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"(e) The amount of all balances, collections, and appropriations allocated under subsection (a) to the revolving fund created thereunder, which is in excess of $120,000,000, is hereby made available to the Governor of the Farm Credit Administration for the establishment of a revolving fund of not to exceed $40,000,000. Out of such revolving fund, the Governor is authorized to allocate and expend such amounts as he deems necessary for subscriptions to the capital stock and/or paid-in surplus of Federal Intermediate Credit Banks.”

(b) The first sentence of paragraph (a) of section 2 of the Agricultural Credits Act, approved March 4, 1923 (U.S.C., Sup. VII, title 12, sec. 1061), as amended, is amended by striking out the period at the end thereof and inserting in lieu thereof a comma and the following: "which amount may be increased from time to time with the approval of the Governor of the Farm Credit Administration":

(c) Section 2 of the Agricultural Credits Act, approved March 4, 1923 (U.S.C., title 12, sec. 1061), as amended, is amended by adding at the end thereof the following: “ With the approval of the Secretary of the Treasury, the Governor of the Farm Credit Administration is hereby authorized to subscribe from time to time to the capital stock and/or paid-in surplus of any Federal Intermediate Credit Bank on behalf of the United States, in such amounts as he may determine are necessary for the purpose of meeting the credit needs of eligible borrowers from the bank, and the amount of the capital stock and paid-in surplus of such bank may be increased or decreased from time to time by the Governor, in accordance with such needs. Such stock shall be divided into shares of $100 each and subscriptions to such paid-in surplus shall be made in multiples of $100 out of the revolving fund created under subsection (e) of section 5 of the Farm Credit Act of 1933, as amended. The Governor on behalf of the United States shall make payment for stock and paid-in surplus of such bank and such payment shall be subject to call in whole or in part by the board of directors of the bank, with the approval of the Governor."

Sec. 15. Subparagraph (b) of section 14 of the Federal Reserve Act, as amended, is further amended by adding the following after the semicolon at the end of such paragraph: “To buy and sell bonds of the Federal Farm Mortgage Corporation having maturities from date of purchase of not exceeding six months, and to make loans on the security of bonds of the Federal Farm Mortgage Corporation subject to the limitations and restrictions respecting loans on the security of direct obligations of the United States issued under the Second Liberty Loan Act, as amended."

SEC. 16. (a) If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.

(b) The right to alter, amend, or repeal this Act is hereby expressly reserved.

Sec. 17. This Act may be cited as the “Federal Farm Mortgage Corporation Act".

you wish.

STATEMENT OF HON. W. I. MYERS, GOVERNOR FARM CREDIT

ADMINISTRATION, WASHINGTON, D.C. Governor MYERS. Mr. Chairman, would it be appropriate to point out what has been happening in carrying out the terms of the Emergency Loan Act?

The CHAIRMAN. I think it would, and you may just proceed as Governor MYERS. I have passed out to each member of the committee a statement showing the number and the amount of loans closed, by States, May 1, 1933, to December 31.

The total number of loans closed during that period was 79,254, amounting to $210,565,454. The progress by months is shown by a graph. I have only a few copies available but I will pass them out as far as they go. I think you can see what has happened from the chart.

Mr. CHASE. That is money actually paid out?
Governor MYERS. Money actually paid out.

When the act was passed, from 3 to 4 million dollars a month in loans were being closed; but from August to December, inclusive, the amounts closed approximately doubled each month. For August the amount was more than $7,000,000; for September, about $13,000,000; for October, about $28,000,000; for November, nearly $53,000,000; and for December, $98,000,000.

This increase is in response to the efforts put forth by the Farm Credit Administration to give effective relief through the refinancing of debts, made possible under the Emergency Farm Mortgage Act.

Up to last night we had paid out approximately $250,000,000. The daily loan volume now is approximately $5,000,000.

The $250,000,000 paid out includes both the Land Bank Commissioner's loans from the $200,000,000 appropriation for that purpose and the Federal land-bank loans made under the $2,000,000,000 authorization of bonds, the interest of which was guaranteed by the Government.

A distribution of those loans for the same period, that is, up to January 1, is shown in this tabulation. Of the $210,000,000 of loans which had been closed and the money paid out up to that date, $140,000,000 was land-bank mortgage loans, and about $70,000,000 was the Land Bank Commissioner's loans. Since we had available only $200,000,000 in the Land Bank Commissioner's fund and since $70,000;000 had been paid out, about $130,000,000 only was left available on January 1.

But, Mr. Chairman, the approvals have run far beyond the amount of loans actually closed, because it takes time to carry through the formalities incident to the closing of loans. On January 1, loans aggregating more than $655,000,000 were approved but not paid out, in addition to the amounts paid out. That amount was divided into approximately $406,000,000 of land-bank loans, approved but not closed, and $249,000,000 of Land Bank Commissioner loans, approved but not closed.

For about 2 months we have made approvals of loans subject to available funds. You will remember that the $200,000,000 was made available under condition that this would be all that could be spent before January 1. This accounts for the loans being approved in advance of loans closed. On January 1, therefore, we had paid about $70,000,000 from the Land Bank Commissioner's fund and we had tentatively approved loans aggregating about $249,000,000. These approvals, however, were made subject to the availability of funds.

The $140,000,000 of land-bank loans which have been closed have been paid entirely in cash. When loans have been approved, we have not sold bonds on the market from the $2,000,000,000 authorization to get funds to pay the borrowers, for reasons you well understand. It has been impossible, because of conditions which were not foreseen, to sell the bonds at or near par. We have used the bonds as collateral for borrowing from the Reconstruction Finance Corporation, and have obtained commitments of $150,000,000. We have borrowed, therefore, on the security of those bonds in order to pay cash to the borrower. None of the bonds issued under the $2,000,000,000 authorization are in the hands of the public.

We have proceeded as well as we could. There were delays which we regret. But having got the machinery under way, we find it necessary to try to get funds to carry forward the program. The demands upon the Government for cash are such that the administration deemed it advisable and necessary for us to attempt to finance the loan program by the use of bonds instead of cash, and the purpose of this bill is to make possible that procedure.

Mr. Chairman, would it be appropriate to make a brief statement analyzing the proposed bill?

The CHAIRMAN. I think it would be well for you to make such a comment, Governor Myers.

Governor MYERS. If it meets with your approval I would like to make a general statement on the sections of the bill and come back, after I have completed, and answer any questions that may be asked insofar as I can.

The CHAIRMAN. You may proceed in such a manner as you desire.

Governor MYERS. Section 1: The Governor of the Farm Credit Administration is authorized to organize and charter a corporation known as the Federal Mortgage Corporation.

The board of directors of the corporation will consist of the Secretary of the Treasury, or an officer of the Treasury duly designated by him, the Governor of the Farm Credit Administration, the Land Bank Commissioner, and two officers of the Farm Credit Administration, to be designated by the Governor. The directors will serve without compensation. The Governor will be chairman of the board of directors.

Section 2: The corporation shall have succession until dissolved by an act of Congress and will exercise all of the general and incidental powers of an ordinary corporation. The corporation will also be entitled to free use of the mails, and, with the consent of any board, commission, or other department of the Government, may avail itself of the use of their facilities.

Section 3: The capital of the corporations will be in the sum of $200,000,000, all of which will be subscribed and owned by the United States Government. Stock will be paid for out of funds made available to the Land Bank Commissioner under the provision of section 32 of the Emergency Farm Mortgage Act of 1933.

This refers to the Land Bank Commissioner's fund, the $200,000,000 made available to the Land Commissioner last year. No additional capital is contemplated.

Section 4: In order to enable the Federal land banks and the Land Bank Commissioner to obtain the necessary funds for the continuation of their lending operations, the corporation will be authorized to issue bonds in an aggregate amount outstanding at any one time of not to exceed $2,000,000,000. These bonds will be fully and unconditionally guaranteed as to interest and principal by the United States, and on account of such guaranty shall be lawful investments, and may be accepted as security, for all fiduciary, trust, and public funds.

The Federal Farm Mortgage Corporation will have power to issue its bonds in such amounts and at such times as may be approved by the Secretary of the Treasury. The bonds will be secured by consolidated bonds issued by the Federal land banks, by mortgages on farm lands made by the Land Bank Commissioner, and by such other collateral as the corporation may have available.

The corporation may also exchange its bonds for consolidated farm loan bonds issued by the Federal land banks, and make loans to Federal land banks on the security of consolidated farm loan bonds. The corporation will also be authorized to purchase, for cash, consolidated farm loan bonds from the 12 Federal land banks.

The Secretary of the Treasury is authorized, in his discretion, to purchase bonds of the corporation, and to sell the same. The bonds will be printed from engraved plates prepared and held by the Secretary of the Treasury. The expense of such engraving and printing will be paid by the corporation.

Section 5: Except for the purpose of refinancing bonds previously issued thereunder, no Federal land bank will be permitted to issue bonds under the provisions of section 21 of the Emergency Farm Mortgage Act of 1933, after 90 days after the enactment of this act. (The amount of bonds which have been issued under the provisions of the Emergency Farm Mortgage Act does not exceed $150,000,000.)

That is, this section limits the issuance of additional bonds from the $2,000,000,000 authorized by the Emergency Farm Mortgage Act of 1933, on which the interest only was guaranteed by the United States.

Sections 6 and 7: Loans made by the Federal land banks and by the Land Bank Commissioner may, at their option, be made in bonds of the Federal Farm Mortgage Corporation.

Section 8: The Federal land banks will be authorized to exchange their bonds for Federal Farm Mortgage Corporation bonds of equal face value, and to purchase bonds of the Corporation.

Section 9: The aggregate amount of first and second mortgage loans, which may be made by the Land Bank Commissioner under the provisions of section 32 of the Emergency Farm Mortgage Act of 1933, has been increased from $200,000,000 to $8,000,000. The funds necessary to make this $600,000,000 of additional loans will be obtained from the sale or exchange of bonds issued by the Federal Farm Mortgage Corporation.

Sections 10, 11, and 12 provide: (1) That the Federal Farm Mortgage Corporation may act as fiscal agent of the United States; (2) that the Corporation and its property and obligations will be exempt from taxation; and (3) that the penalty provisions of the Farm Credit Act of 1933 shall be applicable to the operations of the Corporation.

Sections 13 and 14 provide for the creation of a revolving fund of not exceeding $40,000,000 out of the balances, collections, and appropriations allocated under subsection (a) of section 5 of the Farm Credit Act of 1933, which are in excess of the $120,000,000 therein provided for. That was the production credit revolving fund. The new revolving fund thus created will be available to the Governor of the Farm Credit Administration for the purpose of subscribing, with the approval of the Secretary of the Treasury, to the capital and paid-in surplus of the Federal intermediate credit banks. These subscriptions will be made in such amounts as the Governor may determine are necessary, in order to meet the credit needs of eligible borrowers from those institutions.

Section 15 would authorize any Federal Reserve bank to buy and sell Federal Farm Mortgage Corporation bonds, having maturities from date of purchase of not to exceed 6 months and to make loans on the security of such bonds subject to the same limitations and restrictions respecting loans made on the security of direct obligations of the United States issued under the Second Liberty Loan Act, as amended.

Section 16 reserves the right to alter, amend, or repeal the act, and provides that if any provision of the act is held to be invalid its other provisions shall not be affected thereby.

Section 17: The act shall be cited and known as the "Federal Farm Mortgage Corporation Act.”

The establishment of the Corporation in the Farm Credit Administration merely gives a device whereby we may issue $2,000,000,000 in bonds, the interest and principal of which will be guaranteed by the United States, to continue the mortgage refinancing program.

The first use of that $2,000,000,000 would be to refund the bonds which have been issued under the act of last May and which have been given to the Reconstruction Finance Corporation as collateral for loans. That is $150,000,000 of the new bonds will be used for this purpose of refinancing. The $2,000,000,000 under this bill, therefore, does not represent an increase from the $2,000,000,000 authorized last spring, but simply represents a change in the type of bond.

Now, the corporation will issue its bonds, guaranteed as to principal and interest; and will exchange these bonds for Federal land bank bonds, thereby furnishing the land banks with Government guaranteed bonds to be paid out to borrowers instead of cash.

The Land Bank Commissioner would act as the agent for this corporation and would continue to make the loans which we call the Land Bank Commissioner's loans. The mortgages obtained on such loans would be exchanged for these Government guaranteed bonds, and, therefore, the same type of bonds would be paid to the borrower who obtains a loan from the Land Bank Commissioner as is paid to land bank borrower.

Mr. Chairman, I shall be glad to answer any questions concerning any points that have not been covered.

The CHAIRMAN. There are two or three questions that I would like to ask you, Governor Myers.

How does the amount of loans actually closed since last May compare with the loans made by the land banks during the previous year?

Governor MYERS. The second page of the figures which you have, Mr. Chairman, shows the loans closed for 1932 were $27,569,800. Up to last night we had closed, since May, approximately $250,000,000

The ChairMAN. In other words, about ten times as much during the period since May as was closed during the previous year?

Governor MYERS. It would be about nine times as much since May.

The CHAIRMAN. What are the total commitments, or rather, the total applications that have been made during this period?

Governor Myers. From May 1 to December 31, inclusive, we received 497,207 applications, for slightly over $2,000,000,000, and during the same period, 50 percent of these applications had either been closed or approved. Those which have been closed into loans aggregate $210,000,000. In addition, we have approved loan applications aggregating $655,000,000.

The CHAIRMAN. And through this proposal you expect to be able to make further loans when the bonds are made available?

Governor MYERS. Yes.

The CHAIRMAN. In order to carry out the purposes of the emergency act?

Governor MYERS. I am sure that every body would prefer, to pay out cash if we could do that, but we have, however, a problem since

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