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decline in farm indebtedness, which has taken place since 1928, was not the result of normal liquidation but of foreclosures, bankruptcies, and forced sales and of the inability of credit agencies to give that support which is absolutely requisite to recovery. In 1932 oneseventh of the mortgaged farms were encumbered for 75 percent of their value; the mortgage debt represented 40 percent of the value of all mortgaged farms and 25 percent of the value of all farm land and buildings. Because of the drop in farm-commodity prices, payment became impossible for great numbers of farmers. About 6% million of our people are actively engaged in agricultural pursuits and 30 million people depend upon agricultural solvency in order that human souls may stay in human bodies. The system of the Federal land banks may have done some good but it has not been adequate to the situation. State legislatures have been compelled to resort to moratoriums else the sheriff would now be selling more farm homes than he ever did and more of our farm people would be seeking shelter in charitable institutions and more of them would be dependent upon bread lines for bare sustenance.

The present desperate condition of agriculture has been reflected in serious outbreaks in some sections of our land. Men who have lived upon their homesteads and who work in the hardest kind of toil from 12 to 14 hours a day during 8 months of summertime and almost 10 hours a day for 7 days in every week during wintertime; men who are skilled and who work intelligently and who have no sense of wrongdoing and who are without blame but are overwhelmed by conditions for which they are not responsible and who have exhausted their resources, are loath to permit their homes to be taken away and their loved ones sacrificed to a ruthless juggernaut of insolvency and foreclosures. The American farmer is a manly man. He believes that he must always perform his contracts and keep his promises and be loyal to his country and keep and preserve its laws and fulfill his duty to society in general. But is not his duty to his wife and his children the most sacred of all of these?

Is not his promise to his loved ones as consecrated as all others? If he is thrown out of house and home without fault of his own he is likely to feel that sense of resentment which might even impel him to resist force with force. Despair may, at times, drive the best of our citizens to desperation. These men are feeding America and no American citizen has a right to eat the bread that they produce unless he is willing to share with them all of the things that bring about beautiful home living and establish them in society on a basis of decent, bountiful, intelligent, and religious twentieth-century citizenship. The conditions following the debacle of 1929 remain. While farm

. prices of many commodities have risen in unit value, still the things the farmer must buy have risen in greater degree and he still remains in relative submergence. No man can win in an economic race while carrying such a handicap. On the basis of the present income of agriculture, and of the present indebtedness of agriculture, and of the present taxes and interest rates which agriculture must pay, it is impossible for agriculture to carry on successfully. When it can carry on---when it does prosper, then we will not be compelled to furnish relief to millions of nonfarmers who are now dependent upor governmental bounty and governmental doles. Farm tenancy is growing apace. Foreclosures have divested real farmers from ownership while

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moratoriums against foreclosures are mere temporary palliatives and are not permanent nor remedial.

The bill provides that farm indebtedness shall be refinanced through the use of existing governmental machinery at an interest rate of 142 percent and a further payment of 172 percent annually to amortize

a the loan. It will take 47 years to liquidate such an indebtedness, during which time the mortgagor will make a yearly payment of $30 on each $1,000 of the loan. Provision is made to issue bonds which will be secured by first mortgages upon the farm lands of the country. These bonds will draw interest at 1% percent and will be amortized at 1% percent annually. In the event that there is not a ready market for them the Farm Credit Administration will deliver them to the Federal Reserve Board which in turn will cause currency (notes) to be issued and given to the Farm Credit Administration dollar for dollar. These Federal Reserve notes are not to exceed $3,000,000,000, this being the amount of the revolving fund fixed in the bill. Thé Federal Reserve Board will issue these notes just the same as it does today, except that the Federal Reserve banks are getting them today and do not pay anything for them. They pay no interest upon them. They pay nothing for the use of the credit of the Government. Surely there ought to be some way for the Government when in need, to get money without borrowing it from a bank.

This bill has met with unprecedented public approval. It agrees with the party promises and the party platforms of all political parties. No other bill before this Congress compares with it in the backing and endorsement which has been given to it. The National Farniers' Union and many State Grange and Farm Bureau organizations are for it. It has been endorsed by leaders in the Veterans of Foreign Wars and in the American Federation of Labor and by the National Union for Social Justice. Twenty-nine State legislatures have memorialized Congress for its passage, including those of Montana, Nevada, Wisconsin, Illinois, Minnesota, North Dakota, California, Nebraska, Oregon, Indiana, Arizona, Idaho, Colorado, Oklahoma, South Dakota, Tennessee, Iowa, South Carolina, Kansas, Michigan, Ohio, Texas, Kentucky, Wyoming, North Carolina, Arkansas, New Mexico, New Jersey, and Washington. In addition the lower house in each of the following States have endorsed the bill: New York, Delaware, Pennsylvania, Alabama, and Missouri. Our people want to have it enacted into law during this session. The realization of their hopes should not be postponed.

Section 2 is a simple acknowledgment of the solemn promises and duties of the Government to place American agriculture on an equality with other industries. This section recites that farm mortgages now existing may be refinanced for 14 percent interest and 12 percent principal per annum, all through the machinery and use of the Farm Credit Administration and the Federal Reserve Board, and the employment locally of the Federal land banks and national loan associations.

Section 3 authorizes the liquidation of farm mortgages and other farm debts existing at this time by the making of real-estate loans to the extent of the fair value of the farm and of 75 percent of the value of the insurable buildings. This section authorizes the Farm Credit Adininistration to make all necessary rules and regulations to carry out the purposes of the act. The section also provides that farm

H, Repts., 74-1, vol. 2

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indebtedness may be scaled down in accordance with the provisions of existing laws. It is believed that such a loan will be a safe one and that the farmer can meet its conditions. The low rate of interest stipulated and the favorable terms given the borrower enhances his ability to pay and makes the loan easier of payment. Furthermore, when a loan of this character is placed upon a farm home then the value of the property will be increased because the advantageous conditions for payment surrounding the mortgage will make the property more desirable and of greater value.

There should be no question about the safety of this security provided that the bill is honestly administered and that loans are made on real values as provided in the bill and not on fictitious or puffed-up values. The very fact that a piece of land carries a governmental loan at 1%-percent interest will in itself establish its value on a higher basis and therefore make the loan increasingly secure.

Section 4 provides for chattel-mortgage loans which are limited to 65 percent of the fair market value of the livestock. The present practices regarding chattel-mortgage indebtedness are very harmful to the farmer. High rates are exacted with the result that the income of the farm is absorbed in meeting the requirements of chattel mortgagees. Experience has shown that many cases of foreclosures upon the land itself have resulted from the insistence of local and exacting chattel mortgagees whereby farmers were dispossessed of their ability to carry on. Section 4 of the bill is designed to remedy such evils. In some cases it will be necessary to resort to livestock in addition to real estate, and the loan on the real estate will be supported by the chattel loan. The chattel-mortgage provisions of this section can be readily used to supplement the real-estate loan so that the Farm Credit Administration may get the benefit of both personal and realestate security. Furthermore, it is desirable that the entire indebtedness of the farmer, both real and personal, should be held by the one agency.

Section 5 authorizes a small appropriation to carry out the provisions of the act; but all necessary and actual expenses so incurred must be apportioned and prorated and added to each individual mortgage. Such sums so added shall be paid to the Farm Credit Administration for administrative purposes. Through this means the expenses of the administration of the act will be paid by those who get its benefit and not by the Federal Government. By this bill farmers are not asking for charity or for a dole or for any subsidy. They will repay these loans. In this respect they are asking for much the same treatment that the Government has already afforded to other industries such as railroads and banks and insurance companies through the Reconstruction Finance Corporation and through other instrumentalities.

Section 6 provides that the funds to refinance existing indebtedness shall be provided through the issuing of farm-loan bonds by the Farm Credit Administration through the land bank commissioner and Federal land banks, as now provided by law. These bonds shall bear interest at the rates provided in the mortgages extending to farmers and must be sold at par.

Section 7 supplements section 6 and relates to the sale of bonds in case they are not readily purchased. The provision is that the Federal Reserve Board shall take these bonds and issue Federal Reserve notes against them up to their par value. The amount outstanding of these notes at any one time shall not exceed $3,000,000,000. Is this sufficient? This legislation will be administered under the regulations of the Federal land bank system. This system has been in operation for more than 20 years and to date it has now outstanding in farm loans less than $2,000,000,000. The fund named is a revolving fund and will surely be sufficient to cover loans that can safely be made for some period of time and until repayments are made and recovered under the revolving features of the plan. It is sufficient to take immediate care of those farmers who are in imminent danger and in sore distress and who are about to be dispossessed. As time goes on and as amortization payments in excess of what is required for redemption of bonds are returned into the fund, new and increasing numbers of mortgagors will get advantage from the act.

There is a prospect also that private money to some extent will be invested in the bonds, and when this happens the revolving fund will be augmented and increased. The amount of farm loans outstanding in the whole country approximates $8,500,000,000. About 29 percent of them are held by individuals where there is more or less of a personal relationship existing between debtors and creditors. The holders of many of these private loans will not desire to have them rewritten right away, but will carry them indefinitely into the future; and many of these private mortgages will be refinanced upon terms which will not be wholly out of line with the present proposal. In this respect also, debtors will gain substantial benefits.

Section 8 has to do with the payment of the interest and principal which will accrue on the farm-loan bonds, and provides that payments upon the bonds shall be turned over to the Treasurer of the United States for the purpose of redeeming the notes that have been issued and for the further purpose of reinvestment as a sinking fund in new issues of farm-loan bonds. If we compare this plan for the issuance of currency with those which have heretofore been used whereby the Government has loaned its credit to the banks, and has also given them as a free and gracious gift the right to issue currency, and moreover has actually paid interest to them beside, we will be compelled to agree that the Frazier-Lemke bill will prove to be of great value to the Government itself. Instead of paying 3-percent interest to these banks the conditions will be reversed and the Government will be receiving interest at 1% percent. And at the end of the amortization period (47 years) as computed on the amount of the revolving fund, the Government will have made a profit of $6,345,000,000 above what it is now costing us under plans now practiced and schemes now fashionable. Instead of paying out money it will be receiving money. This is one of the few times in the history of this Republic that anybody has seriously proposed to pay the Government a profit for the use of its own credit. Heretofore the money changers have demanded and derived that income and that profit. Heretofore certain banks have issued currency at a cost to them of only about 27 cents per thousand dollars, being the amount that is paid for preparing and printing the bills or notes.

This profit would keep our schools open; it would build a network of broad highways throughout the land; it would establish and maintain hospitals and colleges and libraries. It would reduce taxes. It would help to restore buying power to common people and prosperity to the country.

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It is not necessary at this time to examine into the propriety of the privilege of issue extended by Federal Reserve laws. Many people who are in full support of the Frazier-Lemke bill believe that such privilege is proper and necessary. It must be remembered, however, that the 12 Federal Reserve banks are private corporations, that they and their stock are privately owned, and that none of their profits go to the Government. Why should the credit of the Nation be given away absolutely free? Why should a bonus (interest) be paid to those

а who receive such largess? Those who believe in this privilege, as well as those who do not, ought to be able to unite in refusing to monopolize it. Those who get it are not in a position to claim exclusive rights in it. Nobody owns a charter right to it. Safety and security being conceded then it must follow that the right involved in the issuance of currency based on Government bonds ought not to be a special one to be exercised alone by those who are affluent. Security regarding such issuance must be guaranteed always; but when this is done and when safety is assured, why cannot some of the benefits of this privilege be extended to farmers and home owners?

Section 9 prevents any undue or dangerous or uncontrolled expansion of the currency. Whenever the amount issued under the act shall exceed $25 per capita, the Treasurer is authorized to retire the notes from further circulation and thus always keep within safe and controlled bounds. And the same section protects against any undue or harmful deflation in providing that the Treasurer shall not be allowed to retire more than 2 percent of the notes in any one year.

On February 28, 1935, there were outstanding from the Treasury $5,466,702,738, being about $43.07 per capita. On October 31, 1920, we had $53.21 per capita circulation. Since then it has decreased $10.14 per capita. Furthermore, in 1929, before the crash, we were using at least $62,000,000,000 of bank money or bank checks. Some authorities make this figure much larger. This is now down to about $20,000,000,000. In other words, we formerly had at least three times the amount of bank money (checks, drafts, etc.) than we have now. These facts call for explanation and remedy.

A goodly part of the money that has gone from the Treasury is really not in circulation at all. Some of it is in foreign countries. Some of it is in Cuba, where it is used as money almost exclusively, and some of it is in other countries which use it in one way or another. A lot of our money has been lost or destroyed in fires, and still more of it is hiding in safety deposit boxes and in old socks and mattresses. We can take the $8,580,000,000 of gold that is now idling in the Treasury and redeem every dollar of our outstanding currency and then have a balance of more than $3,000,000,000 of gold left untouched in the Treasury and not obligated in any way. We have also a billion of dollars of unused silver. We could issue an enormous sum of currency based upon those $4,000,000,000 worth of extra gold and silver.

Let it be remembered that this bill does not propose to create any new or additional interest-bearing tax-exempt

securities. It provides for an intelligent and regulated expansion. There are specific limits provided and safe boundaries set against uncontrolled issues of currency. The contemplated issues do not so far exceed our previous experience as to cause any honest apprehension among those who desire in real good faith to restore prosperity to agricultural as well as to commercial interests.

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