these borrowers from the Federal land banks is anxious to propose any radical or revolutionary changes in the organic structure of the system. The only justification we can find for presenting bills along these lines is based entirely on the proposition of a very acute emergency in some of the agricultural districts, caused by the drought, and financial and other conditions. I realize in order to have any hope on earth of securing any action on any of these proposals, we might as well have an understanding at the beginning that we are not seeking to destroy by this legislation the stability or solvency of outstanding obligations of the Federal land-bank system. Their obligations now in the aggregate amount to over a billion dollars in bonds and other securities, and we must realize that the interest on those obligations is being paid semiannually, and if we undertake by legislation to destroy a sufficient income from the banks to pay those semiannual installments, it would necessarily cause great depression in the market value of those securities.

In the bill which I have introduced here-and I want to say by way of explanation that it is not my bill; I claim no pride of authorship in it at all; it was a bill that was introduced when Congress met, in the Senate, by Senator Harrison, of Mississippi, and in looking over the measures proposing some relief along this line I had occasion to investigate the provisions of the Harrison bill. It seemed to me that it met in substance the requirements of our situation, and so I consulted with Senator Harrison and asked his permission to introduce an identical bill in the House, so that it might be pending in the same form in both branches.

Mr. BRAND. What is the status of the Harrison bill?

Mr. BANKHEAD. They have had hearings before the Senate Committee on Banking and Currency, and no action has been taken by that committee as yet. They had a hearing on it some few days ago, which was attended by some Members of the House. Now, with that preliminary statement-and I do not think it is necessary for me to undertake to accentuate the very desperate situation in which thousands of these borrowers are placed by reason of the conditions I have mentioned-I would like to present very briefly the purposes of the Harrison-Bankhead bill. It is divided into three substantive propositions; two of them, I think, are not really essential to the purposes that we have in mind. The first provision of the bill simply vests the discretion in the Federal land bank, by and with the approval of the Federal Farm Loan Board, to withhold foreclosure of any mortagage securing a loan made by such bank if the borrower is in default under the terms of the mortgage, and to extent time for the payment of any installment due or to become due under the terms of any such mortgage, for a period of not to exceed two years. Now, I want to say that, for any information I have to the contrary, that discretion is now vested in the Federal land banks.

In other words, I think that if they saw fit to extend the maturity of these agreements, that they have the power to do so. It is a matter of contract. But this expression was written into the bill, largely, I might say, for the purpose of expressing to the Federal land banks and the Federal Farm Loan Board the intent and desire of Congress in reference to this matter, as a mere expression of the sense of our appreciation of this extreme emergency. In other words, it might

be taken in the nature of a prayer to the Federal land banks to consider the humanity and expediency of exercising the discretion already vested in them. The essential part of the bill is the one. that is sought to be covered by the bill of Mr. Steagall, and in substance it seeks action along the same lines. And I want to say this, that I feel sure that none of my colleagues in the House who have measures pending here, is wedded to any particular proposition. What we are seeking to do is to try to get some affirmative action from this committee on some bill, whether it be a particular bill or a combination of several of these bills or resolutions, that will effectuate the purposes that we have in mind. In other words, the proposition is that, while securing the solvency of these outstanding obligations, the par value of bonds, a depression in which, of course, we recognize the danger of bringing about, that a system be set up providing for action by the Secretary of the Treasury, or the Treasury Department, to advance temporarily, either in the way suggested by Mr. Steagall, as a loan to these land banks, to be repaid out of their net earnings in five years, or a specific fund authorized to be appropriated in this bill to which I am now calling attention-to authorize the Secretary of the Treasury to advance out of any funds in the Treasury otherwise not appropriated, to any land banks, upon their demand, a sum sufficient to cover the amount of interest payable by such bank during a period of not to exceed 18 months from the date of the approval of this act, on any Federal farm loan bonds issued by it, the sums so advanced to be used exclusively for the purpose of making such interest payments, and the Federal land bank receiving any such advance to repay the same to the United States without interestI believe that is a condition somewhat different from your proposition, Mr. Steagall.

Mr. STEAGALL. of course, I would rather not have any interest, but we must try to take care of the situation in the best way possible. However, that is immaterial.

Mr. BANKHEAD. My bill says:

The Federal land bank receiving any such evidence shall repay the same to the United States withour interest in such manner and under such terms and conditions as the Secretary of the Treasury and the Federal Farm Loan Board, acting jointly, shall prescribe.

Now, there, gentlemen, is the crux of the proposition involved in this legislation. In other words, I think it may be recognized that we have an extreme emergency, and in a great number of cases-I do not know whether there is any representative of the land-bank system here this morning or not

The CHAIRMAN. Yes; there are several members here.

Mr. BANKHEAD. I do not know to what extent defaults have been made for the calendar year 1930, but I imagine that a very large percentage of those installments, including both the installment and the interest have been paid, and I imagine that the delinquencies, upon the proposition that we are seeking to reach here, are comparatively small, as compared to the aggregate number of loans outstanding.

The CHAIRMAN. Before we finish these hearings we will give the Federal Farm Loan Board and those who are interested from the

administrative standpoint an opportunity to furnish the necessary information to this committee in connection with all these measures. Mr. BANKHEAD. I am very happy to know that, because it is essential that we have both sides of the picture in order to get any action on this matter. Now, there is a third provision in this bill that I think is not essential to the purposes we have in mind, and that is in reference to giving discretion to the Federal Farm Loan Board to allow redemption in cases of default, where the lands have not, subsequent to the foreclosure, been resold by the bank and passed into the hands of private purchasers. I think that discretion is already vested in the land banks. The main purpose and the main value of that provision in the bill is as an expression of the opinion of Congress upon this phase of the emergency.

Now, gentlemen, I think that covers what we have in mind in connection with the Harrison bill. It seems to me that it resolves it purely into a question of whether, on the facts presented, to meet an emergency which no one will dispute, which the banks are readily recognizing in connection with thousands of their borrowerswhether or not Congress, justified solely upon an emergency ground, because no one is desiring to impair the integrity of this sound structure, whether or not a situation like this justifies temporary advancements of the funds of the Treasury to help tide over these men who are about to lose their homes, many of whom have been paying installments for 10 or 12 years. In that connection, I want to say that there is one thing that appeals to me very strongly in reference to this legislation, that these men are not drifters or loafers that are involved here. These are the solid and substantial landowning members of the drought-stricken area. They are men of substance and character, men who have been meeting their obligations, and when you go ahead in a wholesale way, from what I understand, and foreclose on these mortgages, the land banks are unable to sell these lands for a gross of 25 per cent of the face value of their securities, and you do a double injustice not only to these substantial farmers of the country, but also to the banks themselves, because you are loading them down with the necessity of carrying a tremendous acreage of land that they have to pay taxes on, that they have to maintain in its condition of productivity, assuming all of those burdens from which they would probably derive a tremendous loss; whereas, if you provide a reasonable moratorium, these men will have an opportunity, when they have another crop and approach normal conditions, to pay their installments and interest, because there is no waiver of any rights, under this bill, of the Federal land bank to securing interest on the amounts loaned. I trust that some legislation of this character will be reported by the committee.

Mr. PRALL. Would you limit this relief to those who have paid certain installments, to a man who had defaulted on his second or third payment, or regardless of installments, would you say it should be granted in any case?

Mr. BANKHEAD. Well, I am assuming that if there had been a prior default, probably foreclosure would have taken place, or else some arrangement would have been made about taking care of the installments. You see, under the conditions of these loans, if a default is made in the 1930 payment of the amortization sum

and the interest, that immediately gives the bank the right to foreclose on the whole amount due.

Mr. PRALL. But do you say that a man who has defaulted in his third payment should get relief, or do you say that a man who had paid any installments, eight installments, or any number of installments should get relief?

Mr. STEAGALL. Oh, the purpose of this bill, regardless of the numerical status of the installments, whether a man has paid his first installment or his tenth installment, or whether he has paid them all up to the present time, up to the date of default, this bill merely seeks to meet the present situation of those who can not pay the amount now due.

Mr. PRALL. Regardless of how many payments have already been made?

Mr. BANKHEAD. Yes, that is it exactly.

Mr. LUCE. Mr. Chairman, I would like to ask Mr. Bankhead several questions. Mr. Bankhead, what the lawyers know as acts of God recur with a frequency that is not appreciated by the general public. The last annual report of the American Red Cross showed that it had shared in the matter of 102 disasters in the previous year. Since I have been a Member of the House, about a dozen years, hardly a year has passed but some region of this country has come to Congress asking for help, usually in the way of a distribution of seeds. I chance to be somewhat familiar with the agricultural region in New England, in northern Maine, and where the potato crop is a mainstay.

Experience shows that they will have good crops for three or four years, and in that time they are in ease and luxury, and you might actually find potatoes being hauled to the warehouses in Packard limousines. The result is that when the lean years come, they have no resources and no reserve to meet the situation, and they are broke, and everybody has to trust them for a year. I may also call your attention to the fact that during the Mississippi floods which aroused the sympathy of Congress, a flood in the State of Vermont did proportionately greater damage than was done by the Mississippi flood, but Congress, aroused by the magnitude of this disaster in the South, was far more generous than it was to the little State of Vermont, where, as I say, the damage was proportionately greater than in the Mississippi Valley. Now, hunger is not what you might call a case of mob suffering or mass suffering. When a man is hungry, it makes no difference to him whether there are 10 other men hungry or 10.000 men hungry. And so in the case of your farmers down there. The loss that any one of them suffers is as serious as if it was a loss from which he alone was suffering. Will you tell us why you would have generosity of this type extended to 10,000 or 100,000 persons and not to 100 or 1,000? If you are going to forego the payment of interest at all, under these conditions, why would you not allow it to be done in any case of individual distress? Why not provide for the lean years of the farmer in Worcester or in the Dakotas? The farmers in the Dakotas come to us frequently in these matters. How do you justify the extension of unusual generosity or liberality, or whatever you may call it, benevolence, by the magnitude of the disaster, when only individuals are concerned, as individuals, as in this present case?

Mr. BANKHEAD. Well, I want to say that it is rather an involved question. It is certainly a rather long one. But of course, I have in mind what the gentleman from Massachusetts is asking me. The question assumes to ask whether or not we undertake, as a temporary emergency brought about by an act of God, if that is admitted, or whether we shall, by an effort at permanent legislation, set up, as a part of the wisdom of Congress, a system whereby, under recurrent visitations or acts of God, people in some particular sections might be given remedies and benefits, and as the gentleman has said, generosity. Now, I will say to my friend from Massachusetts, I would not oppose a permanent policy on the part of the Government, if our finances justified, of giving to the President of the United States a very large sum of money to be used at his discretion, without the action of Congress, to be used in cases of extreme national emergency. I mean by that, developments of sufficient gravity and scope to appeal to the Executive as being a national emergency. Now, getting back to the concrete proposition that the gentleman has in mind, with reference to why we should extend this generosity to only a few of these borrowers and not lay down a general policy or a universal moritorium, I would say that the only difference is that it involves a greater strain on the Treasury. In principle, I do not see any difference. As a practical proposition, I think that the land banks can be vested with authority, as provided for in this bill, to be exercised upon investigation by them. They have field agents all over the country. These local associations have their secretaries and treasurers all over the country, and they could act just in the same way as the county agents in making a survey of conditions. You will find from their reports one farm being visited with a more severe drought than one in an adjoining part of the county. You will find conditions over which the borrower apparently had no control, however provident or diligent he may have been, on account of banking facilities or other involvements of a personal nature, where it is absolutely impossible for him to make these payments, whereas his neighbor just across the street, or across the road, might be more fortunate and might have the funds to pay his instalments. I do not know whether that satisfies the gentleman's curosity along the line of my views or not.

Mr. LUCE. It is not a question of curiosity.

Mr. BANKHEAD. Well, I did not mean it in the sense of personal curiosity.

Mr. LUCE. It is the attitude of one who is greatly disturbedMr. BANKHEAD. Well, maybe I used an unfortunate term. Mr. LUCE. Oh, I did not resent it in the slightest. It is a question of being greatly disturbed at the prospect that the Federal Government will undertake to alleviate individual cases of distress. Mr. BANKHEAD. Well, I will say to the gentleman from Massachusetts very candidly that it disturbs me and it disturbs all of us, and I realize that probably we are impinging too far on the question of what the gentleman is pleased to call governmental generosity, but at the same time, when we are confronted, as we have been confronted this year, in the last few months, by a condition of almost universal catastrophe in some sections of the country. our impulses and our humanities are somewhat inclined to get the better of our philosophical views of government and its functions.