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law for the levying and collection of taxes for the payment of such bonds: Provided further, That no district may issue additional bonds for any purpose without having first obtained the written consent of the Secretary of the Interior as long as it is in debt hereunder.
SEC. 6. Whenever any district shall have sold any property in said district for unpaid taxes and shall have bought in the same, and shall hold the title to such land, then the Secretary of the Interior shall require, when any loan is made to said district, that the district allow the owner at the time of such sale and purchase, or his heirs at law, executors, administrators, or assigns, to repurchase said land for no greater sum than that for which it was sold and purchased, plus taxes which have accrued on the same since the date of said sale: Provided, however, That the owner, his heirs at law, executors, administrators, assigns, or grantees shall exercise such right within two years after the date of said purchase by the district and the district shall, at the time of the exercising of the right to repurchase, hold title to the lands sought to be redeemed.
Sec. 7. There is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $100,000,000, or so much thereof as may be necessary, which amount shall be a revolving fund for the purpose of making loans under the provisions of this act: Provided, however, That the amount appropriated in any one year shall not exceed $20,000,000, but shall be in such amounts as shall be recommended by the Secretary of the Interior and when appropriated shall be deposited by the Secretary of the Treasury in this fund.
SEO. 8. The Secretary of the Interior shall make all reasonable and necessary regulations for carrying into effect the purposes of this act, and the actual expenses connected therewith shall be paid out of the money provided hereunder.
The CHAIRMAN. Mr. Hall, will you make whatever statement you care to make, and then you may present the other gentlemen who desire to be heard.
STATEMENT OF HON. ROBERT S. HALL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MISSISSIPPI
Mr. Hall. I assure you, Mr. Chairman, that my remarks shall be brief. I thank you for giving us this opportunity to appear before you in the consideration of House Resolution 117. This legislation is reported from the Committee on Irrigation and Reclamation. The sponsors of this bill are convinced that it is very important legislation. The Irrigation Committee as well as the sponsors of this legislation are convinced that, without this relief, those in the drainage districts of the United States will not be benefited directly by the relief that has already been given by Congress.
In furtherance of the presentation of the interests in this matter, it was thought wise to have the respective delegations from each of the States of the Union, who are interested in this matter, to voice their sentiments to his committee, by resolution. I have the petitions of 202 Members of Congress, addressed to the committee, asking for this rule, and I will state to the committee that I am advised that there are other petitions that will be filed with the committee, which will bring this number up to, perhaps, 230 Members of Congress. As chairman of the Irrigation Committee, I am delighted to see the interest that has been manifested, and the earnestness which has been shown in regard to this legislation. I am not so familiar myself with the history of this legislation, but I am pleased to state that we have the former chairman of the Irrigation Committee, Mr. Smith of Idaho, before us this morning. He has appeared before the Rules Committee in previous Congresses asking for a rule in regard to
this legislation. It is now my wish to have Mr. Smith address the committee in the interest of this matter.
May I leave with the committee the petitions of 202 Members, which is the number up to date, and I will file with the committee later the other petitions as they are sent to my office ?
The CHAIRMAN. Yes, sir.
Mr. Hall. Mr. Smith, will you address the committee at this time?
STATEMENT OF HON. ADDISON T. SMITH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF IDAHO
Mr. SMITH. Mr. Chairman and members of the Committee on Rules, since my last appearance here I have been succeeded as chairman of the Committee on Irrigation and Reclamation by my distinguished friend, Congressman Hall, of Mississippi. At the opening of this Congress I reintroduced the bill concerning which we presented arguments in favor of its enactment at the last session, and at the request of the committee I filed a report. As Mr. Hall has said, this is not hastily considered legislation. Our committee has been considering it now for five years. In the Seventieth Congress we conducted extensive hearings on the bill H. R. 1416, and in the last Congress we continued hearings on H. R. 11718. We also conducted hearings on the pending bill, so that we wish you to know that we have not gone into this matter hastily. We have endeavored to secure the best information from the various sections of the country and from those who are posted regarding the necessity of the legislation, in order that we might come here with a case prepared as nearly 100 per cent as possible.
The rule you are considering, House Resolution 117, provides for the consideration of this bill on the adoption of the resolution. The bill under consideration, H. R. 4650, is entitled "A bill to provide for the relief of farmers in any State by the making of loans to drainage districts, levee districts, levee and drainage districts, irrigation, and/or similar districts other than Federal reclamation projects or to counties, boards of supervisors, and/or other political subdivisions and legal entities, and for other purposes."
This legislation is along the line of the enactments by Congress during the last few years with the hope of stabilizing the basic industry of agriculture. When we appeared before this committee at the last session of Congress, questions from the members indicated that they thought we were making a new departure, that we were going into a new field. That was not true at that time, and it certainly is not true at the present time, for since we appeared before you at the last session of Congress there has been enacted legislation providing for enlarging the activities of the Federal Farm Loan Board to relieve farmers who are unable to meet their obligations, and giving the board authority to extend existing loans, rather than to require them to come in and make a new loan. We also recently enacted, and it was signed by the President, legislation providing for a Reconstruction Finance Corporation, which extends relief to banks, railroads, and various organizations of different kinds. There is also pending a bill to relieve depositors in insolvent banks, and
also a bill is being prepared, if not already introduced, providing for home-building organizations which would cost probably $100,000,000.
Now, there is nothing local or partisan in this legislation, nor in the legislation which has been considered, especially during this session of Congress. Every Member of Congress, regardless of his political affiliations, realize that the country is in such a condition of depression, so many people are out of work and so many organizations and financial institutions are failing, that it is necessary for us to throw aside partisanship and legislate for the best interests of the country. We feel that this legislation fills a gap that is not taken care of in any of the bills to which I have made reference. We have had a law for some years providing for the making of loans to farmers, through the Federal Farm Loan Board, by means of Federal land banks, and that law is being liberalized now to the extent of putting $125,000,000 of the Government's money into these banks, to be loaned out to farmers, and the law has also been liberalized in regard to the extension of loans. So that those classes of people are taken care of. They have security. But the farmers that are to be taken care of in this legislation do not have an opportunity of borrowing money from the Federal land banks, or from any other governmental agency, because the Government requires that any advances made against such property shall be a first lien on the property, and these lands are all encumbered by bond issues, which were made necessary in order to secure money to put the land in a condition so that it could be cultivated.
Mr. O'CONNOR. Mr. Smith, if I may interrupt you there, is that bill of yours, H. R. 4650, identical with Senate bill 4123, which was before the committee last year and on behalf of which arguments were presented ?
Mr. Smith. It is almost identical, Mr. O'Connor. The only change was in section 5, which had reference to the bonds which would be issued, where the counties assume the obligation of making improvements in various districts. That is the only change. The purport of the bill is identical.
I may add that when this bill passed the Senate at the last session of Congress it did not provide for interest nor give authority to the Secretary of the Interior to negotiate with the bondholders regarding the price the Government was to pay for the bonds. The House Committee on Irrigation and Reclamation amended the bill, requiring 3 per cent interest, and also providing for giving the Secretary of the Interior authority to negotiate with the bondholders as to the value of the bonds, and providing that he could not pay more than the appraised value of the bonds. So that the bill is safeguarded in that respect over the bill that passed the Senate. A similar bill to the one we are considering has been introduced in the Senate and contains provisions which the House committee incorporated in the bill that was passed by the Senate at the last session of Congress.
Now, with reference to the character of lands to be benefited. Swamp lands are useless unless they are drained, as are arid lands unless supplied with water. We have also in this bill a provision for private irrigation districts. Those lands are useless unless water is put upon them. So it is necessary, before the farmers go upon the swamp areas or upon the arid lands, to obligate themselves to spend a considerable amount of money to put the land in condition so that it can be farmed. It is quite different from the prairie lands in the
West, which were settled 40 or 50 or 60 years ago, or land in other sections of the country where the lands were ready for the plow. Even in the forest sections of the country, they could utilize the lumber for buildings, fencing, etc., in a way that would bring some income. But these lands in the arid and swamp districts require the farmers to assume large financial obligations in order to put the land in condition to be farmed.
Most of these irrigation and reclamation projects were inaugurated 10 or 15 years ago, at a time when farming was more profitable than it is at the present time. Many people sold out their farms in the Mississippi Valley, and went into the arid West and into this swamp country, thinking that they would be able to farm more profitably; but because of the expense incurred in preparing the land for cultivation and also because of the low prices of farm products, these people who have spent years in their efforts to reclaim this land and cultivate it and build their homes, are now confronted with this great debt which is hanging over them. They have, through their efforts, created communities and towns, they have built their houses and have developed their land, but now they are confronted with the necessity of paying these assessments, and their interest on the bonds, and, in some instances, paying the bonds themselves in order to make prog. ress. This bill simply provides that the Federal Government shall step into the picture and relieve these farmers, probably 500,000 or possibily 1,000,000 of them. The census report states there are about 5,000,000 people living on these swamp lands and on these irrigated lands.
Mr. PURNELL. Might I ask you this question: This relief runs to the drainage districts and not to individual farmers!
Mr. SMITH. Yes, we deal with the district.
Mr. SMITH. And under the reclamation law we have the farmers organized into districts to make it more easy to carry on their obligations to the Government.
Mr. PURNELL. I say, the loan goes to the drainage district and not to the individual farmer
Mr. SMITH. Yes, sir; that is right, but the farmers are benefited by reason of the fact that they are in the district and would receive the same relief as if they were dealt with individually.
Mr. PURNELL. Just for the purpose of clarification, because we have had this matter before us previously: How will one of these individual farmers who is, say, several years in arrears in assessments, be directly benefited ?
Mr. SMITH. Well, the district takes care of the delinquent farmer, oftentimes for a year or two. If the farmer is unable, after a lapse of a year or two, to meet his obligations, and the land must be sold to recoup the district for the obligations it assumes for the individual, then someone else will step into the picture in place of the man who was sold out. But the land as a whole, as a project, belongs to the farmers en masse.
When the reclamation law was first passed, the Reclamation Service kept an account with each individual settler on the project. That required a good deal of bookkeeping and expense incident to employing people to keep in touch with the individual on the project. About 12 years ago Congress passed a law organizing these farmers,
or authorizing them to organize into districts. Now the district secretary transmits to the Reclamation Service the construction charges which they are required to pay; and they are being collected by the district officials instead of by the Government officials.
Mr. PURNELL. What can we say in answer to those who charge that this is relief for the bondholders?
Mr. SMITH. Well, that is a question that is sometimes asked, but on page 3 of the bill
Mr. Hardy. May I say one word right there? It saves the farmer from having his farm foreclosed by the bondholders somewhere else, and it leaves the farmer on the land, instead of turning the land over to New York bankers who might foreclose on it and take it away from him.
Mr. MICHENER. The Government takes the bonds instead of the farmers, or, rather, instead of the bankers, because the bondholders turn their indebtedness in to the Government, and then the Government holds the bag and must deal with the farmer.
Mr. PURNELL. Well, I only raised that question because the charge has been repeatedly made; it was made the last time this matter was before the Rules Committee, and even subsequent to that time, that this is a matter for relief of bondholders. Now, I do not want you to take this as an indication of unfriendliness, but I say that was the charge that was made when the matter was before us at the last session. We heard it in the cloakrooms, that this was a proposal to relieve the bondholders rather than the individual farmers in the drainage districts.
Mr. Smith. That charge could have been very properly made if we had passed the Senate bill, because there is no provision in that bill, as it passed the Senate, making it necessary for the bondholders to come into the picture with the Secretary of the Interior and accept whatever the appraised value of their holdings may be.
Mr. BANKHEAD. You say that charge could have been very properly made if we had passed the Senate bill. Was that the same Senate bill that you asked us to give you a rule on last year?
Mr. SMITH. No, sir. We amended it in our committee. The bondholders were enthusiastic about this bill as it passed the Senate; but when it came to the House and we amended it in our committee, they lost interest in it.
Mr. Martin. They are still soliciting for it.
Mr. Smith. They may be soliciting for it to this extent, that it would be a benefit to them to the extent of the actual value of their bonds.
Mr. PURNELL. Had your committee amended this bill before you brought it to the Rules Committee?
Mr. SMITH. At the last Congress?
Mr. PURNELL. You had taken out the provisions that were supposed to be objectionable in the Senate bill?
Mr. SMITH. We put in a provision, in the Senate bill —
Mr. MICHENER. As a matter of fact, we put in the Senate bill a provision that the Secretary of the Interior should, by his engineers, make a survey of the security, a survey of the lands, to determine