In order to give you some idea of the importance of the drainage problem, you know that in each census there is a special division devoted to this subject. Here is a report from the 1920 census showing that farming on drained land is a large proportion of our agricultural activities. According to this census report there are 65,000,000 acres of drained lands, and we have information before the committee only on 8,000,000 acres. On those 8,000,000 acres the assessed value was $309,000,000. The number of acres delinquent was 1,151.000; outstanding bonds $2,131,000. This is a case where we want to save values already created and homes already built. Mr. MICHENER. What do you think the reaction would be on the small bank in the agricultural community, the small banker who is having his difficulties to-day, and why? Largely because he has carried the local farmer and has done everything that he could to save the local farmer. Now, we come along in this legislation and take money out of the Federal Treasury to protect the large bonding companies which bought these bonds and sold them throughout the country, and if we did that, it seems to me that we should pass some legislation to take care of the local country banks that are suffering the same as the bondholder is to-day, and the farmer is suffering just the same, only he is suffering individually rather than collectively in the form of a corporation. Mr. SMITH. Well, the stabilization of finances on these drainage districts would help everybody; it would help the local bankers, the local grocer, the butcher, the farmer and everybody, and put conditions back to normalcy. I do not know how you can justify your insistence that the bondholders would be benefited, when they have to make such a sacrifice in order to get the benefit of this act. Mr. PURNELL. Suppose you put it on the other foot and say that the relief primarily is for the farmer, that we help a group of farmers to the exclusion of others? Now, the dockets of the courts of our country are filled with foreclosure proceedings, and banks are failing every day because they have carried the paper of these little individual farmers. Now, are we going to be open to criticism for helping a group of farmers to the exclusion of hundreds of thousands of others who are actually losing their farms through foreclosure? Mr. SMITH. Mr. Purnell, you are open to criticism now, and I voice it in your presence, that your farm relief act only benefits a few farmers of this country. You took no consideration at all about the other farmers, these people who really need help, and I am not discrediting the farm relief act at all, but I know of cases in my State where men who were getting along splendidly in their farm activities, are borrowing money to put up big brick warehouses. Mr. PURNELL. Well, anything that will help the agricultural situation will help the little tenant farmers. Mr. SMITH. That is what I contend; that the passage of this law will result in stabilizing finances in these districts and help the local banker, the grocer, the merchant, the butcher, and everybody else. It will bring back the morale that is absolutely necessary if you are going to enable these people to take care of their obligations. Mr. PURNELL. I am just asking whether or not we will be open to the charge that we have helped a small group and overlooked others. Mr. SMITH. Well, why did you not take into consideration these people when you held hearings for month after month in the committee on Agriculture and brought out your farm relief bill? Mr. PURNELL. Did we not? Mr. SMITH. Why, no. These people can not get the benefit of that law. Mr. PURNELL. I do not understand what you mean by that. The agricultural market act was passed for the benefit of all agriculture and all farmers. Mr. SMITH. Yes, but they can not all take advantage of it, just like the Federal farm loan act was intended to benefit everybody, but these farmers are not benefited. The farmers on the irrigation districts and the drainage districts, where there is already a lien, can not secure any benefit at all. Now, Mr. Chairman, I have used more time than I intended. Mr. THURSTON. Are they in any different condition from the farmers throughout the country? Mr. SMITH. Yes sir. If a man has a $10,000 loan on his individual farm, he can easily take up that obligation and get his money from the land bank if the security is sufficient. That is easy. Mr. MICHENER. What will this legislation cost? If the Congress enacted this legislation, how much money would be required? Mr. SMITH. It will not cost any more than Congress determines, and Congress will determine how much should be made available. Mr. MICHENER. Yes, but before you start on a proposition of this kind you certainly ought to have some idea of what it will cost. Mr. SMITH. Well, we have fixed in the bill a sum of $95,000,000, for expenditure over a period of five years. Mr. MICHENER. How many farmers are affected? Mr. SMITH. There will probably be 4,000,000 or 5,000,000 persons benefited by this law. Now, I find I have used more time than I intended, Mr. Chairman. Mr. BANKHEAD. I was anxious to hear you go into something in detail with reference to the provisions of the bill. Assuming the correctness of your premise, we would like to know how you propose to support it under the provisions of your bill. Mr. SMITH. I will be glad to do that. But before I start in on that I want to say that I have here in my hand petitions signed by 135 members of Congress, addressed to the Chairman of the Committee on Rules, asking for this hearing. I intended to submit this in advance of the hearing, but Mr. Snell, the chairman, kindly consented before he knew what great support this bill had, to grant us a hearing, for which we are very grateful. I want to introduce a resolution from the legislature of the State of California, adopted recently, favoring this legislation for the record. (The resolution referred to is as follows:) Hon. NICHOLAS LONGWORTH, SACRAMENTO, CALIF., January 21, 1931. Speaker of the House of Representatives, Washington, D. C. I am directed to inform you that the Legislature of the State of California had adopted the following resolution: Whereas there has been proposed in Congress a bill known as the Glenn bill (S. 4123, 71st Cong., 3d sess.), which provides that the Federal Government, through the Department of the Interior, shall make loans to irrigation districts, drainage districts, levee districts, levee and drainage, and/or similar districts on other than Federal projects; and Whereas the passage of this bill will do much to hearten the farming community of this State and aid materially in restoring their confidence; and Whereas this bill has now passed the Senate of the United States and has been reported favorably to the House of Representatives by the House Committee on Irrigation and Reclamation. Now, therefore, be it Resolved, by the Senate and Assembly of the State of California, jointly, That the Legislature of the State of California urges the passage of this bill at the present session of Congress and that the President of the United States be requested to attach his signature thereto so that it may become a Federal law; and be it further Resolved, That the secretary of the senate be and is hereby directed to telegraph copies of this resolution to the President of the United States, the Speaker of the House of Representatives, and Hon. Bertrand H. Snell, chairman of the Rules Committee of the House of Representatives, and to mail copies of this resolution to the Senators and Representatives of California in Congress of the United States. Ј. А. ВЕЕК, Secretary of the Senate. Mr. MICHENER. That was after you put in the irrigation districts? Mr. SMITH. Yes, sir. Mr. MICHENER. Then as I understand it, the original bill did not include irrigation districts? Mr. SMITH. That is true. Mr. MICHENER. And in order to get this support you had to include irrigation districts? Mr. SMITH. Yes, but private irrigation districts are identical with private drainage districts. There are private irrigation districts in all the Western country. Mr. MICHENER. Yes; they are corporations? Mr. SMITH. They are organized districts authorized under State laws. Mr. MICHENER. That is what I mean. Mr. SMITH. Yes, if you want to call them corporations. Mr. SMITH. But they are organized under State laws, to enable a group of men to get together and accomplish certain things. Mr. MICHENER. The only difference is that the individual runs his own farm for his own profit, but here a number of individuals get together for their mutual benefit and form a district or a corporation, which is a private enterprise entirely. If it is successful they make money; if it is not successful they lose. They have made a wrong guess; they have not been successful. So to-day they are asking the Government to step in and favor them as against the individual local banker who has loaned money and helped the local farmer. Mr. SMITH. Well, as I stated a moment ago, these districts are very similar to the organized towns or communities. It is all on the same principle. If a town or community is unable to meet its obligations, foreclosure proceedings could be imposed. But nobody wants to do that. You would not want to sell out a town. You give them encouragement to go ahead and offer them a long time to meet their obligations. Now, here are cases where these farmers are unable to meet their obligations. They can not get any help from any other source than the Federal Government. Now, is the Federal Government interested in 5,000,000 people who are going to be driven from their homes? Mr. MICHENER. Yes, but there are 5,000,000 people in these corporations and there are 10,000,000 people outside of these corporations. Mr. SMITH. That is true, but the helping of those people would benefit the others, Mr. Michener. You know that. Mr. MICHENER. Now, let us see whether it would or not. By the helping or furnishing of Government aid to one of these corporations in California, an irrigation proposition, which permits that corporation to grow products in competition with my individual farmer, I can not see how my individual farmer is going to profit by it. Mr. SMITH. Do you not think that the people in California, Idaho, Utah, and Wisconsin are entitled to live and dig their living out of the soil and maintain their homes? Mr. MICHENER. Yes, sir. Mr. SMITH. They are living out there under adverse conditions. They only have 5 or 6 inches of rainfall a year, when you in Michigan have 50 or 60 inches, and you do not need irrigation. The Federal Government has spent millions to the development of the resources of the western territory and encourage people to go there. These expenditures have been made in that country since away back in 1785. In the early years of our country Congress passed laws to develop the country and large donations of public lands were made to the States to build educational institutions. That has all been in the interest of the general welfare, and we are building up in that country a civilization equal to that of any State in the East, and its citizens draw on the manufacturers of the eastern country for supplies. If it were not for the development of the arid wastes, you people living in Michigan and manufacturing automobiles would not be selling so many of them out there. Mr. MICHENER. I represent an agricultural district and our farmers are being foreclosed day after day. It is true, I have always voted for your reclamation projects; I have voted for everything to help the West; I have voted for everything to help all of these people in distressed territories. But the time has come when we find ourselves-we who have been paying the money-we find ourselves in the same condition, as far as agriculture is concerned, that you find yourself. Mr. SMITH. What money do you say you have paid, Mr. Michener? Mr. MICHENER. I do not see why we should be called upon to go farther and continue that policy which means ruination to our people for the benefit of another group of agriculture. Mr. SMITH. What money do you say you have been paying? You are not paying the money that has reclaimed the arid wastes. Only about one-tenth of the arid West that has been placed under irrigation has been reclaimed by the Federal Government, and the Federal Government did that with money received from the sale of lands within the public-land States. The money does not come out of the Federal Treasury. It does not come from taxes that you people in Michigan or other States pay at all. We put up the money from the sale of public lands in our own States, and that money is put back into the arid lands to help build up homes and towns and communities, and furnish a market for the eastern people engaged in producing manufactured goods. Mr. MICHENER. It seems to me there is a difference where you have a public project, let us say, a reclamation project that the Government started and finally has gone through, and it finds itself in distress; it seems to me there is a little difference there so far as the Public Treasury is concerned, because we started the project and we followed it up; there is a difference between that situation and a private corporation, established for the purpose of making money in farming, finding itself in distress and then asking the Government to come to the relief of those properties. Mr. SMITH. Do you think that when a dozen men or a hundred men go out into a swamp and build drains and reclaim the land, that they are there for the purpose of making money? They are not there for that purpose. They are there for the purpose of building homes for themselves and their families, to make roads and schools, so that they may enjoy the comforts of civilization that the people enjoy in a section where they do not need drainage or where they do not need irrigation. I do not get your viewpoint at all. The national wealth produced in these low lands and on reclamation projects amounts to hundreds of millions of dollars and pay taxes to the Federal Government. The CHAIRMAN. Mr. Smith, under the provisions of your bill, do I understand that any county that had a bonded indebtedness and had defaulted on it could come under its provisions? Mr. SMITH. No, sir; not any county, but in one of the States the county has furnished the money to drain these lands, and they are in default. I think there is probably only one State in that situation. The CHAIRMAN. It only applies to a county that furnished money for drainage purposes and not for other purposes? Mr. SMITH. Yes, sir. The CHAIRMAN. It does not apply to a county that had railroad money to build schools and roads? Mr. SMITH. No, sir. The CHAIRMAN. Then the general public indebtedness would not come under the provisions of this bill? Mr. SMITH. No, sir; absolutely not. This money is for the ex pense of draining land. That is all it is for. The CHAIRMAN. Well, if you adopt the policy of paying back to the county or assisting the county in financing drainage areas, would it not be reasonable to expect that somebody is going to finance a county in building a public road or schools Mr. SMITH. Well, that is possible, but not likely. It is possible, of course, that somebody would ask relief of that kind, but it is not likely that they would appeal to Congress for that purpose. The CHAIRMAN. There are a good many contractors who have defaulted on their bonds at the present time, where the money has been used for general improvements. Why would not they be entitled to relief, the people who own those bonds, the same as drainage bonds? Mr. SMITH. Well, they could not come under this law, because I have specified definitely what this law applies to, and that is only to drainage and irrigation lands. Agriculture is a fundamental proposition. It is the basis of all our prosperity and advancement. The CHAIRMAN. I am not arguing that point. |