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Mr. LEMKE. We come next to a resolution introduced in the State of Iowa in which there was an appropriation of $25,000 to send a committee down here to lobby for this bill or a similar bill. That got a majority of the vote in the Senate, but not a constitutional majority. It lacked one vote.

I will say that if the gentleman who had charge of it had consented to an appropriation of $10,000 the bill would have got a constitutional majority and that State would have been represented here by the governor, the lieutenant governor, and six members to appear before the committee and see what could be done.

Then last, but not least, is the resolution just passed by the special session of the Legislature of Wisconsin, and it passed unanimously in both houses. It asks this body, the Congress, to pass a farmers' relief bill. It is know as Joint Resolution No. 16. I am informed that Senator Blaine read the original or a copy into the Congressional Record.

(The resolution of the Legislature of Wisconsin, referred to and submitted by the witness, is here printed in full as follows:)

[State of Wisconsin, in Senate. introduced by Senator Keppel.

Senate Joint Resolution 16. December 15, 1931,
Referred to committee on agriculture and labor]

JOINT RESOLUTION MEMORIALIZING THE CONGRESS OF THE UNITED STATES TO ENACT THE FARMERS' FARM RELIEF ACT

Whereas American agriculture has been all but destroyed through the period of price fixing and deflation; and

Whereas thousands of farmers have lost their farms during the past ten years and thousands more are at this time being ousted from their farms through the process of mortgage foreclosures: Now, therefore, be it

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Resolved by the senate, the assembly concurring. That the members of the Legislature of the State of Wisconsin hereby respectfully memorialize the Congress of the United States to speedily enact into law the bill known as The farmers' relief act which provides for the establishment of an efficient credit system whereby the unjust and unequal burdens placed upon agriculture during the period of price fixing and deflation may be lightened and for the liquidation and refinancing of agricultural indebtedness at a reduced rate of interest through the Federal farm loan system, the Federal reserve banking system, and the postal savings depository system, and creating a board of agriculture to supervise the same. Be it further

Resolved, That properly attested copies of this resolution be transmitted upon adoption to both houses of the Congress of the United States and to each Wisconsin Member thereof.

Senator THOMAS of Oklahoma. Does that refer to the Frazier bill?

Mr. LEMKE. Yes; all of them do.

Senator FRAZIER. Some of them refer to the one introduced at the last session.

Mr. LEMKE. All of them refer to the bill introduced at the last session.

Senator THOMAS of Oklahoma. It is substantially the same bill? Mr. LEMKE. It is identical except as to rate of interest.

We found that the Federal reserve bank was loaning money at 112 per cent to member banks in New York, and foreign borrowers were receiving money at 112 per cent, and we concluded that we were as good as the people of New York and the people of foreign nations, so we are asking the same rate as they are getting-12 per

cent.

Senator THOMAS of Oklahoma. You state that the Government has loaned bankers in Europe at 12 per cent. Do you have anything more definite on that?

Mr. LEMKE. The Literary Digest claimed that the Federal reserve bank loaned $250,000,000 to the Bank of England. That was in the month of November, was it not, at the time that bank was rather in a desperate way?

Senator THOMAS of Oklahoma. In connection with the French loan?

Mr. LEMKE. Yes. And we refinanced all their foreign indebtedness, which we understood was, simply, at the time we entered the war, the people of the United States assuming all indebtedness of the financiers to the extent of $15,000,000,000, and when we went into the war we had to assume that indebtedness. I am not criticizing. I think it was absolutely essential to do it. The bond issue was largely used as a credit proposition to offset that indebtedness, and that has been scaled down to about seven or eight billion.

Senator THOMAS of Oklahoma. You do not understand that the Government has any money itself to lend excepting through regular institutions like the Federal Farm Board?

Mr. LEMKE. And the Federal reserve banks.

Senator THOMAS of Oklahoma. The Federal Reserve Board furnishes money to the several Federal reserve banks, and they do not get any interest at all on it. The Treasury furnishes the 12 Federal reserve banks all the money they want at no interest, and all it costs is the printing.

Mr. SIMPSON. About 90 cents a thousand.

Senaor THOMAS of Oklahoma. And then the Federal reserve banks under the law make loans. They are restricted by the law in the making of those loans. I was trying to develop what you have in mind about the 12 per cent.

Mr. LEMKE. I am going to be very frank. Some of us people in the West believe that Uncle Sam is cartooned like a farmer because it is just as easy to put things over on him as it is on the farmer.

Senator FRAZIER. What do you understand that the reserve banks pay for those notes?

Mr. LEMKE. They do not pay more than one-half of 1 per cent for the printing, and they can keep them a thousand years if they wish to, and they loaned them out at a rate as low as 12 per cent last fall to New York banks, and they usually charge a good deal more, 4, 5, or 6 per cent. During the crisis, when the farmer was made the shock absorber in the deflation, a Mr. Strong, president of a First National Bank, made the statement to me that the Federal reserve bank, during the period of deflation, compelled local banks, which had to stamp "Payment guaranteed "on notes, to renew their notes every 15 days at 7 per cent interest, and which, together with revenue stamps, brought the cost up to 35 per cent per annum. You will remember that during the inflation the Federal reserve bank increased the currency in this country by about $2,700,000,000. Then in 1920, especially toward the beginning and the end of 1921, there was $2,000,000,000 that the Federal reserve bank had yanked away from the people, and the farmer was acting as a shock absorber because he was not organized.

I want to say to this committee that the local banks throughout this Nation are back of this bill, with practically no exception. There may be some that I do not know about, but in my State and in Minnesota bankers have come to me after I have made an address on this bill, saying, "I am one of these bankers. I am still open, but unless something is done my bank will be closed, and with it will go my life, because I am 65 years of age and I can not stand the racket."

The only banks that I know are opposed to it are the so-called chains or branch banks; and I could testify that they are not all opposed, because I recall that the Senator has one letter from a chain bank who is strongly for this bill and who says that unless it passes there can be no restoration of prosperity.

I have made those observations and I want to make a few others before I begin on the bill proper.

It is easy for somebody in authority that we think ought to know, to throw out an expression, and then if the newspapermen take it up we are all inclined to believe what he has said, and then it is repeated and repeated until it makes a dent on our brain cells, and finally we accept it as a fact.

I want to talk about hoarding a minute. I will say that no person who is informed on the money situation in this Nation will accuse the people of this country of hoarding.

Senator FRAZIER. Did the deflation start in 1920?

Mr. LEMKE. It started in 1920, and it was brought to a crisis in December, 1921. At that time they had withdrawn about $2,000,000,000.

Senator FRAZIER. Is that what brought about the deflation?
Mr. LEMKE. It did with the farmers, unquestionably.

There are a few things that I think we can agree upon, Senator, and one is this, that the amount of money in circulation has a direct bearing upon the standard of living and the prices of commodities. There can be too much money as well as too little. There ought always to be enough units of exchange; and that is what money is. Let us forget about gold and silver. To me paper is just as good as anything else, provided the United States Government has its stamp on it and does not issue too many or too few. We are told that there is forty or fifty billion on deposit, but only a billion at most in the banks to-night

Senator THOMAS of Oklahoma. The records will show that there is not a billion dollars. It is only eight hundred million. There has not been a billion on any night in recent years. The records will show that.

Mr. LEMKE. I would rather err on the other side than on the side of being unfair to these banks. They draw interest on all of that money.

Suppose my friend has a thousand bushels of wheat out in the street and he has a hundred men to measure that wheat and there is a rain coming on and he has got to get it out of the way. He has a hundred half-bushels with which to measure it, 99 of which are made of sheet iron and one is made of gold. Those men are all at work. You have employment and just enough half bushels with which to do that work. Suppose somebody should come along and say, "You get out; we only want the gold half-bushel." Then you

have 99 men out of employment and one working on a job that is too big for him.

On the other hand, I can give you illustrations where you can have too much. Suppose we have a million bushels of wheat out here and we have 100 men to measure it and we have 10,000,000 half-bushels on top of it. Then we have too much. But these economists I know will agree with me that the amount of money in any Nation, the unit of exchange, can be figured out so that every one will have a yardstick. What is money? While we are on it we might as well give our different viewpoints. It is a medium of exchange, a measure of value, a unit of exchange, with which you and I measure the muscle and brain energy of the people of the United States; and the people of the other nations do the same. Consequently under an intelligent government there never can be idleness as long as there are human wants and as long as there is raw material.

I say that the present condition of the United States of America is unnecessary, uncalled for; and I repeat that my friend Glenn Frank told the truth when he said it was because there has been a breakdown of economic leadership in the various capitals of the world.

The farmers in my State are selling potatoes at 15 cents a bushel

Senator FRAZIER. They are 10 cents, now.

Mr. LEMKE. And they pay 9 cents for the sack to put them in. I asked a farmer what he was doing that for, and he said he had to buy some gas so that he could plow and plant some more potatoes

next year.

The people of the South have been told to destroy one row out of every three rows of cotton. There are millions of people that need clothing. There are 7,000,000 out of employment entirely and 7,000,000 more on part time. Why is that? Because some fool says there is not enough to pay them off on Saturday night.

I am not sure just how to arrive at the amount of money that is in the banks.

Senator THOMAS of Oklahoma. The controller's report is the only evidence. He submits a report to Congress on the first day of the session, in December, and his report is made up as of June. There is no report in recent years that I have discovered that shows as much as a billion dollars in any of the banks at one time, in real money.

Mr. LEMKE. This is the Federal Reserve Bulletin of January, 1932, and I have been trying to find out. I have suggested to the Senator here that nearly all of the money in actual circulation in the United States, shown on paper, is in a few large cities, and that the rest of us feel, at least we in South Dakota, that our per capita is lower than that of the peon in Mexico.

Let us take the city of Boston. That had $230,799,000 on that date. Senator THOMAS of Oklahoma. You mean, the Federal Reserve Bank of Boston?

Mr. LEMKE. All the banks, the Federal reserve banks.

In Philadelphia we have $242,941,000.

In New York we have $881,477,000.

Senator THOMAS of Oklahoma. That money is not in circulation. That is money in the vaults of the Federal reserve banks. That is

not where anybody can get it. Some member bank has got to borrow that money before the people have a chance to get it. So that money is not in circulation. Down at the Treasury they have $8,000,000,000.

Mr. LEMKE. That is not in the bank.

Mr. SIMPSON. It is not even in a bank.

Senator THOMAS of Oklahoma. None of it is in circulation

Mr. LEMKE. I think that you will find practically half of all the money actually in circulation in those four cities, and the rest of this Nation must get along somehow on the balance.

Senator NYE. Mr. Chairman, not being a member of the committee, may I be permitted to ask a question?

Senator FRAZIER. Go ahead.

Senator NYE. I am just reminded that the governor of the ninth Federal reserve district is contending that 60 per cent of the money in that district is being hoarded. What is your reaction to that? Mr. LEMKE. I would say that he is absolutely mistaken, and that his optimism gets the better of his judgment; and I will go further and say that some of these people, if they go on estimating that way, will be like the ostrich with his head in the sand until something butts them over.

I will give you some other figures on the banking situation. Our friend from the Federal land bank spoke about this being just temporary. I do not understand why those men are always fighting on the other side of the table when they are supposed to represent institutions that should be run in favor of the farmer.

Let us consider the Treasury reports. I want to call your attention to them. Here is a statement of the United States money on October 31, 1930, and then we go to money outstanding outside of the Treasury. We have on October 31, 1930, $4,492,603,000, of which one billion, three hundred and forty-nine million nine hundred and forty thousand and some odd dollars were Federal reserve notes. Bear that in mind. There was a per capita circulation a little over a year ago of $36.30. That is in circulation on paper. One fourth of that, I am told, is in foreign countries.

Senator THOMAS of Oklahoma. On the question of the amount in circulation in foreign countries, what information have you to base that statement on?

Mr. LEMKE. I have followed the commercial reports as closely as possible, and a few years ago there was $253,000,000 of Cuban loans. Of course, there is some in Mexico, because I have received. American gold, $20 gold pieces, 800 miles south of the line, when I cashed a draft for $200. That was in a mercantile business. If you go to any of the larger cities in Mexico and have a United States draft you can get either United States gold or paper money for it in exchange.

Senator THOMAS of Oklahoma. You can go any place in the world and do that.

Mr. LEMKE. I will also say that Senator Ladd gave me that as approximating the amount. He claimed that about one-fourth of the money at that time was in circulation in foreign countries.

Senator THOMAS of Oklahoma. I have tried to get information and I have submitted inquiries to the Treasury Department and to

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