REDUCTION INTEREST RATES IN TERMS OF PRODUCTS AS COMPARED WITH PREVIOUS YEARS

You were asking especially about the quantities of farm products required to pay interest.

We have a statement here showing that it takes less farm products to pay interest on land-bank loans now than during the pre-war period, and, of course, very much less than in 1932.

Mr. CANNON. Will you insert that statement at this point?

Governor MYERS. The total amount of interest payments, the amount paid by the Treasury on a $10,000 farm mortgage made in the year 1935, was $50, which means that $350 will be paid by the farmer. That took 5.9 bales of cotton, as compared with 10, on the average, from 1910 to 1914.

(The statement above referred to is as follows:)

Mr. CANNON. Governor Meyer, you may continue your statement. Mr. MYERS. I think I have covered the general statement of what we are trying to do. We are trying to eliminate overlapping of supervision, we are combining offices, and we are reducing expense.

ECONOMICAL POLICIES IN ADMINISTRATION OF FEDERAL LAND BANKS

Mr. THURSTON. Are you extending that same policy to the economical administration of the Federal land banks?

Mr. MYERS. Yes, sir.

Mr. THURSTON. I am pleased to hear you say that.

Mr. MYERS. I have discussed that at some length, and will be glad to go into it further. During the period of 2 years of the emergency, cost sometimes had to be sacrificed to speed. We had to act quickly to save farms from foreclosure, but as time has gone on, and emergency loans have declined, the personnel in the district banks has been reduced and they have proceeded toward a basis of normal efficient operation, having a personnel that is properly qualified and no more than is necessary to handle the loans that are on the books and those which are being made.

Mr. THURSTON. You are aware of the fact that out in the Omaha land-bank district, farm-loan associations and other farm organizations, with that very thought in view are anxious, first, to reduce what they regard as excessive overhead costs at Omaha, and, second, they are very much opposed to the recent change which virtually deprived the local associations of power in the control of the policies of the bank. They want that power restored to the owners of the stock, and, as I recall it, 95 percent of the Omaha bank stock is owned by the borrowers.

Mr. MYERS. It is not that much, but it is a substantial part.

Mr. THURSTON. I know there will be an active movement in that respect in the Omaha land-bank district.

Mr. MYERS. We will cooperate hearitly. We are pushing progressively toward reducing every unnecessary expense to the end of saving the farmer borrowers' money. We are operating these institutions at the lowest possible cost.

REPRESENTATION OF THE BORROWERS ON THE BOARDS OF THE VARIOUS FARM CREDIT ORGANIZATIONS

Now, may I offer this comment: At Omaha, St. Louis, and in each of the 12 farm-credit districts, there are boards of seven directors who are resident in the district. They formulate the policies, employ the personnel, and fix the salaries, subject to supervision from here. Until 1933 there were only two institutions in each district; the Federal land bank and the Federal intermediate credit bank. The farm-loan association borrowers elected three directors, three were appointed by the Washington office, and one known as the directorat-large was nominated by the borrowers and appointed from Washington. When in 1933 the production credit corporations and the banks for cooperatives were created to improve and complete the credit service the Farm Credit Administration was tendering, the method of electing directors was changed. Now one director is elected by the National Farm Loan Association borrowers, one is elected by the Production Credit borrowers, and one is elected by the borrowers from the banks for cooperatives.

The production credit borrower and the land bank borrower are sometimes the same man. They are almost always farmers. Borrowers from the banks for cooperatives may elect a farmer, or they may elect someone who is an officer in the cooperative organization. The change has been made to give the new units representation on the boards. Another important change made, under the legislation enacted by Congress in regard to the seven directors, is that the direc tor at large was formerly appointed from the top three as the result of an election, and he is now a straight-out appointment. However, it should be noted that under the act, in addition to the director elected by national farm loan associations, one of the appointed directors must be a borrower from the Federal land bank.

Mr. THURSTON. Of course, the members who have farm loans greatly exceed in interest the smaller and temporary borrowers who have now equal representation. Those farm-loan borrowers have much more invested in the banks than the temporary borrowers who have equal representation.

Mr. MYERS. The production-credit borrowers may be temporary in the sense of being seasonal, but they are borrowing from year to

year.

Mr. THURSTON. Their borrowings would not represent onetwentieth of the borrowings of the others.

Mr. MYERS. Taking the country as a whole, farmer-borrowers own about 10 percent of the total stock outstanding in production credit associations.

Mr. THURSTON. They have equal representation with those who have 10 times as much interest.

Mr. MYERS. Taking the United States as a whole, the borrowers own about half the stock of the land banks.

Mr. THURSTON. In value?

Mr. MYERS. The land bank borrowers own half in dollar volume of the stock. The production credit associations are new, and their volume of business is increasing, which means, of course, that the stock ownership of the borrowers is increasing.

PERCENTAGE OF MONEY BORROWED THAT HAS BEEN REPAID

Mr. UMSTEAD. Governor, how much of the money appropriated by Congress at the last session was obligated in crop production loans? Mr. MYERS. We loaned approximately $57,000,000 for crop production.

Mr. UMSTEAD. Out of the $60,000,000 provided?

Mr. MYERS. Yes, sir.

Mr. UMSTEAD. Have you the record to show the repayments by States?

Mr. MYERS. Yes, sir.

Mr. UMSTEAD. Could you give the percentage of money repaid by borrowers in North Carolina for the year 1934?

Mr. MYERS. It was 95.7 percent.

Mr. UMSTEAD. What was the percentage of 1935 loans that were repaid, or do you have that available?

Mr. MYERS. It was 87.5 percent; that was up to December 31.

Mr. UMSTEAD. The collections for 1935 have not yet been completed.

Mr. MYERS. No, sir. Taking the United States as a whole, in 1934, 58.3 percent of the loans were collected.

Mr. UMSTEAD. For the latest date mentioned by you, what percentage of the 1935 loans were collected, taking the country as a whole?

Mr. MYERS. Approximately 38 percent, or, to be exact, 37.9 percent.

Mr. UMSTEAD. That was for 1935?

Mr. MYERS. Yes, sir. The difficulty there is due to the fact that so many States suffered from drought, and the collections in such States have been extremely low.

Mr. UMSTEAD. According to the figures given by you, the cropproduction loans have resulted in a substantial loss. Nevertheless, that is a service which, perhaps, is not rendered by any other facility or organization; is that true?

Mr. MYERS. Yes, sir.

Mr. UMSTEAD. That is largely because of the fact that all other organizations under the control of your administration require some form of endorsement or collateral.

Mr. MYERS. We require security.

Mr. UMSTEAD. You have to do that because it is a mutual undertaking and you have to protect the investment of other borrowers by undertaking to provide safety in making the loans.

Mr. MYERS. Yes, sir.

Mr. UMSTEAD. These crop loans, just referred to by me, are practically the only means that a farmer has of obtaining money where he does not have collateral to put up at the time he receives the loan.

Mr. MYERS. It is the only source of this form of credit. He might be able to obtain credit from the local merchants.

Mr. UMSTEAD. I am referring only to loans made through Government agencies. Now, you stated that in 1934, 95 percent of the money borrowed in North Carolina was repaid.

Mr. MYERS. Yes, sir.

Mr. UMSTEAD. Will you give those figures for the State of Georgia in 1934 and 1935.

Mr. MYERS. In 1934, 96 percent; and in 1935, 93 percent.

Mr. UMSTEAD. Are there any other States having a higher per centage of repayments than North Carolina and Georgia.

Mr. MYERS. They are among the highest. The Southern States run very high in repayments. Some States run extremely low, taking it as a national picture.

Mr. UMSTEAD. Will you give the percentage of repayments in the State of Virginia?

Mr. MYERS. In 1934, it was 87.2 percent, and in 1935, 68 percent. Mr. UMSTEAD. What are the figures for South Carolina?

Mr. MYERS. In the same order, in 1934 it was 95.8 percent, and in 1935 it was 90.8 percent.

Mr. UMSTEAD. Is it not a fact that four States, Virginia, North Carolina, South Carolina, and Georgia are producing practically all of the bright-leaf flue-cured tobacco in this country?

Mr. MYERS. Yes, sir.

Mr. UMSTEAD. In the year 1934, under the operations of the Agricultural Adjustment Act, the price of bright-leaf flue-cured tobacco was unusually high, was it not?