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COMMITTEE ON RULES

EDWARD W. POU, North Carolina, Chairman WILLIAM B. BANKHEAD, Alabama.

FRED 8. PURNELL, Indiana. JOHN J. O'CONNOR, New York.

EARL C. MICHENER, Michigan. ADOLPH J. SABATH, Illinois.

HARRY C. RANSLEY, Pennsylvania. ARTHUR H. GREENWOOD, Indiana. JOSEPH W. MARTIN, JR., Massachusetts. E. E. COX, Georgia. THOMAS S. McMILLAN, North Carolina.

WILLIAM S. MOYE, Clerk

CROP PRODUCTION LOANS

MONDAY, JANUARY 9, 1933

HOUSE OF REPRESENTATIVES,
COMMITTEE ON RULES,

Washington, D. C. The committee met at 10.30 o'clock, a. m. Hon. Edward Pou (chairman) presiding:

The CHAIRMAN. We have before us this morning House Joint Resolution 529, introduced by Mr. Jones of Texas, authorizing the Secretary of Agriculture to make loans for crop production, and for other purposes, and also Senate bill 5160, to provide for loans to farmers for crop production and harvesting during the year 1933.

[S. 5160, Seventy-second ('ongress, second session) A BILL To provide for loans to farmers for crop production and harvesting during the year 1933 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the unexpended balance of the amounts allocated and made available to the Secretary of Agriculture under section 2 of the Reconstruction Finance Corporation act, as amended, and all amounts received from the repayment of loans or advances heretofore made under such section 2, as amended, shall be available for expenditure by the Secretary of Agriculture for the purpose of making loans or advances to farmers as hereinafter provided for crop production and crop harvesting during the year 1933. Such loans or advances shall be made either direct to farmers or through the medium of local farm organizations established by them and in making such loans or advances due consideration shall be given to the special requirements of the truck-farming industry in the present trucking areas of the several States. The amount loaned or advanced under this act to any farmer within any such area for the production and harvesting of any truck crop shall not exceed $125 an acre, and no such loan or advance shall be made to any such farmer for the development of new acreage or unless he enters into an agreement with the Secretary of Agriculture at the time such loan or advance is made to plant during the year 1933 not more than 65 per centum of the acreage planted by him in 1932. Except as herein provided the loans or advances under this act shall be made upon such terms and conditions, in such amounts, and subject to such regulations as the Secretary of Agriculture shall prescribe. A first lien on all crops growing, or to be planted or grown, shall, in the discretion of the Secretary of Agriculture, be deemed sufficient security for any such loan or advance. Any person who shall knowingly make any material false representation for the purpose of obtaining a loan or advance, or in assisting in obtaining a loan or advance under this act, or who shall knowingly violate any agreement entered into with the Secretary of Agriculture under this act, shall, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than six months, or both.

SEC. 2. The Secretary of Agriculture is authorized and directed to establish such agencies as may be necessary to carry out the provisions of this act and to provide for making the relief contemplated by this act immediately available.

[H. J. Res. 529, Seventy-second Congress, second session) JOINT RESOLUTION Authorizing the Secretary of Agriculture to make loans for crop production,

and for other purposes Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of Agriculture is hereby authorized and directed to request the Reconstruction Finance Corporation to advance to him

the balance of the sum authorized to be allocated to the Secretary of Agriculture under section 2 of the act of January 22, 1932, and the Reconstruction Finance Corporation is directed to make such advances regardless of the amounts of notes, debentures, bonds, or other obligations of such corporation that may be outstanding at the time of making such advances, and the Secretary of Agriculture is further authorized to request the corporation to return all sums heretofore returned and/or released to the corporation by the Secretary of Agriculture, except so much as may have been used by the corporation to establish agricultural credit corporations under section 201 (e) of the act of July 21, 1932, which sums, together with the sums collected or to be collected from loans made by the Secretary of Agriculture during the year 1932 under said section 2 of the act of January 22, 1932, shall be available to the Secretary of Agriculture to make loans to farmers during the year 1933 for crop production, including harvesting. Due consideration shall be given to the requirements of the truck-farming industry in the trucking areas of the various states.

Sec. 2. (a) A first lien on all crops growing or to be planted, grown, and harvested during the year 1933 shall be required as security for such loan. Such loan shall be made through such agencies upon such terms and conditions and subject to such regulations as the Secretary of Agriculture shall prescribe.

(b) The Secretary of Agriculture may require as a condition to the making of any loan that the borrower agree to reduce his acreage or production program on such basis, not to exceed 30 per centum, as may be determined by the Secretary of Agriculture, and may provide that any such limitation shall not apply to the farmer, tenant, or share cropper who in 1932 planted not more than a minimum acreage of such crops as shall be designated by the Secretary of Agriculture.

SEC. 3. (a) The moneys authorized to be loaned by the Secretary of Agriculture under this resolution are declared to be impressed with a trust to accomplish the purposes provided for by this resolution, namely, the production and harvesting of crops, which trust shall continue until the moneys loaned pursuant to this resolution have been used for the purposes contemplated by this resolution, and it shall be unlawful for any person to make any material false representation for the purpose of obtaining any loan or to assist in obtaining such loan or to dispose of or assist in disposing of any crops given as security for any loan made under authority of this resolution, except for the account of the Secretary of Agriculture, and for the purpose of carrying out the provisions of this resolution.

(b) It shall be unlawful for any person to charge a fee for the purpose of preparing or assisting in the preparation of any papers of an applicant for a loan under the provisions of this resolution.

(c) Any person violating any of the provisions of this resolution shall be guilty of a misdemeanor and shall, upon conviction thereof, be punished by a fine not exceeding $1,000 or by imprisonment not exceeding six months, or both.

Mr. Jones and several other gentlemen are present and desire to be heard. We will hear Mr. Jones first.

STATEMENT OF HON. MARVIN JONES, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS, AND CHAIRMAN OF THE COMMITTEE ON AGRICULTURE

Mr. JONES. Mr. Chairman, according to the figures furnished me by the production loans division of the Department of Agriculture, the total allotments by the Reconstruction Finance Corporation to the Secretary of Agriculture amounted to $132,500,000. Of that amount, $64,000,000 was made in production loans, and then $47,500,000 was released by the Department of Agriculture back to the Reconstruction Finance Corporation for the establishment of the regional agricultural credit corporations.

There have been $16,000,000 in collections. An additional $15,000,000 has been turned back, including $5,000,000 of the $16,000,000 collected, leaving a balance now in the hands of the Secretary of Agriculture of $11,000,000.

The Senate bill, according to the Department of Agriculture, would allot no further funds, because of the lack of sale of further bonds.

Both the joint resolution and the Senate bill, of course, would have put in any additional collections hereafter made; but that, under the circumstances, is considered for the time being to be rather small, although they will ultimately be paid.

Mr. SABATH. That is, the collections from former loans?
Mr. JONES. From those former loans.

The House resolution provides for the allocation of the balance of the $200,000,000 regardless of the sales of bonds and other securities, and that, according to the department's estimate, would total $92,000,000. This should be added to the $11,000,000 on hand.

The CHAIRMAN. Making $103,000,000? Mr. JONES. Making $103,000,000, according to their estimates. Those estimates were hurriedly prepared and are subject to correction.

The CHAIRMAN. You said, as I understood you, that under the Smith bill there would be only $11,000,000 available, which would be entirely inadequate.

Mr. Jones. There would be $11,000,000, plus any collections hereafter made.

Mr. BANKHEAD. Under this provision you would practically limit the acreage to one-third, would you not?

Mr. JONES. One advantage the House bill would have is that it would give the Secretary some discretion in handling a situation where a man had fully complied with his agreements.

Mr. BANKHEAD. Here is what I am disturbed about. Would not that mandatory reduction, before he could get a loan, cut his credit to practically nothing?

Will you kindly interpret what your understanding of subsection
(6) of section 2 is?
Mr. Jones. That is in the Smith bill?
Mr. BANKHEAD. No, in your resolution.

Mr. Jones. It simply provides that the Secretary of Agriculture may, under regulations, require a reduction in acreage not to exceed 30 per cent as a basis of the loan.

Mr. BANKHEAD. Thirty per cent from what original production? That is what I want to find out.

Mr. Jones. The crop planted in 1932 was the way it was intended to apply.

Paragraph (6) provides that the Secretary of AgricultureMay provide that any such limitation shall not apply to the farmer, tenant, or share cropper who in 1932 planted not more than a minimum acreage of such crops as shall be designated by the Secretary of Agriculture.

Mr. BANKHEAD. I may be a little dense, but I want to get it clear in my mind, because it is important.

Suppose that in 1932 he had to agree to reduce his acreage onethird.

Mr. Jones. Yes.

Mr. BANKHEAD. If he wanted to borrow again this year, has he got to reduce it by 30 per cent below the 1932 crop?

Mr. Jones. It would be not to exceed 30 per cent. The Secretary might decide it would not be necessary to make an additional limitation.

Mr. BANKHEAD. Suppose he did; would not that be tantamount to requiring a reduction of over 60 per cent on the 1931 crop?

last year.

Mr. Jones. That would, if he applied the full requirement, yes.

The proviso at the bottom, however, was meant, I will say to the gentleman, to cover a small farmer who planted only a limited amount. He might not be required to make any reduction at all. But he could have a certain limitation put on.

Mr. BANKHEAD. Assuming that the Secretary should apply the maximum of his authority, it would amount to over 60 per cent below the 1931 acreage, would it not?

Mr. Jones. Provided he had complied fully with the conditions

Mr. BANKHEAD. Do you not think that is a pretty drastic requirement with reference to the reduction of acreage, to say that if he had only 100 acres he could only plant 40 acres of it to get a loan?

Mr. Jones. The gentleman knows that we have a great deal of cotton on hand now, and we do not want to go into a program of encouraging greater production. I believe there should be a rather rigid requirement before the Government goes into the business of financing these productions.

Mr. BANKHEAD. I agree with you on that.

Mr. JONES. I think the Department of Agriculture will use discretion.

But it is an unusual procedure for the Government to provide for extending credit direct. It has been done with reference to business under the Reconstruction Finance Corporation, and in view of the desperate situation I think it would be justified. But we do not want it to be used as a method of stimulating overproduction, which might cause more injury than the assistance would offset.

Mr. BANKHEAD. I think that is a very wise conclusion. I wanted to get it clearly in my own mind.

Mr. Jones. Both the Senate bill and the House resolution carry that, except that the Senate bill goes a little further than the House resolution. It makes the 35 per cent reduction mandatory.

Mr. Cox. In Georgia our crop was reduced more than one-third last year on the entire cotton crop, whether they participated in the benefits of this previous loan or not.

Mr. MARTIN. Is the Secretary of Agriculture in favor of this bill?

Mr. Jones. The Secretary of Agriculture has not made a report on this bill. The House bill, however, includes some recommendations made by those who have been handling the crop production program and who have had occasion to have some experience in the method of handling

Mr. SABATH. This would not apply the second reduction to those who have complied with the 1932 provision and who have reduced their crops according to that provision?

Mr. Jones. They might do so. Subsection (b) of section 2 provides that

The Secretary of Agriculture may require as a condition to the making of any loan that the borrower agree to reduce his acreage or production program on such basis, not to exceed 30 per cent, as may be determined by the Secretary of Agriculture.

I take it that under that provision he could have as an exception to that a regulation providing that a man who had reduced his acreage last year the full amount should not be required to reduce the full 30 per cent.

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