a mortgage which may be insured under this title, and that the farm with respect to which the application is made is of such character that there is a reasonable likelihood that its earning capacity will be adequate to enable the applicant to carry out undertakings required of him under such a mortgage, it shall so certify to the Secretary. The committee shall also certify to the Secretary the amount which the committee finds is the reasonable value of the farm, and where advances are to be made by the mortgagee for the construction of repairs and improvements, the amount of such advances which the committee finds is economically justified on the basis of the income which can be realized from the operation of the farm.

"(c) No certification under this section shall be made with respect to any farm in which any member of the committee or any person related to such member within the third degree of consanguinity or affinity has any property interest, direct or indirect, or in which they or either of them have had such interest within one year prior to the date of certification.

"(d) No mortgage made by any person or with respect to any farm shall be insured under this title unless certification as required under this section has been made with respect to such person and such farm by the committee."

AMENDMENTS APPLYING GENERAL PROVISIONS OF TITLE I

SEC. 2. (a) Section 40 (b) of the Bankhead-Jones Farm Tenant Act (authorizing the Secretary to delegate powers to the Farmers' Home Corporation) is amended by striking out "or title II, or both," and inserting in lieu thereof a comma and the following: "title IA, or title II,".

(b) Section 42 (a) of such Act (relating to services of county committees) is amended by inserting after "title I" the following: "or title IA".

(c) Section 50 (a) of such Act (relating to taxation of property) is amended by inserting after "title I" a comma and the following: "title IA,".

BORROWERS ELIGIBLE UNDER TITLE I

SEC. 3. Section 3 of such Act is amended by inserting after subsection (d) the following new subsection:

"(e) Mortgagors whose mortgages are insured under title IA may be granted loans under this title for (1) the construction of necessary repairs and improvements upon the mortgaged property, or (2) to enable such mortgagors to meet payments of principal and interest due upon such mortgages. Any such loan shall comply with all of the requirements of this title, except that the mortgage or deed of trust securing such loan may be junior to the mortgage insured under title IA."

DEBENTURES ELIGIBLE INVESTMENTS OF BANKS

SEC. 4. The last sentence of paragraph "Seventh" of section 5136 of the Revised Statutes, as amended (relating to eligible investments of banks), is further amended by inserting, after the words "National Housing Act" the following: "or which are insured by the Secretary of Agriculture pursuant to title IA of the Bankhead-Jones Farm Tenant Act".

DEBENTURES ELIGIBLE INVESTMENTS FOR DISTRICT OF COLUMBIA LIFE INSURANCE

COMPANIES

SEC. 5. Section 35 of chapter III of the Act entitled "An Act to regulate the business of life insurance in the District of Columbia", approved June 19, 1934 (48 Stat. 1152), is amended by inserting in paragraph (3a), after the words "Federal Housing Administrator" the following: "or which are insured by the Secretary of Agriculture pursuant to title IA of the Bankhead-Jones Farm Tenant Act".

MINIMUM ALLOTMENTS TO STATES UNDER TITLE I AND AUTHORITY TO REFINANCE

LOANS

SEC. 6. Section 4 of the Bankhead-Jones Farm Tenant Act relating to equitable distribution of loans) is amended by adding at the end thereof the following words: "Provided, That, if the amount thus determined for any State or Territory, other than the Territory of Alaska or the District of Columbia, shall be less than

$100,000, the allotment for such State or Territory shall be increased to $100,000, and the amounts determined for the remaining States and Territories shall be adjusted accordingly. The funds allotted to any State or Territory may be loaned to enable the borrower to refinance an existing mortgage or mortgages on a farm personally operated and occupied by him and for necessary repairs and improvements thereon, in cases where the Secretary determines that such refinancing is necessary and will enable the borrower successfully to operate the farm, and that the borrower cannot obtain credit for such refinancing from any other Federal agency or federally incorporated lending institution. Such loans shall comply with, and be subject to, all the provisions of this title."

STATEMENT OF DR. WILL W. ALEXANDER, ADMINISTRATOR, FARM SECURITY ADMINISTRATION

Dr. ALEXANDER. As you stated, Mr. Chairman, the bill has not been reported on by the Department and did not come to us through regular channels so that I am reporting to you largely on the operations of the present Bankhead-Jones farm-tenant program.

I suppose you want me to say how this would fit into the present act rather than for us to have a discussion or advocate the passage of this bill.

I would call the attention of the committee to the fact, in the first place, that the passage of this bill, would not require the Department of Agriculture to take on any new functions. As the bill is written it fits into the tenant program already under way, and would require nothing more, except that it enlarges the program, but would not require us to undertake any new functions.

I do not, of course, need to review for you the situation regarding the farm tenancy condition in this country.

The CHAIRMAN. I think we have that in mind pretty well.

Dr. ALEXANDER. You have all of that, I think.

Mr. FULMER. May I ask you a question, Dr. Alexander?

Dr. ALEXANDER. Yes.

Mr. FULMER. What about the number of tenants; have they been increasing?

Dr. ALEXANDER. Perhaps it is on the increase. And a very curious thing seems to be showing up. We have discussed this to some extent and it seems that the tenancy increases more in good times than in bad times. I do not know just why but we are trying to ascertain that now. Whether it just happens that way, or whether there is some reason for it, we have not yet ascertained.

Mr. FULMER. Of course, the reason for that is that in good times the holders of mortgages can foreclose on the mortgages and sell the owners out, and that makes far more tenants.

Dr. ALEXANDER. That is probably true.

Mr. FULMER. They can sell for the amount of these mortgages at that time and for that reason do not undertake to sell in bad times when they would have to take the land or have a loss.

Dr. ALEXANDER. Under the Bankhead-Jones bill we have made loans to 7,000 tenant families. You will remember that for the first year we had $10,000,000; the second year, $25,000,000. And this year we are operating under an appropriation of $40,000,000; about 7,000 loans having been made.

I think it was very wise, Mr. Chairman, that you started this thing off in the small way in which you did; much wiser than trying to undertake a larger program. It has enabled us to do, I think, the

job more carefully than we could have carried it out on a larger scale. That enables us to test out the program that was set up by the Congress. We have learned a good deal about the problems involved; it has given us time to study them.

I do feel, however, that we have gone far enough, so that we could wisely, at this time, consider whether or not the thing ought not to be expanded.

You will be very much interested in the repayments that have been made under the tenant-purchase program. There were only 10 delinquencies, and that is reduced today to 3. In other words, only 3 out of the loans that have become due are delinquent.

Mr. FLANAGAN. How many?

Dr. ALEXANDER. Three. That is, of those that had become due. Some of them have not become due, but I am referring to those that are due.

Mr. KLEBERG. How many of them have become due, Dr. Alexander?

Dr. ALEXANDER. About 645.

Mr. KLEBERG. Only 3 delinquencies out of 645?

Dr. ALEXANDER. As of this moment. There were 10 who did not come in with their payments when due, but that has been reduced to three.

But, of the amount due, and we had about $92,000 due, we have had repayments of over $152,000. A great many of them are ahead of their payments in spite of the fact that we have this small number of delinquents, so that as against $92,000 that was due we had payments of $152,000; in other words, almost $60,000 represents payments ahead of the due date.

(These figures are based on last year's collections. Most of this year's payments do not become due until March 31, 1940. However, by December 31, 1939, $351,760 had been paid in advance on these maturities.)

Mr. FULMER. You are referring now to payments under the act providing for purchases of land?

Dr. ALEXANDER. Yes; under the Jones-Bankhead Act.

Mr. FULMER. You are not referring to any additional loans that you have made in the way of supplying stock, machinery, supplies, and so forth?

Dr. ALEXANDER. I am talking about only the loans that were due on this tenant-purchase program, borrowed on the land.

Mr. MURRAY. Have you made any grants to any of these people who have bought farms?

Dr. ALEXANDER. I do not think so.

Mr. MURRAY. You would not know for sure?

Dr. ALEXANDER. I would have to look that up; I do not think so. (A check of the records showed that no tenant-purchase borrower has received a grant since certification of his loan.)

Mr. MURRAY. I would like to have that.

Mr. ANDRESEN. The first payments that come due are payments of interest and not principal and interest?

Dr. ALEXANDER. Interest and principal.

Mr. ANDRESEN. In other words, the very first year, out of the first crop, they are required to make payments of interest and principal? Dr. ALEXANDER. Out of the first crop has to be made one payment of principal and interest due.

Mr. ANDRESEN. I see.

Dr. ALEXANDER. The loan is made on a 40-year amortization basis of 4.3 percent, including interest.

Mr. ANDRESEN. How long has the program been in operation? Dr. ALEXANDER. We are in the midst of our third appropriation. Mr. ANDRESEN. Three years?

Dr. ALEXANDER. Yes.

Mr. ANDRESEN. And there are only six hundred-odd payments? Dr. ALEXANDER. Six hundred and forty-five.

Mr. ANDRESEN. Six hundred and forty-five out of seven thousand first payments due?

Dr. ALEXANDER. Yes.

Mr. ANDRESEN. There will be many come due in this year,

Dr. ALEXANDER. Yes.

Mr. ANDRESEN. Many of them?

1940?

Dr. ALEXANDER. Yes; of course, we were not able to get into this immediately after the authorization was made; and we thought it was only fair for these payments to follow after the first crop, after the farmers had had the first crop on the farm.

Mr. MURRAY. Is it not true, Dr. Alexander, that many of these farmers who have bought farms could have acquired farms themselves?

Dr. ALEXANDER. They could not have acquired them without help. Mr. MURRAY. Here is what I am told happened in my district, that the purchase was made from the mother, and there was not a mortgage on the farm.

Dr. ALEXANDER. There has been a little bit of that here and there in the early days, and we have not thought it was wise. That has been one of the problems, and we have discouraged the county committees from helping heirs who should be able to buy farms from their relatives. The committees have had instructions not to sell these farms nor to make these loans to people who did not need help.

Mr. MURRAY. A county agent not in my district said that had occurred. You understand, I am not criticizing the program, but I think a considerable part of the criticism that has been made of the program has resulted from the fact that such loans have been made. That is one of the principal reasons for the criticism, that farmers are given loans who could have acquired farms themselves without this assistance.

Dr. ALEXANDER. If the committees are doing that they are violating their instructions, and I would be very glad to have specific illustrations so we can look into that very carefully.

The CHAIRMAN. I took occasion to interview five different places, only two of them in my district, and in those cases they selected only

tenants.

One of the interesting things was the great interest the county committees had in the problems. They were putting in a good deal of time in helping to work out the situation. They had made a very careful inquiry of the character and industry of the tenants, of the number that had been submitted to them, some 20 or 30 applicants for each place, and they showed me the list. I spent an hour or two with each committee, and they showed me the selection of tenants who were anxious to secure farms who otherwise would not be able to secure them.

Dr. ALEXANDER. I have had the same experience.

The CHAIRMAN. I think that is true generally. I made inquiry of only five different places, and, as I say, only two of them were in my district.

Dr. ALEXANDER. I have checked the thing rather carefully. I have checked scores of them, and I have not found more than one or two out of the scores that I have checked where I thought the committee had made a mistake. I found one in Arkansas where the farm had been sold to the farmer's boy. They were quite embarrassed when I discussed that with them. But, by and large, I am sure that these people have selected the people intended to be helped by the program. Mr. MURRAY. If I may supplement my statement, Dr. Alexander. Dr. ALEXANDER. Yes.

Mr. MURRAY. That is what was told me and I am simply passing the information on to you.

Now, he also made another point, and as I say, I am just telling you what he said about the program there. And after all that is what we want to know, how the program works out. I think that is one of the embarrassing parts of the program, and as I say, I am not trying to find fault with the purpose of it but simply pointing out what has been told me about it.

Dr. ALEXANDER. Yes.

Mr. MURRAY. And here is the point that he brought out: He said that back in a particular district, and this gentleman is on the county committee, that when they had selected a farmer that they could not go ahead with the program until they took it up with the demonstration agent, the home demonstration agent, who told them they ought to have bathtubs, electric lights, and other modern equipment, which is all right but he said they did not have that in his section and he did not want to be on the spot about it.

Now, I wondered whether it was the policy of the Administration to require such equipment, or when you buy farms or make the loans to some tenant, whether it is necessary before the program can be put into effect that bathtubs be installed or whether they have to have electric equipment.

Dr. ALEXANDER. I can submit the list of farms purchased.

Mr. MURRAY. I mean, when a farm is selected do you try to build houses, equip them with bathtubs, and so forth. I find this is the principal source of criticism.

Dr. ALEXANDER. We take them with the house that is on the farm. If the house has to be repaired, the house is repaired, put in good repair, in order to protect the government loan.

If it is a house that cannot be repaired then we build a house that is adequate. That is passed on by the county committee, with the man himself agreeing on the kind of house he ought to have.

I am unable to say whether you are correct about the houses having baths in them. We do ask the home demonstration agent to go out and help plan the kitchen because we find the kitchen is one of the principal equipments of the housewife; in other words, the kitchen. should be properly equipped because it is an important thing in this enterprise, which depends somewhat on the satisfaction of the housewife.

I will give you the figures showing what the houses have cost and you will see that we have not been building luxurious houses.