course, they will deny that, but I have sat on those committees, and I know. I do not offer that as any criticism, because they had a job of their own to do and a reputation to make in the bank, and naturally they were trying to do the job with credit to themselves and to the Governor, the Commissioner, and the Government itself.

However, I remember that 3 or 4 years ago a regional director for Farm Security wrote a letter to the bank, and the bank did not answer the letter. I mention this to show you the lack of cooperation when operations are under different agencies. I happened to be a director at the time, so I say down and wrote to the president of the bank and said, "This man is regional director for Farm Security. He is with the Government and is trying to do a job the same as you are. I know you are busy, but I think that as a matter of courtesy you should at least answer his letter if you can't meet him."

He immediately wrote that regional director a letter and told him he would be glad to see him at the bank.

Just to show you the difference, when the transfer was made, they then wrote to Farm Security and asked for a conference, so that they might correlate and coordinate their work better.

I am giving this to you practically, without any criticism of anybody, because I would not say anything to reflect upon someone else, for I think they are doing a wonderful job.

If you look at the delinquencies, you will see that our bank has the fewest delinquencies in the United States, and our little State of Arkansas-the people they want to make fun of has the lowest delinquency rate in the Union.

The testimony offered to this committee, opposing sections 8 and 9 of S. 3509, for the establishment of county committees in lieu of the National Farm Loan Association where no association exists, is hard to harmonize with the facts submitted in the same testimony showing that consolidation of associations has brought several county associations into one association. It would seem that if farm-debt adjustment committees were not provided for each county, which committees would know the conditions in the county, know the man involved, then the present law should certainly be amended to permit the election of a board of directors for these large N. F. L. A.'s of at least three members from each county. This would seem necessary not only in arriving at an adjustment of the man's debts, but in recommending new loans for the association. We can see no objection whatsoever to these committees as provided in sections 8 and 9, and certainly cannot see how they would lessen the autonomy of the farm-loan associations.

We have no sympathy in the contention made that the autonomy of the associations is being increased through the present subsidizing by the banks, and in placing the responsibility for collections upon them.

Great stress has been placed upon the fact that we are decentralizing; that we now have placed the responsibility for collections, and so on, on these associations. My contention is that that has not increased the autonomy of the association one iota.

Senator MILLER. The only thing in the world it has done has been to add a little more bookkeeping.

Mr. DICKINSON. They are still under the complete domination of the banks. They do not have any responsibility in making new loans,

nor do they have any more voice in shaping the policies of the institution than before.

Senator MILLER. Would you mind answering this question from a practical standpoint. Of course, we all know how the secretarytreasurers are elected. As you say, you have no criticism of that, and neither do I, especially; but actually-in actual practice-the election of the directors of the National Farm Loan Association is dictated by the Federal land bank, isn't it?

Mr. DICKINSON. To an extent; yes, sir. I have known them to ask for certain directors. If a director becomes delinquent, they will not accept him, or they suggest that somebody else be elected. In the Production Credit Associations they are very, very positive about that. They go much further in the selection of directors in the Production Credit than they do in the Natlonal Farm Loan Association. But even in the National Farm Loan Association they take quite a good deal of responsibility.

They try to have one of their representatives at the stockholders' meetings of the National Farm Loan Association.

Of course, he works with them and tells them whether this man is satisfactory or not; and if he is not, they try to keep him from being elected.

Under this bill additional responsibilities could be placed upon the association, as we find in section 8 (a) this language:

The Governor is also authorized to delegate to any such association or committee any of the functions vested in him under the provisions of section 12b, 14a, 15, and 16 of this act.

What I am trying to get over to you is that this bill does not limit the responsibilities of the association but rather increases them. That is the point I am trying to get over to you. I have just quoted from the act.

Section 12 (b) provides that the Governor may

convey the property to the tenant at a price to be determined by the Governor on the basis of its producing value, or for the amount of the mortgage indebtedness on such property at the time it was conveyed to the corporation, whichever shall be less.

Certainly they do not have any such powers today; if they did, these would be delegated powers.

Section 14 (a) provides that the Governor may

provide for payment of obligations or indebtedness under sections 10 to 13, inclusive, of this act, on a variable payment plan.

Section 15 provides for reamortization of Commissioner loans.

Section 16 provides for foreclosure and deficiency judgments. Certainly if the Governor delegated these powers to the association its responsibilities would be enhanced far greater than they could be under the present law, or could be under the Gillette bill advocated by a witness for the opposition.

We do not believe, basing our judgment on experiences of the past, that even though dividends are paid to the association, that a sufficient reserve could be built up in many associations to take care of losses. If the slate could be wiped clean, it might be that with proper supervision, based upon the 23 years of experience of the system, reserves could be maintained in the future where the association has a large volume of loans; but even then if an association had a heavy

loss, it would wipe out any surplus that might be acculumated over a number of years. Again, I suggest that we be practical in our thinking as after all the extension of credit is a business that taxes the best minds of our financiers.

So, any farmer going into a small association and buying 5 percent of the loan in stock might just as well kiss it good-by and forget it.

SUMMARY OF INADEQUACY OF PRESENT LEGISLATION

In closing, we want to make it plain that the present law is inadequate to take care of the farmers' credit needs. The much-talked about seven plans now available for offering relief, when boiled down, still do not allow the land banks and Land Bank Commissioner to scale down debts of their borrowers, not to mention offering any relief for borrowers from private lenders. Certainly there is now no legal authority, without committing a breach of faith with the bondholders, to accept variable payments. Certainly so long as bonds are sold to the investing public they cannot be called and refinanced until the callable period has expired. If the Government were guaranteeing the bonds they could refinance them at will, provided they were held in the vaults of the United States Treasury.

While it was construed by the Governor of the Farm Credit Administration that in order to conserve their resources, they could reamortize Commissioner loans on a new basis, and in 1937 Congress gave them this specific authority, yet we contend the F. C. A. is at least acting in poor faith with the investing public if they do change the status of the collateral behind the Federal land-bank bonds held by the investing public. The law must be changed to allow land-bank loans to be reamortized. It is true that under the present law, they can decline to ask for deficiency judgments and can release same when taken, but the sad experience of the past leads us to believe that this would not be a general policy of the system's administration.

Summarizing our contention that existing legislation is inadequate to meet the farmers' credit needs, we contend:

First, there is no legal method of land-bank refinancing except expensive foreclosure, with resale to the same borrower not mandatory.

Second, there is no present legislation to provide for the marketing of Government-guaranteed bonds that will permit interest savings to the Government that can be passed to the farmers.

Third, there is no legislation that will continue even 31⁄2-percent interest rates beyond June 30, 1940.

Fourth, there is no legislation that will bring inflated farm debt in line with productive farm value.

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Therefore, we are asking Congress to enact this proposed legislation into law at this session of Congress. We do not want it to go over to be made a political football in the coming election. The farmers of America want relief; they are looking to Congress for it.

I thank you.

Senator BANKHEAD. Doctor, I personally want to thank you for your very informative statement. You have presented many important facts, and the history of this organization has been presented as well. It has been very interesting, and I know it will be very ful to the committee.

Mr. DICKINSON. Thank you. There are one or two more exhibits which I should not overlook.

I have here a letter that was sent by Mr. Everett M. Reese, president of the First National Farm Loan Association of Los Angeles, to Representative Voorhis, dated May 1, 1940. In this letter he says: LOS ANGELES, May 1, 1940.

Hon. JERRY VOORHIS.

DEAR SIR: I am writing to urge your support of bill H. R. 8748, introduced by Mr. Jones of Texas. The members of our board of directors are unanimously in favor of this bill and we believe that most of the borrowers through this association are likewise in favor of it. We believe the opponents of the bill are greatly exaggerating disastrous results if the bill becomes a law.

We are very much in sympathy with the provisions of the bill that will enable the farmers to obtain cheaper interest permanently, to obtain a refund of stock, and will provide for increasing the functions and responsibilities of the national farm loan associations.

We understand that objectors to the Jones bill are advancing the argument that the Federal land banks are already providing the benefits that are available in the new bill as far as forbearance and reamortization of loans is concerned. However, it is my opinion that most of the benefits now available to borrowers who are in distress have been brought about since about November 1, 1939, when policies changed.

I am submitting below certain statistical information which may be of interest to you and which may prove my argument in this regard:

Reamortizations completed during 1938 and up to February 28, 1939: Federal land-bank loans, 129; Commissioner loans, 23.

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Reamortizations rejected: Federal land-bank loans, 18, Commissioner, 7. Of these rejected loans all except one have been reamortized since November 1939.

From March 1, 1939, to November 1, 1939, only eight applications were submitted for reamortization.

Since November 10, 1939, including April 5, 1940, 231 land bank and 128 Commissioner applications were submitted, none of which were rejected.

The present policy of the Federal land bank as regards reamortization is about the same policy as was proposed by this association in a resolution passed about February 1, 1938, but in order to conform with the strict collection policy of the Federal land bank it was necessary for us to practically discontinue reamortization and enforce collections through recommendations for foreclosure where payments could not be made. Several foreclosures were completed during that period and a number were started which have since been reinstated.

Under a change in policy since November 1939, we are now being urged to grant the aid to borrowers which we have previously recommended, and for which we were criticized by the examining board of the Federal land bank.

We believe the board of directors of this farm loan association is better qualified to know the credit needs of the community than the credit department of the Federal land bank.

We believe the present policy being followed by the Federal land bank will be insured continuance by the passage of the Jones bill, and we urge your fullhearted support of it.

I should now like to file for the record an exhibit entitled "Debunking the charges relative to the destruction of the Farm Credit Administration," addressed to Members of Congress, dated at Washington, D. C., April 6, 1940.

Senator BANKHEAD. It may be received.

(The document referred to is as follows:)

DEBUNKING THE CHARGES RELATIVE TO THE DESTRUCTION OF THE FARM CREDIT ADMINISTRATION

To the Members of Congress:

WASHINGTON, D. C., April 8, 1940.

The bunk so far presented in criticism of the Wheeler-Jones farm-debt-adjustment bill boils down to five main questions.

As a large group of representatives of farmers in 21 States, which States are located in 9 of the 12 land-bank districts, we have carefully studied the statements in opposition to the bill. We, the undersigned, represent farm organizations and farmers' cooperative institutions serving approximately 350,000 farm families.

Speaking in behalf of those families, we outline below very briefly our appraisal of the "normal value" of that bunk-if necessary, we will follow this appraisal with one of the "productive value" of the same bunk:

(1) Does the Wheeler-Jones bill destroy a cooperative farm credit system? The Farm Credit Administration is not now cooperative. The Capper-Volstead Act, passed by Congress February 18, 1922, defined a cooperative as an institution owned and controlled by farmers. Under this definition the system is not a farmers' cooperative, as it is neither farmer-owned nor farmer-controlled.

(a) It is not farmer-owned. A study of the present set-up reveals that the farmers own less than one-sixth of the present capital stock of the four units comprising Farm Credit Administration. The farmers own $131,585,545.34, while the Government owns $877,269,877. It is admitted that losses that should be marked off at this time are approximately $300,000,000. This is more than twice the capital stock owned by the farmer-borrowers in the four units. Therefore, according to all business practices, the system is insolvent.

(b) It is not farmer-controlled, as the farmers do not elect a majority of the board of directors who formulate the policies of the system. They have no control over losses that are incurred and do not have a free hand in the selection of their local boards of directors and local secretary-treasurers, since the parent units demand a voice in the selection of these officers on the theory they are subsidizing the local organization. For example, the local association has but little or no voice in fixing sale values of farms foreclosed, yet losses sustained are charged back to the association.

(2) Does the Wheeler-Jones bill centralize authority and lessen farmer control? The Wheeler-Jones bill does not centralize authority and does not lessen farmer control, for the following reasons:

(a) It retains all of the farmer participation now granted, through continuation of full power of the present farm-loan associations.

(b) It increases local authority by establishing debt-adjustment committees where there are no operating farm-loan associations.

(c) By the authorized delegation of power contained in section 8-A, the farmloan association or the debt-adjustment committee, whichever is functioning, may itself determine the purchase price of the refinanced farm and make conveyance to the farmer.

(3) Would the bill result in "loose," "easy," or "unsound" credit?

The purpose and effect of this bill will be to create a sound farm-credit system. The system has not operated on a sound basis up to this time as evidenced in part by widespread delinquencies and the necessity for the moratorium ordered by former Governor Hill last September. Provisions in the bill which could insure a sound farm-credit system are as follows:

(a) Any new loans made by the land banks will be made under the same procedure as heretofore.

(b) Applicants for refinancing must qualify with and be certified through their local debt-adjustment committee or the board of their local farm-loan association. (c) After they have been so certified, they still must be approved by the Governor of the Farm Credit Administration, who is authorized to make any additional investigation which he deems necessary.

(d) Land values, upon which will be based refinancing and debt-adjustment operations, are determined in a more realistic manner than has ever been used up to this time. This is accomplished under the provisions of section 12-B, which determines the amount of mortgage reduction, if any, which is required to meet the maximum possible debt load which the farm will service.