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COMMITTEE ON RULES
EDWARD W. POU, North Carolina, Chair man WILLIAM B. BANKHEAD, Alabama.
FRED S. PURNELL, Indiana. JOHN J. O'CONNOR, New York.
EARL C. MICHENER, Michigan. ADOLPH J. SABATH, Illinois.
HARRY C. RANSLEY, Pennsylvania. DANIEL E. GARRETT, Texas.
JOSEPH W. MARTIN, JR., Massachusetts. ARTHUR H. GREENWOOD, Indiana, E. E. COX, Georgia. THOMAS S. MCMILLAN, South Carolina.
WILLIAM S. MOYE. Clerk
AUTHORIZE PAYMENT OF FARM-LOAN MORTGAGES WITH
BONDS ISSUED BY THE MORTGAGEE BANKS
WEDNESDAY, JUNE 15, 1932
Washington, D. C. The committee this day met, Hon. William B. Bankhead presiding.
(H. R. 8167, Seventy-second Congress, first session) A BILL To authorize payment of farm-loan mortgages with bonds issued by the mortgagee banks, and for
other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 27 of the Federal farm loan act, as amended (U. S. C., title 12, secs. 941-943), is amended by adding at the end thereof the following: “Any person having obtained a loan from a Federal land bank or a joint-stock land bank may buy and sell farm-loan bonds issued by the mortgagee bank, and any such bank is authorized and directed to accept such bonds with unearned coupons attached at par value when presented by a mortgagor in full satisfaction of a mortgage after it has been in full force and effect for a period of five years.
Mr. BANKHEAD. Mr. Stevenson, do you desire to make a statement to the committee?
STATEMENT OF HON. WILLIAM F. STEVENSON, A REPRESENTA
TIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA
Mr. STEVENSON. Mr. Chairman, I would like to make a very brief statement to the committee in reference to Mr. Hare's bill, which I think you have before you.
Mr. BANKHEAD. What is the number of the Hare bill? Mr. STEVENSON. It is H. R. 8167. The bill provides that when a mortgage held by a farm loan bank, a joint-stock land bank, has been in existence for five years, which is the time at which they all become callable, if a man desires to pay the mortgage, the mortgagor will have the right to pay that mortgage with the bonds of the bank which he owes, with the uncollected coupons attached. That is the bill as reported, and it does not do anything else. You
say, why? That provision is in the farm land bank law. But it is such that the bonds have to be transferred to the farm loan association that the loan was gotten through. But the farm loan associations, at least three-quarters of them, are out of business. There has not been a loan made in my county this year, or in my State. There have been two loans made in North Carolina and two in Georgia by the farm land bank at Columbia this year.
Mr. BANKHEAD. That is the joint stock land bank?
Mr. STEVENSON. No; the farm land banks and the joint-stock land banks both.
You can imagine, therefore, that the farm loan associations are out of business. I belong to one myself, but you can not find it.
So we desire, so far as the farm land banks are concerned, that the mortgagor may have the right to get the bonds and present them, when he wants to make a settlement, in full payment of his debt.
Those bonds will bring 70 or 75 cents, and it would be very beneficial, and not hurt the bank, because the bank gets the same amount of bonds canceled.
Mr. PURNELL. How would this help the distressed farmers?
Mr. STEVENSON. I can tell you about an instance in my own county and in my own neighborhood. We had half a dozen very successful large farmers who owed the joint-stock land bank a considerable amount of money. There was one fellow with a plantation worth from $200,000 to $250,000, on which he had a mortgage of $25,000 in the bank.
Mr. PURNELL. Would not this help the big borrower to pay off his mortgage?
Mr. STEVENSON. I will tell you how it will help this fellow. As the thing has run along it has reacted on these fellows so they have gotten in debt for their running expenses. A man who makes 500 bales of cotton a year has some debt.
The national banks will loan these fellows money on their crops, but they had to take a second mortgage on their lands. The jointstock land banks are about to sell them out, but nobody will pay $25,000 for that land that is worth $250,000.
The bank owns bonds, or it can go on the market and buy them at 30 cents on the dollar. The joint-stock land banks can take long-time paper and give those fellows the opportunity, or enable them to get out.
The Western Carolina Bank, with 10 banches over there, failed last fall. They have from $150,000 to $250,000 of joint-stock land bank bonds in their assets which they bought because of their association with the management of the bank. They own a second mortgage, under the same conditions I spoke of awhile ago, on thousands of acres of the best farm lands, with the most diversified farming there is in South Carolina.
Of course, they have sold out, and the receiver has been set out of doors.
If he had the right to go up to the joint-stock land bank and say, “Here, this man owes you $10,000, and he tenders you $10,000 of these bonds," and they would discharge that mortgage, it would not hurt the bank a particle, because they would get the debt paid in full and the receiver would have gotten par for those bonds, and he would have a first lien on those lands, and he could make a new deal with the farmers and sell them back their lands on good terms, and it would work out of a most ugly situation.
If there is any reason why, if I have $10,000 and I owe them $10,000, I should not have the right to pay it, I do not understand it.