modity prices is graphically told in the subjoined table. The Bureau of Agricultural Economics of the United States Department of Agriculture is authority for the statement that the farm barometer in January, 1933, stood at 51. Comparing to-day's farm prices with the former price index, the table below shows in terms of what the farmer has to sell just how much he has to pay in the way of farm crops for each dollar borrowed during each of the years indicated in the table. [Reading:]

(Compiled from records of Division of Statistical and Historical Research.) Senator KING. Of course, labor would be subjected to the same pressure. It would take several days' labor now, aside from some of the building trades, to pay the obligation which was contracted in the period you have indicated.

The CHAIRMAN. A carpenter who is getting $11 a day is not hurt at all.

Senator KING. I say, except for these building trades. Some say they are a special class.

Mr. TABER. The third step in our program is the reduction of interest rates and the providing of an ample reservoir of credit to take care of the needs of agriculture in this crisis.

The wholesale foreclosures of farm mortgages, which has been darkening our land and wrecking the homes and lives of our people must stop. The full power of the Federal Government must be invoked to bring this about in an orderly and effective way.

By reason of conditions for which in the main he is not responsible and which are utterly beyond his control, the American farmer to-day finds himself in the most difficult financial and economic situation that has confronted agriculture since the founding of the Republic.

The alarming increase of tax sales and foreclosures during recent months threatens the very foundations of American institutions. In the last six years, every tenth farmer in the United States has lost his farm through mortgage foreclosure, tax delinquency, or bankruptcy.

The last census indicates that there is a farm mortgage debt of about $9.241,000,000, with an average rate of interest of 6.1 per cent. All other farm debts approximate $3,000,000,000 and the interest rate on this additional debt ranges from 6 to 12 per cent-and I

know of cases where it runs to 20 per cent. The total annual outlay for interest on the farm debt is more than $800,000,000.

The two chief cash crops of the American farm, wheat and cotton, were valued at approximately $600,000,000 for the year 1932, a sum just about sufficient to pay the interest on the mortgage debt alone. A reduction of one-third in the interest rate on an amortized loan running for 35 years has the same effect as a reduction of more than one-third in the total face of the debt, and yet it will not adversely affect general security values.

In other words, if we reduce the interest charge on a debt of $10,000 from 6 per cent to 4 per cent, if that is an amortized 33-year loan, we are doing the same service for the farmer as though we marked his mortgage down from $10,000 to $6,000, and we have done none of the dangerous things of continuing instability and difficulty along that line.

Senator HARRISON. The committee on Banking and Currency brought out a bill, as I understand, to carry out that idea to some extent, is not that true?

Mr. TABER. Of course, I am not discussing particular bills, Senator, but in the main the purpose of the Hull bill, as I understand it, which is to provide a reservoir of credit to prevent foreclosures, and at a rate of interest not to exceed 4 per cent, is a step in the right direction. The bill may need further amendments. I have not seen it in its completed form.

It is apparent that the farmer can not continue to pay 6, 7, and 8 per cent interest at prevailing commodity prices. Farm prices must come up or interest charges must come down, and the first step toward security is a 30 or 40 per cent reduction in interest charges to carry farmers through this period of ruinously low prices. This can be done through emergency loans, through the reamortization of loans and through the postponement of principal payments.

The increased farm mortgage indebtedness in the United States has been estimated on the basis of special studies at various earlier dates as follows:

I have here a table or chart showing the returns per acre of 10 leading crops and taxes, land values and mortgage debt per acre of farm real estate.

(The chart referred to is as follows:)

RETURNS PER ACRE OF TEN LEADING CROPS AND TAXES, LAND VALUES AND MORTGAGE DEBT PER ACRE OF FARM REAL ESTATE

The CHAIRMAN. Do you think the Government can pass legislation affecting a private loan to a farmer?

Mr. TABER. Senator, of course we can not-and I think we all rejoice in the fact that in America we can not pass legislation changing contracts, but the Government does have a very definite responsibility and opportunity. We can, in the condition in which we find ourselves to-day, reduce interest rates to the farmers. We can protect the borrower, and we can protect the Government. The Grange resolutions on that point which are in the record, I think, clearly point out the steps that our organization wants taken, and in the main we are in harmony with the other farm organizations, although we may differ in details.

Here is what we propose: First, let us unify the farm loan system. Second, let us issue low interest rate bonds, guaranteed by the Government, and substitute those for the present high interest rate bonds that have doubtful Government responsibility, by having printed across the back of them something to the effect that, "This bond is an instrumentality of the Government."

Then we can reduce the interest charge to the farmer from 6 per cent to 4 per cent. At the same time, we can set one-half of 1 per cent aside as a reserve to protect the Government, and I have figured, since the beginning of the farm-loan system, that if we had set aside one-half of 1 per cent, all the losses on farm mortgages could have been absorbed out of that one-half of 1 per cent.

In other words, we can do justice to agriculture by giving it a lower interest rate. We can do justice to the bondholders, who have a certain misunderstanding, at least, of Government responsibility as to bonds issued under the Federal Land Bank system; and lastly,

we can do all of this without danger of financial obligation to the Government.

Senator HARRISON. Did you read or hear the testimony of Mr. Baruch with reference to the mortgage situation?

Mr. TABER. I did not hear Mr. Baruch's testimony, but the newspaper story would indicate something very similar. He proposes 3 per cent bonds, and I propose 22. He would propose a spread of one-half of 1 per cent, which is not sufficient. I would set aside one-half of 1 per cent spread for the Government, and 1 per cent for the institutions.

Senator HARRISON. But the principle is the same.

Mr. TABER. The principle is the same. It is a matter of detail. Senator KING. You mean that there will have to be some governmental agency set up which, as far as possible, would bring into one organization the various agricultural loans, so that, instead of having half a dozen Federal agencies, extending credit to the farmers, you would have one Federal organization through which the loans and credits to the farmers might be handled.

Mr. TABER. Yes, Senator. You are using my exact words later in that discussion.

This farm mortgage crisis can be relieved and in time corrected by providing an ample reservoir of credit from the Reconstruction Finance Corporation or otherwise to make immediate loans to farmers to pay delinquent interest and taxes and prevent foreclosures, through the unifying of the farm-loan system, the issuance of lowrate Government guaranty bonds and exchange them for the higher interest bearing unguaranteed bonds, reducing the interest rate on outstanding mortgages from approximately 6 to 4 per cent. Payment on principal should be withheld for a 2-year period. Mortgages should be reamortized where the farmers have a sound investment, and a reservoir of credit provided for new loans. This will stabilize farm values and give the farmers of the Nation a fighting chance to save farms and homes.

Here is a farmer who has had taxes and delinquencies pile up. The law is too inelastic. Under the law, we have difficulty in taking care of this farmer. What we should be allowed to do is to write this farmer a new mortgage, if his investment is still sound, taking care of some of these deficiencies and delinquencies, and reamortizing it over a longer period, which would give lower interest rates and lower principal payments. Then we should provide by law that there need be no principal payment until prices lift.

This is a very simple, constructive program. I do not want to seem facetious, but it is so simple that I am just afraid it will not be done. It is very apparent that we can take the steps to avert a tremendous crisis, and render great service.

Senator KING. Mr. Taber, do you not underestimate the magnitude of the task which you impose on the Government if your plan is carried out, in view of the fact, as you have indicated, that the farm mortgages are approximately $7,000,000,000? I am making no criticism at all of your plan, but your plan would contemplate that there must be a readjustment. Many of these organizations have extended credit, and Eastern moneys have been loaned, as you know, in many of the agricultural States. In my State, a great deal

of money has been loaned upon farms by organizations which have furnished the money and taken mortgages and then sold the mortgages in the East, which would mean an approach to, or a contact with all the mortgagees in the United States, those who are private persons, and these Federal banks and joint-stock land banks. It would really mean a reformation, in a way, or modification of existing contracts which relate to $7,000,000,000 of indebtedness, the lowering of the interest, and perhaps the granting of moratoria with respect to many of these loans. Have you appreciated the magnitude of that situation, and that task?

Mr. TABER. I certainly have, Senator, but the trouble with us is that we try to do everything the hard way. We can make this a very difficult problem, and we can make it a rather simple problem. I have put into the record, and I will now read, the distribution of these $9,400,000,000 mortgages:

Federal land banks, 12.1 per cent; joint-stock land banks, 7 per cent; commercial banks, 10.8 per cent; mortgage companies, 10.4 per cent; insurance companies, 22.9 per cent; retired farmers, 10.6 per cent; active farmers, 3.6 per cent; other individuals, 15.4 per cent; other agencies, 7.2 per cent.

Now, Senator, we are going to commence our program entirely on the 17 per cent. It becomes effective automatically without difficulty, and we will start on the 17 per cent without impossible difficulty, now in the Federal farm-loan system by revamping that system and providing the machinery, that will automatically expand. There is no difficulty about it at all. It simply means cooperation between the farmer borrower and the lending bank. Bonds are substituted. The people that do not substitute will wish they had. There is no worry about that, because the unguaranteed, uncertain, high-rate bonds will be exchanged for the low interest rate Government guaranteed bonds.

The CHAIRMAN. Take the joint-stock land banks. The Government is not responsible for them at all. You would include those. and let the Government take all those loans they have made, some of which are worthless.

Mr. TABER. I would not do that, Senator.

The CHAIRMAN. That is what your proposition is.

Mr. TABER. No, Senator. I have not taken the time to go into details. That is not the proposition. The proposition would be that the Federal land-bank bonds-begin, first, with the Federals. The CHAIRMAN. The Government is responsible, in a way, for them. They were set up. The Government is not responsible at all for the joint-stock land banks that you put in there, making the 17 per cent.

Mr. TABER. That is true, but they were each organized under Government control and supervision. Every farm loan has been made by a Government-appointed inspector, and the bonds are issued by the Government, and have on the back of them, "This bond is an instrumentality of the Government." Whether it is 12 per cent, or 17 per cent, we shall not bother to discuss, because, if there is not a provision that protects the Government, of course, we are hoping that no action be taken. No good American wants anything done that does not protect the Government.