medium available through increased price or value of the things that are produced on the farm. There is an old expression in the Bible that suits me right now. "Seek ye first the kingdom of God, and all these things shall be added unto you." You start at the foundation of America's prosperity, "among the producers, and give them consuming and purchasing power, and the balance of this thing will take care of itself.

Senator THOMAS of Idaho. Senator Smith, the object I had in developing that thought was just this point. It is absolutely impossible for agriculture to continue unless the people on these farms can get a fair price for crops.

Senator SMITH. We might just as well quit and not attempt any legislation whatever until you devise a plan-you do not have to devise a plan, but just use common sense, and start the circulating medium where it will flux and liquidate the thing the people want.

Senator NORBECK. Mr. Chairman, we can immediately get into differences of opinion. I will admit the soundness of the thought, other things being equal, that the price will correspond to the amount of money in circulation-with emphasis on the circulation-but I do not see how you are going to reduce the prices of all the articles that are fixed arbitrarily by a method of increasing the currency. Will you be able to buy an Eastman kodak any cheaper? Will you be able to buy a Ford tractor any cheaper? Or will you freight rates be any lower?

In other words, are we not suffering, aside from this, also from the unequal exchange of the labor of the farmer with that of other labor? I call attention to this fact, that agriculture broke down in years of national prosperity, and I might even add that it broke down under a different tariff bill than we have now, although I did not vote for the present one, either. But, after all, is not the trouble with legislation that we have legislated to the advantage of certain groups? There has been too much interference with economic law for the benefit of others, and in the end it leads to centralization of wealth and demoralization of business, and a low exchange value to agriculture that make it impossible to carry on other business.

Should not our first concern be to get an earning power, or purchasing power on the farm corresponding to the earning power or purchasing power in other places? When you restore the purchasing power of agriculture, the farmers will begin to buy paint; they will buy lumber; they will buy machinery; the will buy clothing; they will buy coal; and they will create national Prosperity.

I realize that our interest rate is too high, even then, but I agree with Senator Smith, that if you had your mortgages canceled, you could not function under present conditions.

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Mr. LEMKE. Mr. Chairman, may I state that I take no exception to the remarks of Senators Smith, Thomas, and Norbeck. They are absolutely correct. But if the farmer is going to remain in the game, he must have immediate refinancing. As Mr. Simpson stated here, the farm organizations have other plans to fit in with this bill, but unless you do that there will be no farmer left. This bill is just one step. It does not remedy all the evils.

With regard to this two-billion-dollar corporation, what will come after that? There are fifteen billions of foreign bonds. How many of those are going to be worthless? After the $2,000,000,000 is gone,

you will leave them just where they were before. I understand that some of the Senators who voted for that bill are willing to admit that they do not know what it is going to do. So it is a question what the result of all this will be, except that the farmer, in order to remain on the farm, must be refinanced immediately. That is imperative. Then we must have some confidence in the future. The farm organizations will find some method by which they can sell the things the human race must live on at a price above the cost of production.

I am absolutely in accord with the sentiment Senators here have expressed.

Senator FRAZIER. Are there any further questions?

I understand, Mr. Lemke, you will make a further statement to-morrow?

Mr. LEMKE. I would like to; and I would like to supplement my remarks with some documents. For instance, I have a statement showing the number of States that have adopted resolutions asking Congress to pass this bill, and so forth.

Senator THOMAS of Oklahoma. I would like to see that newspaper that contains the 57 pages of delinquent taxes.

Mr. LEMKE. You will get that to-morrow.

Senator THOMAS of Idaho. Let us have it inserted in the record. Senator SMITH. I think if they would print a list of all the delinquents and mortgages, the price of print paper would go up.

Mr. LEMKE. I might state, Senator, that in Divide County the printing of the tax list, I am told, cost $2,300, and what they got in, outside of the railroads, was about $600.

Senator FRAZIER. The next witness is Mr. John Simpson, national president of the Farmers Union, from Oklahoma.

STATEMENT OF JOHN A. SIMPSON, PRESIDENT NATIONAL FARMERS' UNION, OKLAHOMA CITY, OKLA.

Mr. SIMPSON. Mr. Chairman and gentlemen of the subcommittee, I will just make a very brief statement, and then I have a list of those we wish to call as witnesses before you. I do not know in just what order I want to have them appear, but that will develop as we go along. That is the reason the chairman has given me the privilege of calling these persons.

I will say that there are nine farmers' union States that have sent representatives to this hearing and to hearings that will come before your full committee Thursday and Friday.

Senator THOMAS of Idaho. Will you give the names of the States. Mr. SIMPSON. Oklahoma, South Dakota, Iowa, Colorado, Wisconsin, Nebraska, Minnesota, Illinois, and North Dakota.

We are deeply interested in a program that we believe will be a real remedy for the agricultural situation, and we believe, as Mr. Lemke has stated, that when agriculture has been put on a solid foundation it will not be very long until the rest of the country begins to receive benefits. We think it has to start with agriculture.

There is no one bill that is going to cover the whole field. Senator THOMAS of Idaho. Mr. Simpson, will it disturb you if I interrupt you?

Mr. SIMPSON. No, indeed.

Senator THOMAS of Idaho. I am glad to have you make the statement, because the thought prevailing throughout the country until the last two years has been that, if we look after our foreign trade and look after our industries, we do not need to pay much attention to agriculture. I am glad to have you develop the thought, that we must get agriculture back where it belongs.

Mr. SIMPSON. The farmer with purchasing power puts the laborer to work.

There is no one bill that will do it all, but one of them that is absolutely necessary is this refinancing measure. You can put the farmer back with good prices, but you can not relieve him of the burden of debt that is on him with 6, 7, and up to 10 per cent interest. That is the reason that the National Farmers' Union made Senator Frazier's bill a part of its national program. One of the things we must have is financing, at as low a rate as others get it. As Mr. Lemke has said, these bankers are getting the benefits of the Federal reserve system on the basis of 11/2 per cent, and we feel that we are not immodest when we say farmers are entitled to as low a rate as any banker that lives.

Senator SMITH. In other words, let the bulk of whatever payments he is able to make be applied towards retiring the debt rather than in paying interest.

Mr. SIMPSON. Yes. Senator Smith, a farmer, we will say, owes $10,000 on a farm, that is drawing 6 per cent interest. There is $600 interest annually, and he still owes the $10,000. If this bill became a law, on a $10,000 loan he would be paying $300 a year, and paying off the debt. In other words, the size of a loan does not determine whether it is a safe loan, so much as the terms. You can pay a $10,000 loan at 12 per cent interest, and 12 per cent on the principal more easily than you pay a $5,000 loan at 8 per cent interest.

One other thing. We can not consider this thing entirely from the standpoint of the low rate of interest. It is spread out over a long period of years, in the matter of the payment of the principal. Many farmers to-day are embarrassed by the fact that the loan comapny refuses to renew the loan, even though the farmer has never been delinquent in his interest, has always been prompt in the payment of his interest. Those farmers who found their mortgages coming due in the last 12 months have found most of the loan companies saying, "You have to pay, or at least reduce." A lot of them could pay the interest, but can not pay the principal, and there is no place to go to borrow. So, this bill is absolutely necessary. It is one of the things that we must have to make it possible for farmers to go along and be producers in this Nation, and be purchasers in this Nation. We have a bill, and, as I said a little while ago, Senator Smith, the hearings begin before your Senate Agricultural Committee here on Thursday, on a marketing plan that gets for farmers the cost of production for that part of their product used for home consumption. It is a practical, feasible bill.

Senator SMITH. I do not care to interrupt at this time, because it will be developed, doubtless, later, but I want some of you to develop this fact, that the debts that are now on the farms were created when their product was bringing four or five times as much as it has been bringing and is bringing now. The farmers counts his product as

his dollar. Wheat is the wheat man's dollar. Cotton is the cotton man's dollar. He now has to pay a $1,000 debt with a depreciated currency—that is, his product so that if he pays in wheat to-day, he is paying, for the $1,000, $4,000. In cotton he is paying $4,000. In other words, the thing that he has to pay with has decreased to that extent, while his debt remains the same, and therefore he just can not come out from under that debt unless two things happen. Some plan must be devised to amortize it, or he must have the price of his product raised to the point where the thing that he exchanges for his debt is on the same level as the price at the time he contracted the debt.

Mr. SIMPSON. Senator, you have stated it very conservatively. May 1, 1920, when deflation was started, 211⁄2 pounds of cotton from your State would liquidate a $1 debt. Cotton was 40 cents a pound on the exchanges on May 1, 1920. To-day it will take 16 pounds of cotton to liquidate a $1 debt.

Senator SMITH. Exactly.

Mr. SIMPSON. So, yours is a very conservative statement.

Senator THOMAS of Oklahoma. Is it not a fact, Mr. Simpson, that the national debt is more to-day than it was when the war was over, although they have paid over $9,000,000,000 on principal?

Mr. SIMPSON. If the Government was paying the war debt in cotton, wheat, pork, beef, or any farm product, in spite of the fact that the war debt has been reduced from $25,000,000,000 down to $15,000,000,000 in the last 10 years, it will take three times as many bales of cotton, or bushels of wheat, to pay the debt, as it would May 1, 1920. When deflation. We farmers say that a dollar that takes from us three, four, five, or six times as many bushels of wheat or pounds of cotton to pay a debt as was required when the debt was made is a dishonest dollar. We are here for an honest dollar.

Our plan now will be to call one representative from each of these nine States, to state to the committee briefly the conditions in their States.

At this time I am going to ask Mr. C. H. Hyde to speak about conditions in Oklahoma. In addition, we have other Farmers' Union States in that mid-West Belt that have no representative here, and I will ask him on behalf of the National Farmers' Union, to speak for some of those States.

Senator SMITH. What is his name?

Mr. SIMPSON. C. H. Hyde. It is a bad name, but he is all right. [Laughter.]

Senator FRAZIER. I understood Mr. Hyde made the statement yesterday that he was no relation to the Secretary.

STATEMENT OF C. H. HYDE, ALVA, OKLA.

Mr. HYDE. Senator Frazier and members of the subcommittee, I am a wheat farmer from Oklahoma. Vice president-and have been for several years-of the Oklahoma Farmers' Union.

Senator SMITH. How did you get money enough to come up here if you are a farmer?

Mr. HYDE. We get it out of the dues of the Farmers' Union. We get 40 cents that comes to the State Union to run our State Union on, and that part of it paid my expenses.

Senator FRAZIER. How did you gentlemen come from Oklahoma? Mr. HYDE. We drove our Farmers' Union car.

I came to Oklahoma in 1893 when the Strip country was open to settlement, and have lived on a farm in Alva township ever since, 6 miles in the country. I know the financial condition of the farmers in Oklahoma, and I know to a great extent a like condition prevails at least in the Mississippi Valley States. The Federal census taken in 1890 showed not a mortgage on any real estate in Oklahoma. In 1900, 9 per cent of the farms reported were mortgaged; in 1910, 22 per cent; in 1920, 54 per cent; in 1930. more than 80 per cent. Not only has the number of mortgaged farms increased but the ratio of the mortgage to the value of the farm has increased until the last census on reported farms showed practically 50 per cent of the value of the farm carried the mortgage.

At the time of Statehood-24 years ago-we had no State debt, no county debt. There is now outstanding a bonded indebtedness in the State of Oklahoma, by subdivisions, counties, cities, and schools, above $208,000,000. The ad valorem taxes amount to more than $82,000,000 per year, and have been above $80,000,000 for the past 10 years.

With the mortgage debt the farms have and the high tax rate on the farm home, even if the price of agricultural products should go back to the price of three or four years ago, very, very few farmers would be able to retain their homes; the interest rate is so high they could not meet the taxes and interest. There were more than $40,000,000 worth of municipal warrants outstanding on January 1 this year in Oklahoma, because the farmers as well as the poor people in the cities could not pay their taxes. The State of Oklahoma had outstanding on January 1 more than $8,000,000 worth of State warrants in addition to the amount mentioned above. Without doubt this amount will be increased to $10,000,000 by July 1 this year. County treasurers of two counties in Oklahoma (each with above 3,500 farms in the county), told me in July last that of the real estate tax due January 1 preceding, not a single farmer who lived on the land had paid his taxes. The only farm land that has paid taxes in those two counties was the land taken over by the mortgage companies.

Monday of last week I was invited to address the real estate mortgage companies at an annual convention in Oklahoma City. I have talked with several of them privately. They all say that if the farmer can just pay the taxes, they are willing to let him stay under the present conditions, because if they take the land over it will be that much additional outlay. The biggest real estate mortgage company in Oklahoma went into the hands of a receiver less than 30 days ago. The farmers could not pay their interest and could not pay their taxes. At the present price of agricultural products it will take above one-third of the total agricultural production of Oklahoma for 1931 to pay the taxes on the farm land and buildings and the personal property of the farmers for that year. There are several counties in Oklahoma where the total production of the agricultural products of those counties will not pay their tax bill for 1931.

Oklahoma is usually the second in winter wheat production and usually second in the number of bales of cotton produced. All