Mr. KLEBERG. The reason I ask that is, of course, as you know, that a majority, or rather a very high percentage of the acreage of the United States is operated through livestock, which branch of the agricultural industry has to help pay the taxes, and it is the only branch of the agricultural industry that has not received adequate credit facilities.

Mr. MYERS. In Texas, as you know, Mr. Kleberg, the situation is being handled and mortgage loans are being made to livestock men on their deeded land.

Mr. KLEBERG. Yes.

Mr. MYERS. The problem is extremely complex, because in many range States the deeded land is a small amount. It is not an economic unit in itself, but it is operated in conjunction with the public domain, or the forest land, or State land, or railroad land, or some combination of them.

Mr. KLEBERG. Or a leasehold.

Mr. MYERS. Yes.

Mr. KLEBERG. I understand how complex it is.

Mr. MYERS. Now, the problem is this: With the permits of forest lands and the leases on public domains running for a short period, being considered as personal property and not tied in with deeded land. We cannot go so very far in making mortgage loans on deeded land which requires such other property for the purpose of utilizing it, because we have no assurance that the owner of the deeded land will be able to continue his use of the forest land or the public domain in conjunction with his deeded land..

Of course,

Mr. KLEBERG. One more question and I will be through. Mr. MYERS. We are going just as fast as we can. where we can get leases or permits tied in with deeded land to make a real-estate unit, as you have in Texas on the type of farming you have, so that you have a completed unit able to operate for a long time, loans can be made.

Mr. KLEBERG. Now, on the question of limitation. Is there any change in the limitation of the amount that can be extended to a borrower, in these amendments?

Mr. MYERS. No. The limitation, the maximum, is $50,000 for land-bank loans and $7,500 for Land Bank Commissioner loans.

Mr. KLEBERG. There should be an additional amount. A certain group of farmers, if they have this additional credit made available to them would be saved. They are a small percentage.

Mr. MYERS. The percentage in number is small, but the total amount would be large, perhaps.

Mr. KLEBERG. It is a fact that in the range-cattle industry it would be pretty large.

Mr. MYERS. Of course, if we keep this limit within the 50,000 or 7,500, unless we can meet the problem, tying in leases with deeded land, so as to increase the unit operation in some way

Mr. KLEBERG (interposing). But if that is done, Mr. Myers, would it not be proper and of real advantage to make some arrangement for a particular exemption whereby the limitation of $50.000 could be removed to a higher bracket with the consent of the Commissioner or the Governor of the Farm Credit Administration?

Mr. MYERS. You would suggest putting the discretion in the Administration? Mr. Chairman, I think that is a question for Con

gress-something you must decide. I am not unfriendly toward any amendment which will help agriculture or the cattle industry.. Mr. KLEBERG. I understand that.

Mr. MYERS. The higher or more liberal loans do involve somewhat greater risks. The experience during the depression has been that they always fare worse. But the question of limitation of loans is a question which Congress must decide and on which I do not think it is proper for me to express an opinion.

I will be glad to state my view if you wish me to.

Mr. KLEBERG. That is all right.

Mr. ANDRESEN. May I ask another question?

The CHAIRMAN. Mr. Andresen has a question, Mr. Myers.

Mr. ANDRESEN. My Myers, is it contemplated to change the policy of the Federal land bank which now compels a creditor to accept bonds instead of cash?

Mr. MYERS. The present regulations require the creditor to accept Federal Farm Mortgage Corporation bonds, which the Government guarantees as to principal and interest.

The policy and procedure is this: The farmer gives a mortgage to the land bank, and the land bank issues a bond, a first-mortgage bond, which is really purchased by the Government through the Federal Farm Mortgage Corporation. The Mortgage Corporation, instead of buying them for cash has paid for them in these Federal Farm Mortgage Corporation Government-guaranteed bonds, which are thereafter issued to the creditors of farmers.

The Federal land-bank bonds, contrary to popular opinion, have never been guaranteed in any way. The creditor gets the Government-guaranteed bonds. The question of whether to pay out cash or bonds is a question that involves the whole financial policy of the Government. The Federal Farm Mortgage Corporation bonds were quoted in last night's paper at 10012 and the creditors take them as equivalent to cash.

This amendment would permit us to allow a creditor to take landbank bonds when willing to do so. We would not want to require them to take land-bank bonds, and we do not want to be required to give them land-bank bonds; but we would like to have it made flexible so that we could give them, because the Federal land-bank bonds are wanted, when they are willing to accept them. We want to be able to use them in making loans.

Mr. ANDRESEN. They are not guaranteed as to either principal or interest?

Mr. MYERS. No. They are bearing a higher rate of interest and would be perfectly satisfactory.

Mr. DOXEY. May I ask a question?

The CHAIRMAN. Mr. Doxey.

Mr. DoXEY. In your opening statement you said that you hoped the Federal land-bank bonds could go on the bond market within a year. Mr. MYERS. Yes.

Mr. DOXEY. And the Government would not have to take these bonds?

Mr. MYERS. Yes.

Mr. DOXEY. What particular bonds are you talking about-the Federal land-bank bonds?

Mr. MYERS. Yes.

Mr. DOXEY. The ones that are not guaranteed?

Mr. MYERS. Yes.

Mr. DOXEY. Now, going a step further, what evidence have you that that happy condition will be brought about, other than the general improvement in the farm condition which you spoke of?

Mr. MYERS. All of the outstanding Federal land-bank bonds are selling above par.

Mr. DoXEY. That is fine. And are insurance companies and other people going in for them?

Mr. MYERS. Yes.

Mr. DOXEY. In a big way?

Mr. MYERS. There has been a very keen investment demand for them, due partially to the improvement in agricultural conditions and partially to the fact that Congress has stood behind the Federal land banks in dealing with the farmers in this emergency. But it seems to me that the sooner the Federal Government can get out of the purchasing of land-bank bonds the better it will be for all concerned.

Mr. DOXEY. I heartily agree with you, but I was trying to find out what progress has been made that would indicate to you at the present time that that will be brought about within this current year.

Mr. MYERS. I think the chances are very good if we do not have too much disturbing legislation.

Mr. TOBEY. Mr. Chairman, may I ask a question?

The CHAIRMAN. Mr. Tobey.

Mr. TOBEY. Mr. Myers, this whole thing depends entirely upon the financial set-up, does it not? It is nothing more than a house of cards, is it?

Mr. MYERS. I do not think it is, just a house of cards. The $1,100,000,000 in land-bank loans-certainly, before this program was put into effect, we were in much worse condition. I am glad to say that it is much better, and these bonds are now quoted at 101.

Mr. TOBEY. Yes; but of course the entire program depends upon the money market not only in this country, but in other countries, does it not?

Mr. MYERS. In part, and in part upon farm conditions.

Mr. TOBEY. Is it not all built up, more or less, upon a house of cards, depending upon the money market and whether they can buy these bonds?

Mr. MYERS. It is affected by the money market, as well as by the agricultural program.

Mr. TOBEY. You understand I am not criticizing it.

Mr. MYERS. I understand.

Mr. HOPE. One other question.

The CHAIRMAN. Mr. Hope.

Mr. HOPE. This committee has other bills before it which provide other methods of agricultural financing than that proposed in this bill, and the proponents of those bills are urging their enactment on the ground that the Federal land banks cannot, or will not, make loans at this time that meet the needs of a large class of people engaged in agricultural pursuits.

Now, I would like to have the information, if you are in a position. to give it, as to what proportion of your loan applications it is neces

sary to reject because you are not able to finance the applicant on account of the amount of his existing indebtedness?

Mr. MYERS. Mr. Chairman, I hesitate to give figures from memory. I would be glad to provide that. I do remember, off-hand, that something over 70 percent of all applications received have either been closed or we have been able to make a commitment. Now, in some of these cases where commitments were made the loans were not made because the creditors were unwilling to take the amounts that could have been loaned, or preferred to carry the loans themselves. But we do have considerable information, and I will be glad to make it available to you.

We have attempted to make a loan on what the farmer could expect to receive as farm income. We have not made loans outside of what the farmer could expect to receive from the operation of the farm; and, as I say, some creditors have preferred to carry the loans themselves.

Mr. HOPE. Now, in addition to the information that you may have acquired by a study of those applications, have you made any study of the farm-credit situation to determine whether or not, generally speaking, there is a large proportion of farmers who cannot be financed through farm-credit sources?

Mr. MYERS. We do have some facts bearing on that.

First, is the fact that we are now getting 4 or 5 thousand applications a week as compared with 18 to 20 thousand a week previously, which means either that the large percentage of farmers may have been refinanced, or that a smaller percentage wants to be refinanced; and, also, that other creditors are coming back into the loan field. So that my belief is that through the operations in all parts of the United States, generally, we have taken care of a large percentage of the farmers who are going to play fair, and are willing to play fair.

Mr. HOPE. I would suggest, Governor Myers, that it would be helpful if you could submit to us all of the information you have covering any phase of the question.

Mr. MYERS. Here is another angle that is shown by the fact that in addition to the drop in the number of applications the situation is very much better than it was a year ago, or even 8 months ago, because I think the loan policy of the Federal land banks has been improved or operations have been improved in other lending agencies. But we will furnish all the information we can.

Mr. MARSHALL. Mr. Chairman, I would like to ask the Governor a question.

The CHAIRMAN. Mr. Marshall.

Mr. MARSHALL. Mr. Myers, I am very much interested in this matter. You made a statement that you could furnish and would furnish some information in regard to the percentage of applications? Mr. MYERS. Yes.

Mr. MARSHALL. That have been granted?

Mr. MYERS. Yes.

Mr. MARSHALL. Would it be possible to do that by States? If it would I would like to have it by States.

Mr. MYERS. I think so.

Mr. MARSHALL. There is not any specific reason I have, except I would like to have that for my information.

Mr. MYERS. Certainly.

Mr. MARSHALL. I am not criticizing this act, you understand, or the way it has been administered, because I think you are doing the best you could. But in regard to the question asked by Mr. Hope, to reach the same point that he had in mind-that is, to a certain extent-this law has really not met the situation. And I would like to have an answer to this question, or to have the information, or perhaps you can hand it to us if you have it, but you would not even know from the applications that have been made, would you, just the number of people who need help in refinancing their obligations. What I mean by this inquiry is that the number or percentage of loans granted as compared with the applications has only one bearing on the agricultural situation. Just in my own district I know a number of people who have been told by the secretary of the loan association that it would not be necessary for them to make an application, and the secretary would not even take their money and discouraged filing an application.

You would have to have that information, would you not, to know how many were in need of refinancing help?

Mr. MYERS. I would say, Mr. Marshall, that there are about 2,600 individual committees operating in every section of the country. Now, these committees have referred to them the distressed debtor cases. First, if a man comes to the national farm-loan association for help and the present arrangement prevents his securing a loan, or if he has made an application and is unable to work out a loan, usually an arrangement is made for an application to be filed, and a very large number of these difficult cases have been referred to these committees.

Now, there are 2,600 committees, as I stated, to whom are referred a large number of these distressed cases. Now, those are not committees working under our administration. Those committees are appointed by the Governors of the various States, but it has been the purpose of the whole program to see that the good farmer, who is making an honest effort, is not dispossessed but is given a chance to work out.

The CHAIRMAN. I may say in that connection that we will probably have some hearings on these other measures, at which time we may want to develop this matter more fully, and no doubt the members of the committee will want to go into the question of the policy involved in those measures.

However, I think that this act has really accomplished something worth while. But we do not wish to delay this bill too much by going into those other questions.

Mr. BOILEAU. Mr. Myers, many farmers have made applications for loans, of course?

Mr. MYERS. Yes.

Mr. BOILEAU. Who have absolutely been refused any commitment at all, regardless of the fact that their farms have a value. What justification is there in the act for the loaning agency to refuse to make any commitment? It seems to me that the bank, the loaning agency, is going pretty far when it tells a farmer that it will not make him a loan, regardless of the value of his farm, because it