The other is A. Ludeke. Get men of that type who know the farm game, and local conditions, and local soil. The value they could be to it would be worth millions of dollars, and their services could be gotten without a penny.

May I leave that to go in the record? (The telegram referred to follows:)

Hon. EUGENE TALMAGE,

[Telegram]

WILMINGTON, N. C., February 14, 1935.

Governor State of Georgia, Atlanta, Ga.:

Because the interests of the Southeastern States are preponderantly rural and because it is essential in improving economic conditions to modernize and rebuild rural life, it is recommended that in its Public Works program and in its list of projects submitted in making application to the Public Works Administration for appropriate allotment of funds, that each Southern State include the sum of not less than 20 million dollars for the purpose of raising the standards of rural life and replacing the tenant system with home ownership, thus encouraging a self-sustaining and profitable system of agriculture as a base for a satisfying rural life.

It is further recommended that the funds be utilized under budgets and plans submitted to the Administration for approval but that the management be under commission appointed by each State, the members of which understand and are sympathetic with local conditions.

SOUTHWESTERN COUNCIL,
HUGH MACRAE, President.

Mr. MACRAE. I want to show you gentlemen a few other things. May I file the record of Penderlea for 1 year?

Senator BANKHEAD. I don't think we want to go into that. Mr. MACRAE. That was a model farm. This was the plan of Penderlea, and these were the houses that were to be built. Mr. Westbrook spoke of building cheap houses. That can be done, but, if you want to build a rural civilization that is socially satisfying, you have got to give the woman a house in which she is perfectly happy, and which she wants very badly, and in which her interest will never wane. It will pay you to put 2 or 3 hundred dollars more in the house than 2 or 3 hundred dollars less. It will be a better asset, and it will be there when the 50 years are up. If you build a shack, it will have to be junked. Then if the person should fail, nobody wants it.

I am about through, but I want to show you two diagrams. There is a diagram showing what happened when the War Finance Corporation was shut down in 1920. Industry and the farmers were going up like that together, and the machine was running in high gear. Then they purposely deflated the farmer-the farmer dropped right to the bottom. That was in 1920. The industrialists made more money because they were getting their raw materials cheap. They capitalized their profits, and sold their stock to the public. When they no longer had the farmer's buying power to support them, they dropped. There is your main trouble, and you have got to remedy that so these two lines run approximately together. The industrialist likes to believe that industrial labor can support itself, that laborers producing one product will buy this and that, and those producing others will buy theirs, and so on. They can't do it. After labor has paid for rent, fuel, food, clothing, and other necessaries, there is little left. You may multiply the numerator and

denominator by two, ten, or a thousand, and the result will be the same. The farmer is the greatest consumer and the smallest producer. Together with those directly associated with him-such as machinery manufacturers, the railroads, fertilizer manufacturers— the farmer represents a group of people who constitute about 55 percent of the people of the United States. It is their buying power that buys these surpluses and makes the economic machine go. think when that is realized in connection with Mr. Bankhead's bill we will make some real headway.

I

Here is the same thing in a diagram form. Here is the farmer, the middleman-preachers, doctors, and so on-here is industry. The products from the farm go partly to the middle class, and largely to the industry. Industry adds labor to them, converts them, and then they have got to carry them back and sell them to nonproducers and to the farmer. If you leave the farmer out, you simply have left out the energy of your whole economic machine, and it will not work. Here is what the manufacturers have been trying to do: Get the manufacturers together and the labor together, and try to get them to buy all that product. It is just simply a thing that can't be done. I have tried only to bring in a few practical suggestions, and it won't be possible in a short hearing to cover a large percentage of them, but I am satisfied that, with the combination of forces we now have available, this whole problem can be solved, and I believe it will be solved.

Senator BANKHEAD. We thank you very much, Mr. MacRae. I know you have had a very long contact and experience with these matters, and we are glad to have had your views.

Mr. MACRAE. I would like to make this remark, that if Penderlea had been completed on the 30th of March, as our schedule called for, it would have been worth more than its entire cost. It now has a very great value in showing how not to do it.

STATEMENT OF CARL C. TAYLOR, REGIONAL DIRECTOR, LAND POLICY SECTION, A. A. A., RALEIGH, N. C.

Mr. TAYLOR. My name is Carl C. Taylor. I am now regional director of the land-policy section of the A. A. A.

Senator BANKHEAD. You are located here?

Mr. TAYLOR. No; my headquarters are at Raleigh, N. C. I think any right I have to speak does not inhere in that position center, but in what I had been doing before I went with the land-policy section, although in our work now we are, of course, buying submarginal land upon which reside a great many people who must be rehabilitated, and I hope a great many who will be beneficiaries of this act.

I was with the Subsistence Homestead Division for several months. Previous to that I was dean of the Graduate School of North Carolina State College of Agriculture, and previous to that head of the economic department, and previous to that at the University of Missouri, and before that of Texas.

I was born and reared in Iowa, and I am bound to say that as a boy there on the farm and operating a farm for 3 years, I wasn't conscious of the tenant problem at all. We had tenants in Iowa, but there were not nearly as many as there are now. My own people were landowners, and with very few tenants, so I never thought then

of the tenant problem; but from 24 years ago, when I went to Texas for my first teaching in college and some research work, until the present time, I have been in what you might call the tenant belt of the Nation.

When I received your letter asking me to appear, I immediately wired Dr. Gray and said, "I want to appear.

I am sure I ought not to take much of your time, and I am sure that my contribution is not very great. It should not be a question of giving you any further statistics, I am sure of that. Just to refresh my own mind, because I have been doing some other things in the last few years, I did fill my book bag with statistics of various studies, but I am sure they have been given here by previous witnesses.

I think, as I told Dr. Gray this morning, and as I told the Assistant Secretary of Agriculture Wilson some 2 or 3 weeks ago when he was talking to me about this, that my convictions on the matter were so deep that they were almost a religion. I am not going to take very much time, Senator, but I am awfully glad to state those convictions, which I do think arise out of about 25 years of close contact with this problem; not only close contact with it but with a growing conviction that the toughest problem in Southern agriculture is the one that this bill seeks to attack.

I should like to tell this little instance. At a meeting of the Wautauga Club founded by Walter Hines Page about 50 years ago you remember Walter Hines Page wrote an article on the forgotten man, on this very topic, away back there.

Senator POPE. He had reference to the tenant farmer?

Mr. TAYLOR. Yes. Dr. Clarence Poe, who is president of our little club, gave a dinner for the fiftieth anniversary of that club, of which there are a dozen or so members. He asked this question: What is the most important problem that we will have to attack in the South, not in the next 50 years, but in the next 25 years? When it came my turn, I said it was the tenant farmer. That is my first deep conviction on it. It is very deep, and I don't think it is an emotional conviction. I think it is based on observation and some careful statistical studies, such as Dr. Hamilton cited here this afternoon.

There is absolutely no way we can build an adequate rural civilization in the South until we break the back of the tenant system. That is the reason why, if I didn't say more than a half dozen sentences, I wanted to appear here, and I asked Dr. Gray to allow me to come in order that I might say this thing.

My second conviction is that it is a thing that can't be done in a year, or 2 years, or 3 years. As you know, Senator, it has been a long while in its building, particularly since the Civil War and even before that, and it will have to be unmade by some such slow progress as it has been made. I tried to find last night, late, before I left for here, an article which I wrote for the Southern Planter about 3 years ago on Can You Build a Rural Civilization on Tenant Farming? because I had compiled in that what I thought were the chief arguments for the solution of the tenant problem.

I read your bill with a great deal of interest to see what machinery was set up to provide how it should be done. I say this in that article:

If the agricultural agents of the South became as deeply convinced of the necessity of attacking this one outstanding, fundamental, economic, and social

problem as they had 20 years ago become convinced of Seaman Knapp's program, or if they were as deeply convinced of the necessity of attacking this problem, they could start the next day to helping solve the problem by picking in each heavily tenanted county in the South two tenant families whom they would recommend both from the standpoint of the farmer and homemaking to start toward farm ownership; that without even thinking of any other facilities of helping those people and those already in existence, they could add a few hundred families the first year and a few hundred the next, and unless we do that thing we are going in the other direction so rapidly it isn't a question of falling to peasantry but it is a question of whether we will ever attain anything equal to peasantry in the South.

I think if I had one suggestion to make concerning the bill it would be that the limit of the period for amortization be made longer than it is now.

Senator BANKHEAD. Fifty years?

Mr. TAYLOR. Maybe 60 or 70. Perhaps, you wouldn't want to use it, but the experience of the other countries who have seriously attacked this problem have hit more nearly along that line. I think if we could solve it, not in the sense of eliminating every tenant, but break the back of the tenant system and move as Ireland did, as Denmark did, and England did over generations of time-because it was about two generations in each case there before they really got on top of their problem-we could do so in two generations as Mr. MacRae said, or maybe it was Mr. Rankin, and that it would be the most outstanding thing that was ever done for southern agriculture.

I keep referring to southern agriculture, not because you don't have tenants elsewhere, but because I have been immersed in southern agriculture for 25 years, and I think in those terms.

I think the other conviction that I should like to state is just as dogmatic as those, and that is that you will fail, anybody will fail, who attempts to do this in a broadcast method, or who attempts to take the worst cases which excite us most in the tenant situation in the South. It has got to be the skimming of the cream off the tenant class of the South and moving them into land ownership; that is, you have got to have somebody not only with boots on but with some bootstraps to pull with. I think the success of the administration of the act will depend upon the care with which the clients are selected.

I spoke to a group of some 50 landlords about 2 years ago in Vance County, N. C., about this same problem, and said:

If a thing like this gets started, you are not going to get rid of your poorest tenants. We are going to take your very best tenants.

I think the best farmers in the South, many of them, are tenants; that is, the fellows who actually manage the farms, a great many of them are tenants. They are unable to climb to ownership not only because of tenant farming but because of the whole credit system, and you know, Senator, it is almost a type of civilization that we have built there over two or three generations of time.

I won't say a particular percentage, but possibly say 10 percent from the top, and you will have to fill in with the others. I think a process of that kind is what has got to happen. I am on five rural rehabilitation corporations that are struggling with this problem. Necessarily those groups are working with the fellows who are

in the worst fix. Those are not the clients who should be first recipients of this bill. It should be those at the top and not those at the bottom. I think that is about all I have to say.

Dr. Hamilton pointed out to you the comparison of the statistics of the study which has has recently made, and the one that Dr. Zimmerman and I made 12 years ago, in which it is very apparent that the tenancy which we thought of in the Middle West where I was born and reared, where tenancy is one rung on the agricultural ladder, is not the typical tenancy of the South. Seventy-five percent of all the people who were tenants of the thousand typical farmers that we studied, their fathers had been tenants. It has become a crystallized thing. It is a type of civilization, and not a lovely type, and not one, Senator, that we who live in the South can countenance if we call ourselves agricultural leaders.

On first reading of your bill, naturally I had done a lot of thinking on this myself, and my own ideas stood up, and I didn't thoroughly agree with the bill. As I read it further, I become more and more convinced that it covers the field. One of you asked a moment ago, probably when Mr. Rankin was speaking, if he knew of any incipient objections to the bill. Without quoting the person, an agricultural leader with wide following in this country cited a possible objection this morning when he said, "if the credit that is to be furnished to these people under the Bankhead bill is to be a different credit or a different rate of interest than that given through the regular credit channels to other farmers, I am against it." My reply to that would be, "Unless it is different, it hasn't done anything." As I said to him, "The safeguard will be in the type of farmer you make out of this man and the type of client that you pick to assist." The type of farmer that you are thinking of making is a farmer who in England would be known as a small holder, largely a subsistence farmer, though not totally of course.

Senator POPE. What have you done about the interest in the bill, Senator?

Senator BANKHEAD. It doesn't provide at all.

Senator BILBO. Have you any idea as to what the cheapest rate of interest should be?

Mr. TAYLOR. I have this conviction, that the interest rate should be high enough so that it was not a subsidy. I don't think the United States Treasury should be called upon to finance these people at a loss. Outside of that limit, I think it should be the lowest rate of interest you possibly could have.

Another reason for the long amortization period is that the added amount to amortize the loan can then be so low that it doesn't make it difficult on the farmer to pay out.

Senator BILBO. I want to ask you this: This bill doesn't provide any supervision, yet it provides for taking care of the scattered tenants they will be scattered-and you can also group them under this bill. Now if the Government undertakes to finance these sharecroppers and tenants, do you think we ought to gather in the extension agricultural forces of the Government to supervise that?

Mr. TAYLOR. Absolutely. That is my fourth conviction. The bill does state that other agencies may be called on. I take it that is what the Senator had in mind.