farmer the egg crop represents about 10 per cent of his total income. I think what is true of Illinois, in this connection, is substantially true of most of the States in the Middle West.

A short time ago, probably a year ago, Senator Borah, I think it was, made a statement that around 4 per cent of the people of the United States were receiving about four-fifths of the national income. Now, this is an astounding situation, when, as a matter of fact, I think the farmer, out of the 96 per cent, has received less than his share of the one-fifth.

It has been within the last hundred years that some 30,500,000 acres of farm land in the State of Illinois came to those Illinois farmers from the Government and the Indians, at a cost of approximately $1.25 per acre. In 1925 the value was given by the Bureau of the Census at $136 per acre, and mortgaged for around $57.

Now, that is a higher figure, by the way, than the Bureau of the Census gives it.

Senator MCGILL. Where do you get that figure from?

Mr. KENNEDY. The Bureau of the Census in their calculation of mortgage indebtedness only include the owner-operated farms, and then only include those owners that are at home when the census enumerator comes around. But there are the absentee landlords who have mortgages on their farm, and those that were not home when the census enumerator came, that also have mortgages.

This means that about 41 per cent of its value is mortgaged, and it also means that by 1925 Illinois farmers had lost in the operation of their farms more than 45 times the original cost. This is the penalty that the farmers of the State of Illinois have paid to engage in the noble occupation of feeding the world.

In a survey which I made for the Farmers' Union in 1925, substantially the same condition was revealed in six or seven other of our best States in the Mississippi Valley.

From 41 to 51 per cent of the value of the farms in these States were mortgaged or represent a debt. The balance represented an equity which since has become questionable.

The money the farmers lost in the process of food production has passed into the hands of the money lenders. of Wall Street, who, in turn, exchanged this money for a mortgage on the food-producing lands of the Middle West, and now these fellows are engaged in taking over ownership and engaging in the operation of these farms through the plan of corporate ownership, or what we now call corporation farms.

I just want to digress for a moment here. What, in fact, has happened to the process of food production with the farmer is just what would happen to a factory worker if every Saturday night when he

got his pay check he would be required to sign a note for that amount

and pay interest on a large portion, if not nearly all, of his weekly wages.

The international bankers of Wall Street thus, by special privilege and by governmental protection of their system, slowly but surely are becoming the owners of the land and controlling the food production in the Nation. This is slowly but surely wiping out the family farm, the farm home, the bulwark of this civilization, and what strength and power there is left in our principle of government and in our system of government.

I am not so sure that what happened to the farmers of the Nation has not also happened to the Government itself, and to the political subdivisions of it. In this connection I have reference to the spree of public bond issues, not only of the National Government but also the political subdivisions, such as the States, counties, towns, and municipalities throughout the land.

The city of Chicago, just north of where I am, is considering the question of whether or not they will have to have a receiver appointed for the city. I saw a statement the other day that I think represented that 50 per cent of the income from taxes in that city is going to the payment of interest on the public debt.

Senator MCGILL. They tell me that the school-teachers of Chicago have not been paid for about nine months. Is that correct? Mr. KENNEDY. That is my information.

Senator MCGILL. They are working for no salary at all, just on a promise to pay?

Mr. KENNEDY. Yes.

Mr. SIMPSON. They get scrip.

Mr. KENNEDY. And that scrip is being discounted at about 20 per cent and sometimes more. And not only that, but the school-teachers of Chicago, if my information is correct, are feeding hungry children who come to school in the morning without breakfast, out of their savings, whatever they are.

The plain people of this Nation now have their food-producing lands in hock with Wall Street, or, more exactly, the international bankers, as that is about where they are in the final analysis.

We have not even been considerate enough to choose nationalists with which to hock the farmlands of this country, but have put them in pawn with internationalists.

Senator THOMAS of Oklahoma. What do you mean by international bankers?

Mr. KENNEDY. The international bankers who are so much interested in loaning money to foreign nations, who deal in foreign credits and foreign finance as much as they do in this country.

Senator MCGILL. And sell foreign bonds in this country.

Mr. KENNEDY. Yes; and hand them out to the people at a substantial profit to themselves.

Senator MCGILL. And at a loss to the American citizen.
Mr. KENNEDY. Yes; and of no loss to the bankers.

What we have pawned in this respect-in my judgment, the agricultural lands of this country is the most sacred possession that the people of this or any other nation have. Unless it is a more sacred right to have a government of the people, by the people, and for the people. It has also pawned these last-named rights or principles with each successive bond issue of the National Government, the State, municipality, county, and township throughout the land. This may be the real reason why the farmers of this Nation in the past have been doled out legislation that makes the source of its aid, and therefore the value of its aid intended, dependent on international bankers.

The Frazier farmers' relief bill is designed to relieve or make unnecessary such dependence on Wall Street and put the administration of it in the hands of those that it will benefit, and with the

Government performing in part at least its proper function in carrying out its purpose.

In this connection I do not intend to discuss the details of the Frazier farmers' relief bill.

Senator MCGILL. That is what I wish you would do.

Mr. KENNEDY. But I should like to say this about it, that the bill itself seeks to refinance the existing farm mortgages in the United States. It seeks to do that. It leaves one or two other avenues open, but primarily to make the farm lands of this country the security upon which our currency should be issued; to increase the circulating medium to make money cheap, and to make commodities high enough in price at least so the plain people, the common people, the farmers of this Nation, might be able to pay off their debts.

In 1920 I was farming out in central Iowa. If I owed a note at the bank, which I did at that time, of several thousand dollars, I contracted that note with my ability to pay it in corn at a dollar and a half a bushel. When corn went down to 50 cents a bushel I had the same problem on my hands as if the banker had changed the figure on that note and raised it 300 per cent.

And the same is true with taxes; same is true with interest and every other fixed charge that the farmer has. He has had no reduction in the value of his debt, but he has had a tremendous reduction in the value of the product with which he must pay his debts.

Senator THOMAS of Oklahoma. Don't you admit that inflation, putting additional money in circulation, would bring about a vast benefit for the farmers?

Mr. KENNEDY. Inded, Senator, it would be a vast benefit. Not only would that increase, in my judgment, the price of farm commodities but it would loosen up frozen assets that are in the banks. I do not know of a farmer in my county who can go to the bank and borrow any money. I know a farmer in Iroquois County that has 80 acres of perfectly good land and he wanted to borrow enough money to pay his taxes with, and he could not borrow. It did not have a dollar of debt against it. They are not loaning money.

Senator THOMAS of Oklahoma. The facts are that the banks have plenty of what they call money on deposit. They have in excess of 50 billions on deposit. A year ago it was just a little bit less than 60 billions, 59 billion and several hundred million. Deposits have been going down, but there is still around 50 billions of what is termed money in the banks. Yet you can not go and get a dollar of it without you have money on deposit. You can not go and borrow it.

Mr. KENNEDY. That is right. At Urbana about three weeks agothat is where our State Agricultural College is located-the young mayor of that city declared six holidays in succession, as holidays in order to prevent a run on the banks there. Two banks closed, and in order to not officially close the banks but to declare a holiday, six Sundays in succession, so that it might not have a run on it. And that was done in one or two other Illinois towns that I know of.

Now, I happened a short time ago to be talking with one of the bankers in Kankakee, and he expressed this view: That their deposits were all demand deposits. Therefore, their loans to offset them he told me should be demand loans, of 30 or 60 or 90 days com

mercial paper. That is positively of no use to the farmer. The farmer only has one pay day a year, and that is a sort of an arrangement that is no good. Of course, there is a good deal of the money that is idle, that is true, but the balance of it, especially in 1929, was invested in stocks and bonds.

Senator THOMAS of Oklahoma. The trouble about this money problem, as I see it, is that big deposit does not exist except as a sort of a fiction. While the banks to-day have on deposit something like fifty billions of dollars, actually they would not have in their vaults one billion dollars.

Mr. KENNEDY. That is true.

Senator THOMAS of Oklahoma. One billion dollars of gold, silver, or paper, the kind of money that you boys pay your restaurant and hotel bills with.

Mr. KENNEDY. That is right.

Senator THOMAS of Oklahoma. So that this 49 billions that they have on deposit is nothing more nor less than credit.

Mr. KENNEDY. It is sometimes referred to as phantom deposits. It is merely a fiction or paper affair.

Senator THOMAS of Oklahoma. So that the banks, you might say, have plenty of credit money on deposit, but they do not have enough of real money to, in other words, make this credit money volatile and circulated.

Mr. KENNEDY. That is true, and the Frazier bill, if it becomes a law, will in a large measure remedy that situation.

Mr. Chairman, I have a graph here. The source of it is the Bureau of the Census. My understanding of it here is that this represents public debt. The per capita public debt in the State of Illinois was around $2 in 1915. It has grown in 1930 to around $27.50. That is approximately the rate at which the public debt of the State of Illinois has grown, on which the people have to pay interest. Senator MCGILL. That is the bonded indebtedness of the State and municipalities and counties; is that what you mean?

Mr. KENNEDY. Yes, that is my understanding of this figure here. Senator HATFIELD. I understand it is the obligation that the individual taxpayer would owe, or the individual citizen, that is based upon the population of the State, is it not?

Mr. KENNEDY. Yes, of a public nature.

Senator MCGILL. You mean, Senator, all public debts of the State and municipalities and counties?

Senator HATFIELD. That is right.

Mr. KENNEDY. I have a statement here. This deals, however, with the State of Iowa. It is an editorial that appeared in the Des Moines Register. The caption of it is: "Farm Mortgages Cut $300,000,000.”

Preliminary estimates based upon the 1930 census indicate a surprising liquidation of Iowa farm mortgages since January 1, 1928. In that period there was a decrease in this State of more than 300,000,000, almost 30 per cent of the total, as compared with the decline of 2.4 per cent over the entire country. The impression is intended to be created here that the Iowa farmer is prosperous enough to pay off his mortgages. That is not true.

The same impression is carried in some of the daily papers in the State of Illinois as a result of the census figures, showing a slight decline in the mortgages as a whole. I would venture to say that probably 99 per cent of this $300,000,000 has been the result of fore

closures and bankruptcies or surrender of farm property without the process of foreclosure, and thus a farm that was heavily mortgaged becomes free of debt, because the mortgagee becomes the title holder.

I just wanted to make that observation here, because we have so much of that sort of misinformation to deal with.

Senator HATFIELD. Who generally would become the title holder in case of the sale under the mortgage?

Mr. KENNEDY. Usually a life insurance company.

Senator THOMAS of Oklahoma. Under present foreclosures there are no bidders save the mortgagees?

Mr. KENNEDY. That is substantially the only one that is there to buy in the land. The county judge in Kankakee County told me the other day that between 250 and 275 farms in Kankakee County were in the process of foreclosure right now.

Senator MCGILL. Life insurance companies generally speaking are mortgagees in these cases?

Mr. KENNEDY. Quite a number of them.

Senator MCGILL. More than other mortgage companies?

Mr. KENNEDY. That same condition prevails all throughout the farming sections.

Just as an indication of how the farmers in our State feel regarding this bill, I sent for several copies of this bill and got them from Mr. Lemke, and this carries on one fly leaf a petition (exhibiting). I just got in this morning the names of about 180 farmers all of whom are farmers in central Illinois and they are asking for the passage of this bill. I do not mean to say that they are all the farmers in Illinois who are interested.

Senator MCGILL. Has this particular bill been analyzed and passed around and read by them?

Mr. KENNEDY. Every one has had a copy of it. They have gone over it, I think, rather carefully and it has been discussed in the farmers union meetings there.

Senator MCGILL. Is it not a fact that our medium of foreign exchange has been quite a handicap to people engaged in agriculture? Mr. KENNEDY. In what respect do you mean, Senator?

Senator MCGILL. Well, the fact that more than half the nations of the world are on the silver standard; they are not on the gold standard. Less than half are on the gold standard. It takes what would constitute five dollars' worth of silver, as I understand it, to make one gold dollar over here. For that reason you people are unable to exchange whatever surplus products you might have in a country of that character. Has not that been one of your great handicaps?

Mr. KENNEDY. That has. They have had cheap money and we have had dear money.

Senator MCGILL. The Senate of the United States at the last session of Congress, without any dissenting vote at least, I regard it as unanimous-requested the President to call an international conference on that question for the purpose of establishing some method of foreign exchange whereby the markets of the silver-using nations would be open to the surplus of America. Do you think it would be a good thing for the President to call that conference?

Mr. KENNEDY. I think it would be a good thing if the result of the conference would broaden our markets.