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vidual farmer upon his assessment for three or four years, he has not paid them and has not been able to pay them, what benefit would he derive from the provisions of your bill?
Mr. Smith. Well, of course, you know there has not been very much land moving between people in any section of the country. I do not just get the purport of your question.
Mr. BANKHEAD. What relief would this bill give to a farmer in a drainage district who is three or four or five years behind now in payments of his assessments!
Mr. Smith. Well, of course, he would have to make some arrangement to pay it. This only deals with the district's obligation, not with the individual's obligation.
Mr. MICHENER. It deals with the bonds?
The CHAIRMAN. Mr. Smith, I would like to ask you this question: In all of your hearings, did you get any estimate of the total amount of these bonds in the United States at the present time! Was any estimate given in any way!
Mr. Smith. We have information on only about 8 per cent of all the districts.
The CHAIRMAN. But you have no idea?
The CHAIRMAN. Will you give the committee some idea, in a general estimate? It need not be definite.
Mr. Smith. We can give it to you by States.
Mr. Smith. There are $40,006,439 of bonds outstanding on the districts that we have had reports from.
The CHAIRMAN $10,000,000?
Mr. Smith. $40,000,000. We have heard from about 8 per cent of the districts. The others with whom we communicated were not interested enough to reply to questionnaires. They were not in default, evidently, because they were not interested. So we are centering our attention on the districts that are in financial distress and must have relief, or foreclosures will result and the property will be taken over by the bondholders, or abandoned, and in either instance, of course, it would present a very dark picture. If the bondholders abandoned the proposition, then chaos would result, because those in charge of the district would not be able to maintain their levees and their works to such an extent as to continue to function, so that in either instance it would be a dismal situation. But I am not dealing with the districts that are going along and paying their obligations.
The CHAIRMAN. My idea was to find out in a general way how many districts could come in under this legislation, provided we started it. I think we ought to know something about the total amount that might come in.
Mr. SMITH. The only way that that could be ascertained would be, if the law is enacted, after their applications have been made to the Secretary of the Interior, and he would gather this data.
The CHAIRMAN. Don't you think there should be some estimate made in advance, so that we would know!
Mr. SMITH. Did you make an estimate of how many farmers would be benefited by the Federal farm loan act, or how many
farmers would be benefited by the farm relief act? You were only dealing in generalities then, when you passed these laws. You only dealt in generalities, Mr. Snell, when you took the word of our good friend, Mr. Purnell, who was, in my judgment, the largest factor in getting the farm relief act passed. He could only conjecture how much the venture would cost.
The CHAIRMAN. But that was a definite amount provided for in this legislation.
Mr. Smith. We provide for a definite amount. We are dealing with a definite amount of $95,000,000. If Congress does not want to appropriate more than that, or if they do not want to appropriate it at all they have the opportunity of not doing it.
The CHAIRMAN, I was trying to find out the total amount that might be called for by this legislation, and you say you do not know.
Mr. SMITH. I could not tell any more than you could tell what your taxes are going to be 10 years from now. You do not know. You just guess at it.
Mr. O'CONNOR. Mr. Smith, there must be some book or table that would show the amount of drainage bonds outstanding.
The CHAIRMAN. Of course, the amount in this bill to be authorized is $95,000,000.
Mr. Surth. That is what I say. We have fixed that amount. Congress may make it more or less.
Mr. MICHENER. If it is not sufficient, you can come back to Congress.
Mr. Low. I understand that the total amount of outstanding drainage bonds is $391,000,000.
Mr. Smith. If the amount provided in this bill is not sufficient, we will come back for more, but we hope the enactment of this bill will bring relief to those urgent cases, and that during the next few years we will have information in detail regarding the number of districts that would come within the provisions of it.
Mr. MICHENER. From the information we have received from the side lines, there are $391,000,000 of outstanding drainage bonds. I think you said a while ago that the people who are asking relief here represent about $40,000,000.
Mr. SMITH. $40,000,000.
Mr. MICHENER. That is about 8 per cent. Now, if we grant relief to 8 per cent, we are starting on a policy of granting relief, and we must proceed with the rest of them, because they are all entitled to the same consideration, and just the minute that there is a default in the $391,000,000, of course, they are coming in here and asking for the same relief, and the result will be that instead of having $95,000,000, it will be $391,000,000.
Mr. SMITH. Well, gentlemen, if we did not have some precedent for this legislation, if we are not doing this very thing to relieve people who are in financial distress as well as bodily distress, we would not be here to-day, I will say this, that when this bill was brought to me three years ago for introduction in the House, I said, "No, I will not introduce a bill of that kind: it is not a matter for legislation: it cloes not look to me like it is the sort of legislation that should be enacted.” But as conditions throughout the country grew worse and worse and we kept receiving appeals
from different sections of the country for legislation of this character, I agreed then that I would support the bill when a provision was made for 3 per cent interest, because I though that was conservative and safe, and that the Government would not lose any. thing. Furthermore, it is going to help to bring cheer and hope and improve the morale of millions of people who would otherwise be scattered over the country, drifters, going around the country, looking for work instead of staying in their little homes, free to raise their families and enjoy the benefits and comforts of civilization.
Mr. BANKHEAD. Mr. Smith, there are two other questions I would like to ask you, and then I will not bother you any more. Suppose that in one of these drainage districts 25 per cent of the landowners have paid up all of their assessments and acted in good faith under the contract. Now, where default is made in the payment on the bonds what happens to the landowners who have met all their obligations?
Mr. Smith. Under our State law the districts are organized, and all the property within the district is liable for the indebtedness of the district, just like when you pay your assessments for road or street improvements, or sewer improvements, and your neighbor does not pay, the debt runs against the whole district.
Mr. BANKHEAD. In other words, if a man has paid up, and if default is made, and the foreclosure takes place, he loses his property?
Mr. SMITH. He surely does, if the district is foreclosed, he loses, notwithstanding the fact that he has paid all of his assessments.
Mr. BANKHEAD. Assuming that this bill should pass and that there should be a reduction, by agreement, in the face value of the bonds, would not there be a reappraisement of the land so as to fix the individual responsibility of each farmer under the new bond issue?
Mr. Smith. Well, the individual is not responsible. He is simply collectively responsible, and his private obligations must be taken care of in his own way. This bill would not relieve him. If he is back on his grocery bill, his butcher bill, in his taxes to his county and State, he has simply got to dig it up; but if he is in arrears on his assessments for making improvements to the district, then he will be taken care of under this bilî.
Mr. O'Connor. Do you mean to say that even though he had paid his particular assessment levied against his property, that he would still be liable for the default of his next door neighbor?
Mr. Smith. His property would be, collectively with the others, held responsible for the obligations of that organization.
Mr. O'CONNOR. Of course, that is not the usual way in which assessments work out. In a special assessment, one property owner pays it and he is through with that obligation.
Mr. SMITH. I know he is through with it as far as bookkeeping is concerned, but if there is a foreclosure on that property, generally, his property goes with the other property.
Mr. MICHENER. The answer to that is that this whole drainage district is a joint venture!
Mr. Smith. It is a joint venture for the benefit of all, just like our Government was formed for the benefit of all.
Mr. THURSTON. When you go into a drainage district, there are number of drainage assessments made against a particular prop
erty, and when that is paid, that relieves him of that particular obligation?
Mr. SMITII. Yes, sir.
Mr. THURSTON. Then it is not true that if there is a default in the district, you could not come back at him?
Mr. SMITH. Only in the event that foreclosure proceedings are instituted.
Mr. MICHENER. In other words, if I have a bond against a drainage district, it means that the members of that district have agreed to give that bond to secure the district drainage payments and I can hold everything in that district as security?
Mr. SMITH. Absolutely everything.
Mr. PURNELL. It is not comparable to a street assessment; that is a private venture. If I pay for the street or sidewalk in front of my house, I am finished. If my neighbor does not do it, his property alone is liable.
Mr. ŠMITH. His property is liable to the extent that the county or the municipality could sell it. But suppose that the bonds were in default, the people who own the bonds could come in and foreclose your whole village, and your property goes with the others.
Mr. THURSTON. There is no special assessment in that case; that is just generally against the whole municipality?
Mr. SMITH. Now, Mr. Chairman, I thank you for this hearing: I have a list of members of Congress who are present and would like to say a few words. Mr. Yon and Mr. Drane of Florida wish to be noted as present and favoring the bill.
The CHAIRMAN. Well, the time is at your disposal.
STATEMENT OF HON, WILLIAM E. HULL, A MEMBER OF CONGRESS
FROM THE STATE OF ILLINOIS
Mr. Hull. I shall not occupy over a few minutes of your time. I came into this picture because of the fact that the best lands we have in the State of Illinois are the drainage lands. They raise more crops than any other part of the State. But in the last 10 or 15 years we have been flooded out by the rains, and the general conditions have been such that these lands have been assessed so terribly to keep up their levees that the farmers have practically lost the land. In other words, they are unable to pay their assess
The land is there, and the bondholders have an excessive bond against these lands, and in many cases the bondholders have taken over the land and are farming it in mass farming.
I think there is a good deal of merit to this bill, from the very fact that the Interior Department decides on the revaluation of these lands. For instance, we will say that I have a farm on the Illinois River, with bonds out for $75,000. This bill is passed, giving me the privilege of borrowing whatever the Interior Department determines the valuation of that land to be. They come in and make a decision on my land, that under the present conditions, with the overhead against it, with the floods to be considered, that the bonds
on that land ought to be reduced, we will say, to $30,000. Now, you gentlemen will say, “ What are you doing with the money? You are paying off the bondholders." That is true, but when we pay off the bondholders of $75,000 worth of bonds with $30,000 in cash that I would borrow from the Government, that puts me in a position to go back on the farm, on the basis of the intrinsic value of that land, and make a living for myself and my family. Now, that is why I am for this bill, because it gives a chance to keep the farm in the hands of its present owner. If you do not give the farmer relief in all these flooded sections, then of course, naturally, these farms are going to revert to the bondholders, and the bondholders are going to farm them or let them go by the board, and the levees will go down, and then it ceases to be farm land.
Now, of course, we realize that when we ask for this legislation, we are asking something for people who live in the flooded districts, because we are interested in keeping them going. Now, if you want to destroy them, all right, don't pass the bill; that is all you have got to do, and that is all there is to it. This argument that because somebody else does not get a piece of pie I should not have one, is ridiculous. I think it is absolutely absurd, gentlemen, to question these people as to the validity of bringing about something of this kind, as to their motives in doing something that will give relief to these people. If you gentlemen want to do it, it is up to you. But I stand for this bill on its merits. If the Government will loan these farmers in the flooded districts or in the drainage distriets money at three per cent for forty years, and take a drainage district as mortgage security, the Government certainly can not lose any great amount of money, because the valuation will be decided by the Interior Department, and they certainly are not going to decide on a price of the land above its actual value, and more than likely that branch of the Government will decide on a less price. In other words, they will get ample security, and you are not going to lose this money, you are going to hurt the farmer, who is not in need of this money, but you are going to help the farmer that does need it, and it will not hurt those who do not need it. I think you ought to report this bill out. That is about all I have to say.
Mr. Suitu. Mr. Rainey, of Illinois, wishes to attend a meeting of the Ways and Means Committee. He will take only five minutes.
The ('HAIRMAN. We will be very glad to hear from Mr. Rainey. STATEMENT OF HON. HENRY T. RAINEY, A MEMBER OF CONGRESS
FROM THE STATE OF ILLINOIS
Mr. RainEY. Mr. Chairman, I want to present this matter from a little different angle and clear away some of the brush that seems to have grown up about it. This bill does give the farmer cheap money. It gives to the farmers cheaper money than industry enjoys. They have more equities, this particular class of farmers have, than persons who are engaged in industrial pursuits. This land' is not worth anything without these improvements. They have been encouraged by the Federal Government and by their State governments to make these investments. I have 200.000 acres of this kind of land in my congressional district. When I was a