Page images
PDF
EPUB

So, let us not confuse our thinking. Let us study just how this socialization of credit has come about in other countries that brought agriculture to a position that I do not think we want to be in in this country.

Senator BANKHEAD. What do you mean by socialization of credit? Mr. SHORT. This bill as it is now written

Senator BANKHEAD (interposing). No; I mean your definition. What is your definition of "socialization of credit?"

Mr. SHORT. Usually that comes about by centralization, in the first instance, and then, as it becomes centralized in the Government's hands the tendency is to confuse it with social and political principles and policies to where we become involved in a system that I don't think we want.

Senator BANKHEAD. Is that the formula of the American Bankers Association on credit?

Mr. SHORT. I don't know what the formula of the American Bankers Association is.

Senator BANKHEAD. It sounds like it, to me, as I read their propaganda material.

Mr. SHORT. I have not seen any of it, sir.

Senator LA FOLLETTE. I do not think there was anything in my question which indicated that I thought that a credit situation, so far as the farmer is concerned, is the sole answer to this problem; and you will examine my record in the Senate in vain to find any instance where I have not been doing what I could to attack the problem of farm prices. But, nevertheless, the fact remains that the farmers' share of the national income has been decreasing ever since 1920, and it also is a fact that during the last 7 years efforts have been made, whether we agree with them or not, by the Government to increase the share of the farmer in the national income. It seems to me that if you ignore this question of debts, if you ignore this problem which is confronting the farmers who borrowed money at a time of high land values and high prices, in your effort to maintain what seem to me are the mythical advantages of the alleged cooperative features of this system, what it comes down to, Mr. Short, is that you are asking the farmers who are in that situation to take a licking, to be ground to powder and to lose their farms and homes while we are fumbling around here trying to lift the farm prices.

Is it not a fact that so far as industry is concerned, on the other side of the picture, there has been a scale-down of indebtedness, a scaledown of interest rates, and a refinancing of past obligations in order that industry might continue to borrow and to remain solvent and to prevent failure? It just seems to me that the nub of your testimony comes down to the fact that you want the farmers who are caught in this catastrophic situation to "take it on the chin" until you can get around to some kind of a program which will lift farm prices and values so that they will not have to be ground down through the cruel process of foreclosure and deficiency judgments.

Mr. SHORT. Senator, I would not want you to misunderstand me. Senator LA FOLLETTE. I do not want to misunderstand you. Mr. SHORT. We are willing to go all the way to improve the condition of the farmer that you are so much interested in. We are just as much interested in the farmer as you are. We do not think it is necessary to destroy this system to do it. We know there is a situation in the area in the northern part of your State that needs attention.

We will go along all the way to try to meet that situation. But let us not destroy a system that is good. It has not satisfied all of us; it has not satisfied me in every respect, but we think there is something there to build on. Let us strengthen the cooperative features of this program rather than to just say that because of these catastrophes we have got to throw it out of the window and go to a centralized form of credit.

Senator LA FOLLETTE. Of course, I do not agree with your conclusions as to what this bill is going to do. I suppose I have already taken more than my share of the time, and I do not want to impinge any further upon the time of the witnesses; but I would like to take you, Mr. Short, up into Wisconsin and show you some of the farmers that have been ground to powder in this cooperative system of yours; and I will stack them up against any farmers that you have in your section of the country for their industry, their intelligence, and their good faith in having made every effort to operate their farms and pay their debts.

Mr. SHORT. I will agree with you, Senator.

Senator LA FOLLETTE. I have seen them foreclosed and seen leases taken on those farms, and no mercy extended to the person who owned the farm-and perhaps his father helped to cut it out of the wilderness with an ax. This magnanimous cooperative system that you talk about and want to preserve in its entirety refused to give an extension on the loan which had already been incurred upon the principal of the obligation, but let somebody else buy that farm in, and then turned that man out on the highway with his family and let him go somewhere and humiliate himself by taking direct relief from the Government.

I am all through.

Mr. SHORT. I would like to make one more statement, and I want to make it very clear to Senator La Follette that we are willing to do everything we can and to lend support to any move that will relieve the borrowers that find themselves in difficulty at this time in Wisconsin, in North Dakota, or in Arkansas, or wherever they might be. But we feel that that can best be done by decentralization rather than through centralization.

Senator LA FOLLETTE. I think you are just using highly abstract words which have no form of reference to this practical situation, if you will pardon me for saying so.

Senator BANKHEAD. Just one question. You have spoken eloquently about the desire to get parity income for the farmer-and we are all agreed on that objective. Has your organization any plan to accomplish that except through more and larger appropriations by Congress?

Mr. SHORT. I think you have been submitted a brief that we have prepared on that subject.

Senator BANKHEAD. Yes. But that is the same thing; it is more appropriations.

Mr. SHORT. Through a tax.

Senator BANKHEAD. It is more through appropriations. How the Government gets the money is another question. But that plan is the only plan the organization has to bring about a parity income. You are proposing to accomplish that desirable result that everybody agrees should be accomplished, in only one way, and that is through

larger appropriations by Congress to be distributed to the farmers in the matter of parity payments, without regard to how the Treasury gets the money, whether by processing taxes, stamp taxes, or anything else. Your objective is to appropriate the money.

Mr. SHORT. That is right.

Senator BANKHEAD. That is all.

Senator LA FOLLETTE. In other words, you do not hesitate to lean on the Federal Government to get parity for the farmer, but you do not want to lean on the Government except as you are now leaning on it, to provide the farmer with a credit system that will give him his money at low rates of interest and permit him to refinance his obligations?

Mr. SHORT. I feel this way, Senator La Follette, that the disparity position that agriculture finds itself in today is due largely to policies of government and that so long as those policies are in effect in this country, and so long as the consuming public demands of the farmers that they produce food, fiber, and feed necessary to keep this country amply supplied, in order to meet seasons of drought, and other things, the Federal Government and the tax-paying public owe something in the way of governmental policy that will offset the disadvantages that agriculture has suffered over the years through other policies of government which are largely responsible for placing us in the position which we are today. It is certainly unenviable from the standpoint of purchasing power.

Senator LA FOLLETTE. But you do not hesitate to rely on the Government for help in getting parity income for the farmer?

Mr. SHORT. I think we have got to rely on the Government for it. Senator LA FOLLETTE. But you do not want to rely on Government excepting as you are doing it now, by indirect guaranty of these bonds or obligations of the system and by subsidies from the Treasury for the purpose of providing low interest rates?

Mr. SHORT. I do not think we are in any different position there, Senator, because under this proposed bill you propose to pay back all stock and relieve all borrowers and all associations and banks from any losses. That will all be borne by the Government. I do not see that there is any difference in position between you and me on that, Senator.

Senator LA FOLLETTE. I thought there was. I thought you said, in answer to Senator Bankhead's question, that your only answer to this problem of getting parity income was more appropriations from the Treasury. But your whole appearance here has been a warning against this system leaning on the Government so far as credit is concerned.

Mr. SHORT. If you had been here this morning you would have seen that our big objection is that by this bill you bring about a centralization of this whole system; and I am just wondering if the Senator is in favor of the centralization that is possible under the bill as now written and which is before this committee for discussion.

Senator LA FOLLETTE. You talk about centralization and you claim that this other system is decentralized. We just do not agree about the net effect and how it works. We could debate here for a week and we would not be together.

Mr. SHORT. Well, you know, Senator, that it is possible to bring about a greater decentralization of the present system.

it.

Senator LA FOLLETTE. There has been a long time in which to do

Senator HUGHES. You say it is possible?

Mr. SHORT. Yes; it is possible.

Senator LA FOLLETTE. You have had to admit here, as I have heard your testimony, that practically all of the ameliorating effects which have been produced have been produced as the result of govvernmental policy.

Mr. SHORT. I don't understand your question.

Senator BANKHEAD. It was not a question; it was a statement.
Are there any questions by any of the other Senators?

Senator FRAZIER. I am interested in what Mr. Short said about the farmers having their purchasing power restored and getting better prices. There has been pending in both branches of Congress for two or three sessions a cost-of-production bill which would fix prices and which we believe would restore purchasing power; but your organization has fought against that measure, too.

There is an amendment providing for a parity price instead of costof-production price. There is another bill pending providing for cost of production or parity by a sort of processing tax or certificate plan; and your organization is opposed to that. I cannot quite understand your argument. What do you want to do to raise the price of farm products?

Mr. SHORT. I feel that our organization has put forth a great deal of effort and has taken the lead in many proposals in an effort to bring agriculture to parity position. I am sure that you will find us extending ourselves even to a greater extent in the future, and we hope that we will be able to get the Congress to respond and to bring about the desired condition just as soon as it is possible, because we not only feel that it is essential to agriculture, but we feel that it is essential to every other consuming and economic group in this country. Senator FRAZIER. It should have been possible years ago, because the farmers have been in this bad condition not only for a few years but for a long time. If you are afraid of some of the situations to which you have called attention, why not make these land banks regular farmers' banks; let them issue money just the same as the Federal Reserve System does; let them put up their land-bank bonds for security to the Government for the land-bank notes and pay at a lower rate of interest than they are doing now; Why not?

Mr. SHORT. I am told that we are now borrowing money on a short time basis cheaper than you can actually print it. Senator FRAZIER. It does not cost much to print it. It is 0.07 of a cent per bill, whether it is a $10 bill or a $1,000 bill. So it does not cost much to print the money. The Federal Reserve System prints its money that way, putting up Government bonds or any other security, and all they pay the Government is just the cost of printing, and the cost of the paper.

Mr. SHORT. I am not a student of the subject. We might explore the possibility of giving, in times of stress or when money may not be available at reasonable rates, the discount privilege to the Federal Reserve. I would like this committee to explore that feature, because that would be strengthening the indirect guaranty of these bonds.

We are willing to do anything in our power to strengthen that feature of the program in order that farmers will be able to enjoy the cheapest interest rates possible.

Senator FRAZIER. That would help to bring up prices, too. The Federal Reserve Bank is not a farmers' bank by any means, and the farmers are entitled to a bank the same as other people are, in my opinion.

You are in favor of interest rates being fixed by law, as in this bill; are you not?

Mr. SHORT. I think we have demonstrated our position on that. We favor the subsidy of interest rates; we have always favored the lowest interest rates possible under a sound operating system.

Senator FRAZIER. You have no objection to their being fixed in the bill, have you?

Mr. SHORT. No.

Senator MILLER. Gentlemen, I want to ask the committee to request the Farm Credit Administration to file with the committee the following information, if the committee wants it:

Ownership of capital stock of Federal land banks, including the amount owned by present borrowers, and the borrowers who have paid their loans.

The amount of bonds issued by Federal land banks and now outstanding.

Divide this into districts.

The amount of bonds issued or assumed by Federal Land Bank mortgage companies and now outstanding.

The amount of delinquencies by districts and the average amount of loss.

The number of foreclosures and amount of same during the last 7 years.

A copy of regulations relating to the fiscal management of land banks.

That refers to the regulations issued by the Farm Credit Administration.

Senator BANKHEAD. I think that would be helpful information. Senator MILLER. That information is available, practically, all of it, in the reports of the Farm Credit Administration; but we do not want to have to go through them and dig it out; at least, I do not. Senator BANKHEAD (presiding). Unless there is objection on the part of some member of the committee, it will be agreed that that request will be made.

(The matter referred to follows:)

Capital stock ownership of the Federal land banks at Dec. 31, 1939

[blocks in formation]

1 Stock owned by borrowers in national farm-loan associations is outstanding in an equivalent par amount. In addition, association stock owned by borrowers in the par amount of $4,095,600 had been retired but the owners thereof had not received the proceeds.

STOCK OWNED BY THE UNITED STATES IS NONPARTICIPATING AS TO DIVIDENDS

Stock of the Federal land banks owned by national farm-loan associations is entitled to dividends if any are declared. Borrowers own stock in national farm loan associations in the same par amount as the associations own in the banks. Stock of national farm-loan associations owned by borrowers is entitled to dividends if any are declared by their associations. Stock owned by a borrower

« PreviousContinue »