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Senator THOMAS. Has it helped the situation any yet?
Mr. BESTOR. The Senate just approved that day before yesterday.

Senator THOMAS. You are hopeful that this measure will enable the Federal land bank to function the way it has been functioning in the past?

Mr. BESTOR. We are very hopeful of that.

Senator THOMAS. I received a letter from a cattle man in my State the other day who had a little bunch of cattle and needed some money to purchase feed. His cattle were clear. He went to the intermediate credit bank, and he wrote me that the rate that he would have to pay on a loan was 892 per cent, through the intermediate credit bank. I was really amazed, and I made inquiry of the Spokane Land Bank as to the reason for that high rate, and was informed that they were now paying 5 per cent on their debentures, and they had to add 1 per cent for expenses, which made 6, and by the time it got to the borrower it was costing him 81/2 per cent.

Mr. BESTOR. That is no doubt true. That is in the intermediatecredit bank.

Senator THOMAS of Idaho. Yes.

Mr. BESTOR. The provisions of that law provide that the money obtained shall be secured from the sale of tax-exempt debentures to the public. Although the banks were able to sell debentures last summer at 3 per cent, or less than 3 per cent, and the rate was correspondingly low, yet in the last two months the rates on those securities, and on the market, because of conditions, have been so high that they have had to sell a 5 per cent debenture. In January they sold a 5 per cent debenture.

Senator FRAZIER. Thank you, Mr. Bestor. We would like to have you stay and listen to the rest of the discussion.

Mr. BESTOR. I am very much interested in it. May I ask whether I may have the privilege of correcting my testimony wherever it is necessary?

Senator FRAZIER. Certainly.
Mr. Simpson, who is your next witness?

Mr. SIMPSON. I just want to make a short statement, and then call Mr. C. C. Talbott from North Dakota. I want Mr. Bestor to hear my statement.

The criticism he has of this bill is that it would loan up to the full value of the farm. I want him to get this understanding of the bill, that there are two limitations, and perhaps three-but especially two. One is the value of the farm, and certainly it would be no help to a farmer who has a mortgage on his place to-day to loan him less than the value, because if you went out and tried to sell any farm that is mortgaged for any considerable sum it would mean that you would discover that its value was not more than the mortgage. So, that is not a wild provision of the bill, to loan the value, because, on the whole, the farms are mortgaged to-day for more than they would sell for. We think you understand that.

The second thing is that it limits it to the indebtedness that your institution, of which you are the head, and all the other mortgage companies of the United States, placed on those farms. That is a sa fe bill, because you loaned from 40 to 50 per cent. It is not any wilder to take that loan up than it is to let it stay on there and let it consume the farm.

The next thing is the 11/2 per cent interest. Do not think that we expect the international bankers to take up those bonds at 112 per cent interest. But we do expect this Government to furnish the money at 11/2 per cent interest. It is not any loss to the Government. It is 112 per cent interest. It is a profit to the Government, where they do not make any profit out of what they loan to the international bankers. If there were ten billions of farm loans, and the Government had to take up all of them at 112 per cent interest that would represent an income of $150,000,000 a year to the Government, instead of being a loss to the Government, if my figures are right. So, there is not anything wild in this bill. All this bill does is to help the farmer, and in that way help the whole country. At 112 per cent interest a loan becomes a much smaller loan than it would be at 5 per cent. What are you loaning at now? Mr. BESTOR. Five and one-half

per cent. Mr. SIMPSON. One and one-half per cent is only about one-fourth of that. The same loan would be about one-fourth that size, so far as interest payments are concerned, so that it makes it a much safer loan.

Mr. BESTOR. May I ask you one question !

Mr. BESTOR. On the matter of loaning 100 per cent of the value, would you loan your money on that basis?

Mr. SIMPSON. If I had a loan on a farm--and I happen to have one. I sold a farm a couple of years ago, and I have a $7,500 mortgage on it. It has not been paid yet, but it is as good as gold. The fellows are paying. They do not happen to get their money off the farm, however. I would not want to admit that the farm that I sold, for which I got half of the price in cash, did not have the value of the other half that is against it. You have loaned thousands and thousands of farmers money. To say now that those farms are not worth more than you loaned is an unfair position to take with respect to the farmers. You should take the position that that farm is still worth what your paper showed it was worth when you made the loan. I think there is something that has gone wrong in this country, and we may as well right it, to make it cash at that price. This bill will make it cash at that price again.

Mr. BESTOR. This bill would include junior liens, also.

Mr. SIMPSON. This bill helps the farmers. This bill is the only real help to the farmers of this Nation.

Senator Smith. Mr. Simpson, let us not lose sight of the fact that there is not a dollar in America, in anybody's pocket, that is not guaranteed by the Government.

Mr. SIMPSON. Certainly.

Senator SMITH. Let us not lose sight of that fact. When we are talking about lending my money, your money, or anybody else's money, you must not forget that fundamentally every dollar, whether it is in a lock box or in circulation, is guaranteed by this Government, and that guaranty is based upon the power of the Government to tax and to redeem it. There we get into the nebulae of high finance,


Senator SMITH. But you must remember that fundamentally every dollar of money in my pocket, and your pocket, and everybody else's pocket, is guaranteed. Read the legend on it, “ The United States of America will pay the bearer.”

Mr. SIMPSON. Even a postage stamp bears the same thing:

Senator SMITH. Let us not get away from the fundamental of the circulating medium.

Mr. SIMPSON. I want to read a portion of a letter received from Mrs. Ella A. Taylor, of Lexington, Ky. I opened this letter and read it last night, among 16,000 other letters that I received in response to a broadcast I made a week ago Saturday, in which I named this bill as one of three that would be helpful. There was such a hope that came into the hearts of listeners that I received over 16,000 requests for copies of the bill, and Senators and Congressmen have been receiving plenty of requests for copies.

She asked me a question here that I want to ask you Senators, and I want you to ask it on the floor of the Senate:

I want to ask what you would suggest to a Kansas farmer in the following condition: He is a tenant farmer 46 years of age, with a wife and 11 children, oldest 24 and youngest 5. He has lived on same farm a dozen or more years. Four oldest have graduated from high school. The oldest boy was telegraph operator until the railroad had to retrench.

I want to insert here that all over the United States the railroad companies are nailing up little stations out there in the little towns and discharging the station agent and operator.

I visited this family last summer. They were a happy family in spite of the fact most of them had only one suit or a managed change for laundry purposes. This man had raised sufficient wheat that his part was 7,000 bushels, 5,000 bushels of which was in two big piles in the fields. He had shelter for the rest. He had to pay $100 for a little shabby house to live in and a poor barn and a small grainary. His farm machinery was all taking the weather. They find the garden too dry and sandy to be of much benefit.

This man has been having a hard time with 8 boys and 3 girls, besides himself and wife, and now his wife's father, an old man over 80. Now, he owes a bank $500. They have a mortgage on his stock, combine, tractor, and machinery. The bank won't make a loan for longer than 30 or 60 days. He had to sell a big lot of his wheat at 25 cents per bushel, because he was in debt and had to pay. He now has 500 acres in wheat, 10 head of horses, 4 cows, tractor, combine, and other machinery that he is willing to mortgage to pay this bank. Now, the question is

And I pass it to the Senators of this committeewhat can he do? Will any of these new laws passed by Congress nelp this poor, honest family to live until their new wheat crop matures?

She goes on and tells that his grandsires, four generations back, six of them, served in the Revolutionary Army.

There is a real question. Have you done anything that will help this fellow, a fellow that is helping to feed the world? Isn't it time to do something to help him?

This very bill here provides for loaning to that man and letting him pay off the bank. It not only provides for loaning to a man who has a deed to a farm but to a man just like the one I read the letter about.

Why should any department of the Government be here protesting against something that will help this man?

Senator THOMAS of Oklahoma. Mr. Chairman

Mr. SIMPSON. We had a letter from the Secretary of Agriculture here yesterday, saying that this bill would not do any good. Do you mean to tell me that to reduce the interest from 51/2 per cent to 112 per cent is of no benefit to a farmer? I am a farmer. I live on a farm now. I have paid interest. I know that 112 per cent is a help to a farmer, as compared to 512 per cent.

Mr. PLUMMER. Mr. Chairman

Senator FRAZIER. We may as well proceed. We will give you a chance to testify later.

Mr. SIMPSON. Mr. Chairman and gentlemen of the committee, I would like to have you hear from Mr. Talbott, of North Dakota, at this time.



Senator FRAZIER. Proceed, Mr. Talbott.

Mr. TALBOTT. Mr. Chairman, I may be very considerably prejudiced because of the fact that I have known no other business but farming all my life.

Senator THOMAS of Idaho. Are you living on a farm now?

Mr. TALBOTT. No, sir. I am not living on farm now. I turned over to one of these mortgage companies my entire life savings in 1927 because I saw that I could not beat such a game. After a 9-months discussion with my wife, and with an appraisement, all ready to renew my mortgage, I told her that after our children were raised we were just crazy to consume our earning power any longer in carrying that mortgage and in renewing the buildings that we had built together 20 years before. It would take from $2,500 to $3,000 to rehabilitate that farm and put it in modern condition. Our children were as able to take care of themselves as we were, and more so, so I considered it just cold-blooded business for us to turn over to the Union Central Life Insurance Co. our life savings, and we did it. We are both tickled to death about it and laughing at our neighbors because they are still hanging on.

I am not ashamed to tell the world that after over 35 years with my helpmeet, working like a pair of slaves to feed society and try to give our children advantages and just a little education, we had to surrender our entire life savings or spend the rest of our earning power in battling with a condition that was absolutely hopeless.

Senator THOMAS of Idaho. How many children did you raise?
Mr. TALBOTT. We have three children.
Senator THOMAS of Idaho. Are any of them farming ?

Mr. TALBOTT. No, sir. I persuaded them to leave the farm for the same reason I left it. We would go back to a farm if we had an opportunity, and this will give us that opportunity, Mr. Chair

Senator FRAZIER. I wanted to say that I know Mr. Talbott's farm. I have know Mr. Talbott for a number of years. He had a good farm, in a good section of North Dakota, but under the conditions that prevailed, he, the same as many others, could not make enough off the farm to pay the running expenses, and decided to quit, instead of remortgaging and renewing the mortgage, and adding the interest in with it and going on. There is not much chance for the


farmer under the present conditions. The longer he holds on, the deeper he goes into debt.

I want to say at this time that if we do not get through by noon to-day, we will go on this afternoon. We will start at 2 o'clock and run for two or three hours this afternoon.

Mr. TALBOTT. I might say, for the benefit of the committee, that I am the State president of the only farm organization in my State, I may say, because the others that have been organized there are not functioning. We have enrolled, out of 75,000 farmers, about 36,000 of those farmers in the Farmers' Union. I feel that I am in touch with the farm problem every day, because I cover the entire State. Our organization is set up in township locals, in county organizations, and in subdivisions exactly like the political government of the United States. I have a very wide acquaintance with farmers, and know their individual problems, and I feel that I do understand what is going on, especially in our Northwest area.

Not only that, but I am traveling constantly in the Mississippi Valley, interchanging speaking dates with our other organizations. I have covered a lot of Iowa and a considerable portion of Kansas. I originally came from Missouri, and I see some of that territory in my travels, so that I feel that I know something about the farm situation from the practical standpoint.

Gentlemen, briefly, in discussing this problem and this bill with the people in my territory, they feel that especially since the socialistic bill was passed a few days ago by the House and Senate to rehabilitate the big bankers, the railroad companies, and the big insurance companies—and no doubt they need it; we will accede to that—but the same people who have cried, “ Socialism" against us Bolsheviks out on the farms, have gone to the United States Government and asked for the most socilistic program that has ever been put over in the history of this Government. We feel that, without any blush of shame, we can come and ask for the same thing.

In this bill we are not asking for charity. We are just asking for a square deal. The majority of these farm debts were contracted on the basis of an inflated currency, the same as the basis of the war debt. The bill provides for a limitation of this refinancing to the existing indebtedness. As has been stated here before, that existing indebtedness was made on the basis of what was then judged by the shrewd financiers of this country to be the value, because of the fact that they bought these bonds and took these mortgages on the basis of not more than 50 per cent of their actual value of the land at that time.

I am satisfied that any fair-minded Senator or Congressman can not pick a hole in this bill, except in the matter of details, such as the points raised here by Mr. Bestor, because of the operation of the machinery. I am not so clear in my mind as to whether we have overlooked anything in this bill, in the way of some detail of the cost of operation. I do not want to discuss that. It can easily be provided for.

Senator THOMAs of Oklahoma. On that point, is it not a fact that the farmer pays all the preliminary expenses in connection with a loan from whatever company he gets it?

Mr. TALBOTT. I know I did.

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