My bill makes the Government safe by retaining title in the name of the Land Commissioner. The bill would waive amortized payments on principal for the first 5 years. That was the only way that I could see how we could help the man who did not have anything with which to get started. The first 5 years he just pays interest. That will give him a chance to build a little and to buy a little for the first few years. I do not know a better way. I have always objected to the fact that the Government should go in and begin to make wards out of these people. I think the Government should do business upon a basis of good business principles. Let it sell the man the land. The mortgage on the land is the best credit investment on earth; the Government is protected; it can save the land, and it can save the owner of the land. Then let the farmer go along for 5 years without making payment, during which time he can make his improvement and do a little buying.

Mr. MITCHELL. I was interested in your provision against the collection of judgments. You are not against the idea of the man paying his judgment?

Mr. BINDERUP. Whenever he is able to pay them, but if the first time he gets anything you grab it under a judgment and collect on the judgment he will be helpless.

Mr. MITCHELL. You do not mean that he should repudiate his debts?

Mr. BINDERUP. No; I do not believe in the repudiation of debts; no, not a bit of it.

My bill provides that the contract of sale cannot be transferred, except from husband to wife, or wife to husband, by inheritance. Someone will ask what about children, that if there are children, are they going to be neglected. But here is a son, for instance, who is practicing medicine, or law, in town, has no interest in the land, and does not intend to operate the farm. We want this program for farmers alone, and transfer cannot be made to individuals, partnerships, joint stock associations, or corporations except by inheritance from husband to wife or from wife to husband. I make that limitation.

In case of termination of contract before maturity, for any reason, the Government shall retain all payments made under the contract and same shall be considered as a fair rental price for use of the land, except that the purchaser shall be paid for improvements made on the land at the fair appraised value.

The bill further provides for the financing or purchasing of land by the Farm Loan Commissioner by the financing of contracts of sale of such land, through the Federal Reserve Board of the Federal Re-. serve Bank, in like manner as national banks are now financing farm mortgages. Now, with regard to boom periods. There is this difference here, that the owner of this land cannot sell this land; that is all. Now, when you stop to consider that we have in the United States 12 Federal Reserve banks that are bankers' banks, just banks that are owned by individuals in the States, and they make loans to bankers. And, we have 12 land banks, that are Government banks that are controlled by the United States; where the Government appoints the governor, and the governor appoints the directors, we have a very simple Government institution. And I ask you, gentlemen, is there

any reason why you can not take the security of the farm, any reason why you should not permit the Government of the United States to have this same privilege in its own banks, the Federal land banks, that is given to the private banks, where the man can take his mortgage to the bank and the bank can get it discounted? If I want to get a loan in my home town, I take my mortgage to the first national bank, for instance, and as a member of the reserve bank it can take that mortgage and send it down to Kansas City and borrow money for 2 percent and the Kansas City bank sends to the Government of the United States 40 cents a thousand.

The only thing I use in this bill, gentlemen, is the Federal land bank, and I think they should have the same right that the Federal Reserve banks have. The Federal land banks can use the farm mortgages, and the Federal Reserve banks discount the paper of the member banks. Is there any reason why we should not permit the Federal land banks to use that security, the greatest security on earth, the home that the people live in? And when you talk about liquid condition of the Federal Reserve banks, of course, they can be kept liquid, when they lend every dollar, they have got a liquid condition. But the Federal land bank does not have to be liquid. It has the unlimited security of the United States Government back of it. It can carry these mortgages from year to year until they are due. However in my plan, Mr. Chairman, the money immediately begins to flow into them. And I have no provision or plan in my bill to set aside any amount such as a billion dollars, but I have a proviso for an appropriation of only $50,000, and they can use these contracts on the land coming through the Federal Reserve, and get the money on them, in order to finance the next one that comes in, and in that way it makes it absolutely unnecessary for us to have these large appropriations.

Mr. DOXEY. How much would you estimate that will be over a period of years?

Mr. BINDERUP. Oh, I do not know. It is difficult to say. I might say, perhaps, we could find a little criterion in the past. The Federal land banks have been in existence now since 1913, and they have loaned up to this time, I think, about three billion dollars, and much of that during the depression. So I will say that in this situation that it would not need to be any more than it has been for a number of years. However, if you please, that would merely be my guess, and it may be that you would have to enlarge it.

Mr. LUCAS. Do I understand that the $50,000 is all you provide? Mr. BINDERUP. That is all to start with, because the machinery is already set up. The Land Bank Commissioner already has the machinery set up in every detail, and the boards are already in; you already have the committee to begin with, the machinery is already

set up.

Mr. ANDRESEN. Mr. Binderup, you are familiar with the bill that was proposed by our chairman?

Mr. BINDERUP. Yes.

Mr. ANDRESEN. It was worked out along the line of using agricultural paper for discount, similar to the way the Federal Reserve bank discounts commercial paper.

Mr. BINDERUP. That is exactly my idea; that is exactly what I think ought to be done. Now, that can be done by simply writing

checks. Last year, for instance, millions and millions of dollars were borrowed by the Government from the banks of the United States; they did not have enough demands for their money, and they took every dollar, and there was overlapping of demands; we had four or five billion dollars in the banks of the State, Nation, and in Morgan's 20 banks. What was done? They would simply draw on the bank for it. Just write a check. And we can do exactly the same thing, and some day I hope this Nation will wake up to the situation that 90 percent of the transactions are in checks, and perhaps more, and is there anything unusual about that?

If we should say, simply, that we authorize the United States Treasury, just to make a limit, shall set aside not to exceed $500,000,000, that you cannot exceed that, but it will be there to draw on, to check on. That is the way the banks do it. However, I suppose that is something not before the committee now.

Mr. Chairman, I have appreciated very much this opportunity you have given me of coming before your committee, and unless there are some questions, which I would be glad to answer if I can, I believe that is all I have.

The CHAIRMAN. We have several other witnesses who are very anxious to be heard. You have given us an interesting statement, Mr. Binderup, and on behalf of the committee I desire to thank you. Mr. BINDERUP. I thank you, Mr. Chairman, for this privilege. The CHAIRMAN. Mr. Patman.

STATEMENT OF HON. WRIGHT PATMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. PATMAN. Mr. Chairman and gentlemen of the committee, this bill relates to trying to solve the farm-tenancy question: I believe it is a long step in the right direction. In solving the farm problem, however, I believe you should give some consideration to the landlord as well as the tenant. I know something about it from the standpoint of each. During the depression the landlords were not as well off as tenants. The landlords were required to pay taxes and pay interest on the debt, make principal payments, to keep up the fences, the houses, and improvements, and the tenants occupied the position of using those improvements, and if he happened to make a crop he would get his part of it, and if he did not make a crop he did not lose anything. So it was the landlords all during the depression who were worse off than the tenants. However, both were in a bad fix and are now entitled to relief.

Although this makes a long step in the right direction, I think that any bill that has for its purpose the helping of the farm situation should have tied up with it the means that would help these people to pay the Government, or the one who furnishes them the money. When we employed people during the depression to work and pay for supplies that had been obtained from the Government, or Government agency, we permitted the payment of so much a day, although that was through regular relief program, it did afford the privilege of paying them something in the way of money to make the adjustment of their debts, and I feel, gentlemen, that any bill that undertakes to help these tenants or farmers should have tied up with it

some means that will enable them to pay these debts. Such a bill should help all farmers.

Last summer I visited several counties in my district with the rehabilitation agents. They asked me to visit those clients, and I went with them. Naturally they picked out the best ones they had in each country. And every one I visited I saw a farm with livestock, cattle, and hogs, and under that plan, I think they were the best tenants, their best clients, and each one of them I asked this question: "How much do you owe the Government?" And there was not a single one who was able to tell me. They did not know. I do not think that was just indifference. I do not know why it was, but there was not a single one of them who could tell me how much they owed the Government, and they were the best clients they had. I am not condemning the work; I just do not understand the situation.

Mr. ANDRESEN. They had never been told how much they owed the Government; that is the reason.

Mr. PATMAN. Well, I think, that certainly they signed the note, and evidently when they signed the note and the contract, they saw the amount in it.

Mr. ANDRESEN. The amount of the principal was not in the contract that they signed, any of them. They agreed to pay so much a month, $15 a month to the Government and they would have to read the contract to know just the amount that was actually owed to the Government.

Mr. PATMAN. That is not regular, is it?

Mr. ANDRESEN. That is true.

Mr. PATMAN. All right. But I also visited some of the people who had received crop loans and every one of them knew exactly what they owed the Government.

Mr. ANDRESEN. That is a different thing.

Mr. PATMAN. They got it just like the others did, the way I understand the matter.

Mr. ANDRESEN. It is a different thing; they knew what the purchase price was.

Mr. PATMAN. They did not purchase a homestead. They were just supplied for the crop year. They had been furnished a couple of mules, a wagon, perhaps, and just a little equipment, a few tools, and the only difference was that these seed- and feed-loan fellows were keeping up their payments and knew what they owed.

Now, I think there is another way that we should approach this problem, and that is for the Government to recognize first, that there is a difference in the man who is farming for a living and the man. who is farming for speculation or profit. I think the Government should recognize those two classes and let the people who are farming for a living have an opportunity to earn a living and then if it is not profitable for the other class to engage in farming they will not engage in farming. I believe the time has come when we must make that distinction and if some plan could be tied into the bill that would enable these farmers to get a fair price-make it arbitrary, fix an arbitrary price if necessary-there will be some hope. Why should we fear having an arbitrary price? The railroads have an arbitrary price; the insurance companies, the telephone companies, the public-utility companies have an arbitrary price at which they

sell their service and why should we not have an arbitrary price for the farmer? If the electric company can fix the rates at which it will sell electricity, why cannot the same thing apply to the farmer? And there is not a public-utility company anywhere in the United States that cannot go into court and receive an order to compel the people to pay them a fair return. Why should we be so afraid of mentioning the words "arbitrary price?" Many people receive arbitrary prices. I could mention many, many instances where we have subsidized activity; we have subsidized the steamship companies to carry the cotton across the seas.

Now, why can we not fix a price that will let them at least earn or have an income of $500 or $1,000 a year, not make it any big sum, but make it something. Now, the average income of the tenant farmer, gentlemen, I am told is about $155 a year. The cotton tenant farmer. How is a man going to support himself and wife and an average of three children on $155 a year? I made an inquiry recently and I have discovered that $300 a year is the average all over this country; all over this country. And that includes what they have produced and consumed on the farms themselves. Now, we hear a lot of talk about income on the farm, of people who think that the farmer has a lot to eat, when perhaps they have visited one farm in one county where they have cured hams and know nothing at all about what is in the other homes; they have visited very few of them. Generally, they are almost on starvation income, so if we are going to approach this problem with a view to solving it, let us make some provision to see that these people have a little income if we want to make the program effective. If you want to approach this problem from the only angle which I think will be effective, I think you must tie into a bill of this kind a provision that will give to the people an opportunity to earn the money needed to pay their purchase price and make a living. Let us fix the price of cotton, say, at 20 cents a pound, wheat at a dollar or a dollar and a half, and corn at a dollar, and so forth, and I think we will get somewhere. Provide a price for the basic products and then make provision in the law whereby you will give to the family, say, $500 or $1,000 guarantee from his sales, and whatever he lacks let the Government pay it; let the Government pay what difference there is between his income and the $500 or $1,000, whatever may be realized from the arbitrary price. That will help the country by stimulating purchases, by stimulating sales, and keep these people off of the relief roll.

In the South, where they have these great cotton plantations, I have gone into the homes of these people and you will see the wife has the floor as clean as it is possible to be kept; she has beautiful flowers. The house is as neat and tidy as it can be, the entire house just as nice as it is possible to make it, although there are no rugs on the floor, no cloths on the table, and no towels except what maybe they have made from sacks in which they have bought things from the store, and use them in making towels. Now, if those people in the cotton country could buy the cotton supplies that they actually need for their simple comforts of life, just to satisfy the simple comforts, I do not believe there would be a cotton surplus. But that ties up with this question. The chairman of this committee made a speech over the radio-I did not hear it, but I read it-in which he said the paramount question was price. Well, since he has made that