Mr. BELL. One year. Beginning in 1932, we had outstanding some 3- to 5-year notes which sold at prices to yield 2.50 percent. Čertificates for a term of 1 year gradually went out of the picture.

From 1932 we borrowed at 212 percent; in 1933, 34 percent, and in 1934 it dropped to 134; in 1935, 114; 1936 a little over 1; 1937 it went back up to 114 again, and in 1938 it dropped to a little less than three-quarters.

In 1939 it was down to a half, and today these issues sell on a fourtenths of 1 percent basis.

Those figures are the yields on the 3- to 5-year Treasury notes. The CHAIRMAN. That high period was when we were all trying to live on the stock market.

Mr. PACE. Mr. Chairman,

The CHAIRMAN. Mr. Pace.

Mr. PACE. Mr. Bell, in that connection, I notice that on December 30, guaranteed deposits were in excess of $56,000,000,000.

In your judgment, if that enormous accumulation of money should be released in some way, some time, do you not think that the shorttime rate would go up?

Mr. BELL. With a boom, you mean?

Mr. HAAS. With a change in conditions, Mr. Congressman, naturally, we might have an increase in the rate; but during the interim if gold continues to come in, it might overshadow the other factors.

Mr. PACE. Is it not true that the short-term interest rates you have today is probably largely due to the fact that the money has nowhere else to go for better earnings?

Mr. HASS. The large supply of loanable funds is, no doubt, the most important factor making for low interest rates.

Mr. PACE. Mr. Bell, one other question. It has been testified before the committee, and it has appeared in the newspapers, that the President is contemplating withdrawing 200 to 300 million of this farmcredit money. It has also been testified before the committee that there is an undeveloped, undisclosed loss to the Farm Credit Administration of around $300,000,000, which has not yet developed, very probably on these Commissioner loans, and you testified just now that you thought that probably the best thing was for the land banks to take the mortgage corporation and liquidate those assets the best that we can.

If the President should withdraw two to three hundred million of the funds available; if this corporation is taken over and liquidated and $300,000,000 losses appear there, what is going to be the financial structure of the organization and who is going to take the $300,000,000 loss?

Mr. BELL. Well, if you lose $300,000,000 in the Federal Farm Mortgage Corporation, you certainly would wipe out all its capital of $200,000,000 plus whatever reserves are set up. However, the $200,000,000 is already a part of our public debt, as the Treasury advanced the money to buy that capital stock. On the basis of your figures, there would be an additional loss of $100,000,000 apparently, which would have to be met by the Treasury. I do not know that they are going to lose $300,000,000. I have not heard that. I have not seen any estimate of that amount.

Mr. PACE. That was testified to here before this committee.

The CHAIRMAN. It was not testified to, Mr. Pace, by anyone connected with the Farm Credit Administration. That was some man's opinion from the outside.

Mr. PACE. It is very noticeable that there has not been any denial made by the Farm Credit Administration, and they have been sitting here.

The CHAIRMAN. They indicated that they did not think that there would be anything like that.

Mr. PACE. I have not gotten that from the witness stand. I just think that we ought to have the whole picture of losses there and the money that is going to be withdrawn.

Personally, I want the cheapest interest rates possible, consistent with sound financing; but I think we ought to have the whole picture when we go into this thing.

Mr. BELL. Any estimate of the losses of the Farm Credit Administration made at this time must be very rough. Theirs is a longterm program, and I do not think we can know for several years what are going to be the losses, if any.

Mr. PACE. I think it is based partially on defaults, past experience, and commissioner loans.

Mr. BELL. As I recall the report made under Senate Resolution 150 did not give any such indication. In that report $152,000,000 was the estimated loss in the land banks and in the Federal Farm Mortgage Corporation, without giving consideration to future earnings.

Mr. PACE. That is all.

Mr. ANDRESEN. May I ask one more question, Mr. Chairman?
The CHAIRMAN. Mr. Andresen.

Mr. ANDRESEN. You indicated a moment ago that our excessive reserves in part were due to the large amount of gold holdings we had. Do you think there is any danger to the general public, our domestic economy, from these large, excessive reserves?

Mr. BELL. We have had large excess reserves for several years. I cannot give you a definite answer as to what will happen in the future. Mr. ANDRESEN. I have heard some alarm has been expressed in the Treasury on account of these large gold holdings, causing excessive

reserves.

Now, a large part of the gold, or between 11 and 12 billion dollars' worth of the gold we now possess has come from foreign countries. Mr. BELL. That is about right.

Mr. ANDRESEN. Do you believe that these large foreign gold purchases are responsible for some of our excessive reserves?

Mr. BELL. Undoubtedly.

Mr. ANDRESEN. But, so far as you know now the Treasury is not alarmed over it?

Mr. BELL. We know that there is a problem there; but there is no present answer to it.

Mr. ANDRESEN. In other words, we have a bear by the tail and cannot let go?

Mr. BELL. I would not say that.

Mr. ANDRESEN. Well, what can we do in order to correct the situation?

Mr. BELL. I understand the Senate Committee on Banking and Currency is undertaking a study of the whole question with a view to making recommendations.

Mr. ANDRESEN. Do you not believe that it would be advisable for us to place a tax of around 40 percent on gold imports so as to get the gold prices more or less in line with the old prices?

The CHAIRMAN. I think that we had better stay within the range of this bill.

Mr. BELL. I do not think I would care to answer that, Mr. Andre

sen.

The CHAIRMAN. Are there any further questions? If there are no further questions, we thank you, Mr. Bell.

Mr. BELL. Thank you.

The CHAIRMAN. Now, gentlemen of the committee, Mr. Taber desires to be heard and would like to leave tonight, and I am wondering if we could hear him this afternoon. The private calendar is on over in the House. I am wondering if the committee would be willing to meet this afternoon and hear Mr. Taber, meet, say, about 2:30. I understand that the private calendar will probably not take more than an hour. We can adjourn now and meet at 2:30 if that is agreeable to the committee.

Mr. COFFEE. How about continuing now?

The CHAIRMAN. What is your preference, Mr. Taber?

Mr. TABER. Mr. Chairman, I would be glad to testify now or this afternoon, whichever is convenient to you gentlemen. I can make my time suit yours.

The CHAIRMAN. I think we would hardly have time to finish before the noon hour, unless the committee wants to sit on after noon. Several members have private-calendar bills and they do not think that it will last more than an hour.

Mr. PACE. Would there be any objection to Mr. Bell putting in tables that he has in connection with his statement?

The CHAIRMAN. Without objection that will be permitted. (The tables referred to are as follows:)

Estimated coupon rates on selected new issues of Federal farm-loan bonds [Based on closing prices, Mar. 27, 1940]

NOTE. These estimates of coupon rates on new issues are necessarily rough because there are no issues of similar maturity and call period outstanding. (The longest nonguaranteed fully tax-exempt Federal farmloan issue outstanding becomes callable in about 6 years. The longest partially tax-exempt issue fully guaranteed by the United States becomes callable in about 5 years.) The estimates are based, therefore, on the market patterns established by the closing prices on Mar. 27, 1940, of the outstanding direct and guaranteed issues and the Federal farm-loan issues.

Comparison of short-term and long-term interest rates, 1920-30

Comparison of short-term and long-term interest rates, 1931-40

The CHAIRMAN. Then, we will take a recess until 2:30 this after

noon.

(Thereupon, at 11:40 a. m., the committee took a recess until 2:30 p. m. of the same day.)

AFTER RECESS

The committee met, pursuant to the taking of recess, at 2:30 p. m., in the committee room, New House Office Building, Hon. Marvin Jones (chairman) presiding.

The CHAIRMAN. The committee will come to order. The committee has met this afternoon for the purpose of hearing Mr. L. J. Taber, master, National Grange. We will be glad to hear you, Mr. Taber.

Mr. TABER. Mr. Chairman and members of the committee, my name is L. J. Taber, master of the National Grange, a farm organization of 8,000 local units and approximately 800,000 dues-paying members located in 40 States.

As an officer of a farm organization, and a dairy farmer who has spent most of his life on a farm in Belmont County, Ohio, I most earnestly desire to oppose the passage of the pending bill, H. R. 8748, unless radically amended and unless many objectionable features are entirely eliminated.

I come before this committee with a twofold sense of embarrassment. I am deeply disturbed because I have known and admired your chairman as much as any Member of Congress. I look upon Marvin Jones as an agricultural statesman of character and ability. Mr. Jones has introduced many of the bills which the Grange has championed, and we have always and at all times found ourselves in accord with most of the principles advocated by your chairman. Therefore, it is difficult to oppose so vigorously a measure bearing

his name.