Idaho. Do you feel, at the present time, that if you had your farms clear, with no mortgages at all, or if the mortgages had no interest whatever, you could continue to operate the farms and pay the taxes under the present price level?

Mr. LEMKE. Absolutely no; but I feel that underconsumption would cease as you get more of the medium of exchange into the country, and as the farmer gets purchasing power again, so that he can paint his dilapidated home that is falling to pieces, and get back his sons and daughters, who are crowding the already overcrowded cities. The medium of exchange has a direct bearing on the standard of living of the people. By the medium of exchange I do not mean the present inflation of the currency-I am not objecting to it-that has been brought about in order to save a few banks outside that two-billion-dollar corporation bill which has just passed Congress. Through the executive departments of this Government, the money has been increased within the last few months, largely in four cities, by about $1,250,000,000. That has been done almost entirely in a few of the large cities, and none of that money has found its way out to the small bank, the business man, or any other place. It was simply put into those banks to keep them open.

Senator SMITH. Following up the question Senator Thomas asked, suppose we should wipe out this morning every farm mortgage and every indebtedness that every farmer owes on his farm, and put him back without any obligation whatever. If we continued the present prices of the products of the farm, and the present cost of production, how would he go on?

Mr. LEMKE. If the present costs continued, of course, I will answer that, Senator, by saying that the cost of production within the last year-and only within the last year-has come down somewhat, and the cost of living, but only within the last year in our part of the country. Up to that time it continued the same as it was during the war. But if we assume that the present existing conditions will continue, then, of course, I think that there are men here who are better able to speak on that subject than I am, but my suggestion would be that the farmer could at least continue for some time longer if his indebtedness were wiped out. He could not continue indefinitely.

Senator NORBECK. He could only continue until he got some more mortgages.

Senator SMITH. The only way he could continue at the present prices of farm products and the present cost of things that he has got to live on in the present level of organized society, would be to go into debt again. It would be only a question of time until he would be absorbed again, because everything he produces now, every marketable thing, is selling below the cost of production. Therefore, he will have to go in debt, and he will start right away. He will be in debt the first year, and it is only a question of arithmetical progression until he is in the same fix he is in now.

Mr. SIMPSON. Senator Smith, the Farmers Union has in its program a companion measure to Senator Thomas's bill, that provides for getting a different price than we have been getting for farm products. We have to have both these measures. A hearing on that bill will be held before the full Senate Agricultural Committee beginning Thursday morning.

Senator SMITH. I think the witness who has just testified has stated the prime necessity, and that is to create purchasing power. The only way you are going to do that is to make the circulating