The CHAIRMAN. That is not the fault of the county committee, but, of the amount of money made available. Mr. ANDRESEN. The amount appropriated. The CHAIRMAN. Because of the limited funds. Dr. ALEXANDER. Yes. Mr. ANDRESEN. The bill limits the funds? Dr. ALEXANDER. The bill limits the funds to $50,000,000 the first. year, $150,000,000 the second year, and $200,000,000 the third year. Mr. COOLEY. If you do what is provided here the county committeewill be able to handle that. Dr. ALEXANDER. I think the county committees will deal as generously as anybody else with those who make applications; and their judgment is needed. The CHAIRMAN. Let me state that we had a discussion for several days, of that particular issue, and the complaint was made in some other program that somebdy else in another locality could pass on the application. We had to limit the amount of funds and it was thought if we could get some interested farmers who are living in the county where the program was being operated they would be the ones to know best and to pass on the applications. I know, for instance, in Wheeler County, Tex., they were very sorry they did not have more funds because out of the 30 or 40 applications they could only take care of a small number and there were several of them they regretted they weer not able to take care of. I do think that the county committees, located in the community where the applicant lives, offers a sound method of arriving at the worthwhile application. Dr. ALEXANDER. Yes; I think it is a sound method. The CHAIRMAN. And they are in position to do the job as thoroughly as anyone. Mr. COFFEE. Where are we going to wind up with this thing, Mr. Chairman, with thousands of tenants who want to buy farms and with the limitation in the amount of funds Congress will make available? Every Congressman will be subjected to pressure from every county to make more funds available to take care of these good applications. The CHAIRMAN. They have been taking care of it. We only had $25,000,000 this year. Mr. COFFEE. I know, but you started with $10,000,000. The CHAIRMAN. That was the limitation which the committee put on it. Dr. ALEXANDER. Yes. The CHAIRMAN. Because we thought that it ought to be started on a sound basis, and give it a fair trial. We had $10,000,000 the first year; $25,000,000 and then $50,000,000 authorized each year thereafter. This year it was going up to $40,000,000 and the Budget has cut it back to $25,000,000. We have a limitation in the bill. Mr. FULMER. I would like to ask Dr. Alexander about two questions. Dr. ALEXANDER. Yes. Mr. FULMER. Is it not true that under the provisions of this bill loans may be made up to 100 percent of the value of the farm? Dr. ALEXANDER. Yes. Mr. FULMER. Under the F. H. A. it is only on a certain percent of the total value. Dr. ALEXANDER. I am not familiar with the F. H. A. Mr. PACE. On 90 percent. Dr. ALEXANDER. The bill fixes a limitation on the amount that can be insured. Mr. FULMER. It limits the amount of the appropriation but it does not limit the amount of insurance that is on a 100-percent basis. Dr. ALEXANDER. It limits the amount of obligations that can be outstanding at any one time. Mr. MURRAY. There is another phase of this which I think should receive some consideration, Dr. Alexander. I was just wondering before we spend too much money on a farm program this time if we ought not also to consider what other farm programs are connected with it. Should we not also have in mind the amount of land being made available? The reason I say that, Mr. Chairman, is this: According to the figures issued by the Department of Agriculture last year-and I am giving this from memory-we had an increase of 67,700,000 acres of land added to the farms of this country between 1930 and 1937. I was wondering why we should not also try to control that, when we realize how much of this additional land goes into agricultural production, even if the total contains a high percentage of marginal and submarginal land. I know, without your telling me, that we cannot put all phases of the program into one bill, but we do have much of this submarginal land, and I know up in northern Wisconsin people came from everywhere and took up every little shack, as they do when times get hard in the city. We have to make some plans to meet that problem as well. The CHAIRMAN. I think that is true, but I think if we undertake to put everything connected with the farm program in one bill we would not get very far. We have helped through reducing interest rates, developing a program of handling surpluses, and a marketing program and marketing agreements, as well as exports. Mr. MURRAY. I realize that, but if the committee is going to give favorable consideration to such legislation as this, we ought to have the people understand, at all times, that there are certain classes of land that are not going to be used. Dr. ALEXANDER. Yes. Mr. MURRAY. Otherwise the program would fall of its own weight. The CHAIRMAN. I think I misunderstood you. Dr. ALEXANDER. I think the county committees, again, are the best possible safeguard against that. Mr. MURRAY. The county committee can furnish a safeguardThe CHAIRMAN. The county committee is the chief source of security against making bad loans. Mr. MURRAY. I have had people appraise farms for the Federal land banks. And I know there are a lot of farms that ought not to be made the basis of such loans as these. I think it should be made clear that some classes of land are not to be used for making loans. For instance, the submarginal lands. The CHAIRMAN. The time is up and we will have to adjourn. Mr. PACE. Do you not think it might be well for us to have someone from the F. H. A. come up and give us the benefit of their experience? The CHAIRMAN. Probably that should be done at the proper time. I think we had better go ahead with this phase of the program. We have not completed with Dr. Alexander. I am going to ask if you can come back tomorrow at 10 o'clock. Dr. ALEXANDER. Yes. The CHAIRMAN. We will stand adjourned until 10:30 tomorrow. (Thereupon at 12:05 p. m., an adjournment was taken until 10:30 a. m. of the following day, Thursday, January 25, 1940. FARM TENANCY THURSDAY, JANUARY 25, 1940 HOUSE OF REPRESENTATIVES, The committee was called to order at 10:30 a. m., Hon. Marvin Jones (chairman) presiding. STATEMENT OF DR. WILL W. ALEXANDER, ADMINISTRATOR, FARM SECURITY ADMINISTRATION-Resumed The CHAIRMAN. Dr. Alexander, we will be glad to have you continue with your statement. Perhaps you would like to make a general statement before you are interrupted with questions. Dr. ALEXANDER. There are one or two points that I think were left somewhat unanswered yesterday to which I would like to revert, if I may. Mr. ANDRESEN. There was one point I had in mind, particularly, Doctor, and that I believe the committee should have an explanation of some of the proposed provisions and how the pending bill affects or changes existing law. Dr. ALEXANDER. Mr. Oppenheimer is here to discuss the bill and I would like for him to make that statement. Mr. ANDRESEN. Very well. Dr. ALEXANDER. The question was raised here yesterday, Mr. Chairman, as to which farms are more likely to be foreclosed. We were a little bit interested and somewhat surprised to find that the agencies here did not seem to have studied that question but we found there were two States that have had the question studied by their State colleges. In one study of 4,750 farms, in Alabama, 15 percent had been foreclosed. Another study made of 12,000 farms in Minnesota, 526 had been foreclosed. The evidence seemed to be that the larger farms make more money during the periods of prosperity but in periods of depression_both of these studies reached the same conclusion, that in periods of depression the small farmer was able to ride the storm more successfully than the larger farm, and the percentage of foreclosures seemed to increase with the size of the farm. Those were two studies, one by the State college in Alabama and the other the State college in Minnesota. Mr. FULMER. Do you have any record of how many farms there were involved in each of the different types foreclosed? Dr. ALEXANDER. Yes; we have those figures in the table and will be glad to submit them for the record. Mr. FULMER. Showing the number of small farms? Dr. ALEXANDER. Yes. Mr. FULMER. And the number of large farms? Dr. ALEXANDER. Yes; I think that is all here. 212350-40-ser. h- -3 29 30 AMEND BANKHEAD-JONES FARM TENANT ACT The CHAIRMAN. That is very interesting. (The tables referred to follow :) A comparison of size of foreclosed farms and farms with good loans in Minnesota The size of the farm is an important factor in success in farming but it is dangerous to generalize in regard to the most profitable size. Some farmers fail to make maximum returns for their labor and capital because the farms are too small and others because they are too large. There is a most profitable size for each farmer and no particular size will pay best for all farmers. As a rule, however, when prices of farm products are favorable the larger farms give a greater net return than the small ones, but in periods of low prices the losses may be much greater on the larger farms. The farmers on the larger farms apparently have had greater difficulty in meeting financial obligations during the agricultural depression, than those on smaller farms with lower overhead costs. (Farm Mortgage Foreclosures in Minnesota, by E. C. Johnson. Bulletin 293, University of Minnesota Agricultural Experiment Station, December 1932.) In general, the percentage of loans foreclosed increased consistently as the number of acres in the farm increased (table 12). The average amount of loan per acre was less on the larger farms than on the smaller ones. The percent of the area which was in cropland was much lower on the large farms than on the small ones. Of course, the average loan per farm was least on the smallest farms. In adverse years, farmers on small farms can pay their debts by practicing very strict personal economy. Large farms are dependent on hired or cropper labor, and it is impossible to reduce wages and expenses as rapidly as incomes decline in adverse years. In years of falling prices, as in 1930, many landlords make advances to their tenants in the form of high-priced seed, fertilizer, and food to an amount which is far in excess of the possible return with low prices, even with a good crop. In such years, strict personal economy on the part of the owner of a 500-acre farm can have very little effect on the ability to pay interest on a large debt. TABLE 12.-Relation of size of farm to foreclosures, losses, and other factors, Although the percent of foreclosures was much higher on larger farms than on small ones, this relationship was different on poor soils than on good soils. On sandy loam soils as size of farm increased the percentage of loans foreclosed increased less rapidly than on other soils (table 13). If loans are to be granted on the poorest soils, they should be very conservative, and only on the smallest farms. Source: "Farm Mortgage Loan Experience in Southeast Alabama," E. H. Mereness, Agricultural Experiment Station, Alabama Polytechnic Institute, Bulletin No. 242, January 1935. |