Relief to Farm Loan Borrowers

The CHAIRMAN. This hearing is held for the purpose of considering the subject of relief to farm loan borrowers, particularly in the drought areas of the country. This particular hearing is being held on H. R. 16217, a bill introduced by Representative Steagall of Alabama. We have also before the Committee other bills, H. R. 16300, introduced by Representative Hare, H. J. Resolution 451, introduced by Representative Blanton, H. R. 15362, introduced by Representative Parks, H. R. 15588, introduced by Mr. Swanson, H. R. 15142, introduced by Representative Sanders of Texas, H. J. Resolution No. 432, by Representative Edwards, H. R. 14821 by Mr. Bankhead, H. J. Resolution 409, by Mr. McKeown. This morning I received a letter inclosing a bill introduced by Representative Marvin Jones of Texas, which bill proposes to give relief through the Department of Agriculture, the bill having been referred to the Committee on Agriculture. It apparently covers this same subject. Mr. Jones has called my attention to this particular message. That bill, however, is before the Committee on Agricul

ture.

The bills referred to are as follows:

[H. R. 16217, Seventy-first Congress, third session]

A BILL To amend section 32 of the act of Congress approved July 17, 1916, known as the Federal farm loan act, but adding thereto a section to be known as section 32-A

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section of the Federal farm loan act, approved July 17, 1916, is hereby amended by adding at the end of said section 32 another section to be known as section 32-A as follows:

"SEC. 32-A. That the Secretary of the Treasury is hereby authorized and directed, upon request of any Federal land bank and the approval of the Federal Farm Loan Board, to advance or loan to such Federal land bank, out of any moneys in the Treasury not otherwise appropriated, a sum not exceeding $5,000,000, to be used by the bank as a special reserve fund and to enable such Federal land bank to defer the institution of mortgage foreclosures when, in the judgment of its directors, .it will be to the best interests of the bank and its borrowers to do so. Such Federal land bank shall issue to the Secretary of the Treasury a certificate of indebtedness or its note for moneys so loaned or advanced hereunder bearing a rate of interest not to exceed the current rate paid by the Government on its obligations, and said bank shall annually or

semiannually apply to the payment of such obligation or obligations an amount equal to one-fifth of its annual net earnings until the entire amount has been repaid to the Government."

SEC. 2. This act shall take effect immediately upon its approval.

[H. R. 16300, Seventy-first Congress, third session]

A BILL To authorize payment of farm-loan mortgages with bonds issued by the mortgagee banks, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 27 of the Federal farm loan act, as amended (U. S. C., title 12, secs. 941-943), is amended by adding at the end thereof the following: "Any person having obtained a loan from a Federal land bank or a joint-stock land bank may buy and sell farm-loan bonds issued by the mortgagee bank, and any such bank is authorized and directed to accept such bonds at par value when presented by a mortgagor in payment of any installment due under a mortgage, or in full satisfaction of a mortgage after it has been in full force and effect for a period of five years."

[H. J. Res. 451. Seventy-first Congress, third session]

JOINT RESOLUTION Authorizing and directing Federal land banks to suspend and withhold foreclosure of any mortgage securing a loan made by such bank in what is known as the drought area of the United States where because of crop failure the borrower is unable to make payment of interest or principal due, and to provide for redemption of any such lands foreclosed since April 1, 1930

Whereas it was the intent and purpose of Congress when passing the Federal farm loan act in July, 1916, to aid and protect farmers in times of distress and not to ruin and rob them of their farms; and

Whereas when creating Federal land banks Congress provided that if the initial $750.000 capital required for every Federal land bank was not subscribed within thirty days the Secretary of the Treasury should subscribe for it on behalf of the United States; that all salaries and expenses of the Federal Farm Loan Board supervising such banks be paid annually by the Government; that such banks be national depositaries; that the capital, reserve, surplus, and income of every Federal land bank be exempt from all taxes, Federal, State, municipal, nad local; that the mortgages and bonds of said banks shall be deemed and held to be instrumentalities of the Government of the United States; that the bonds of said banks shall be a lawful investment for all fiduciary and trust funds, and may be accepted as security for all public deposits; and other subsidies were extended to said Federal land banks by the Government to enable them to grant special aid and protection to distressed farmers; and

Whereas certain portions of the agricultural sections of the United States have been inflicted with prolonged and continued droughts, certain localities having suffered three successive crop failures, making it impossible for certain farmers who are borrowers from the Federal land banks to meet the interest and other maturities on their loans; and

Whereas the Federal land banks have harshly adopted the policy of granting no extensions regardless of circumstances, and illustrative of such policy, the Federal Land Bank of Houston, Texas, one of the twelve such banks authorized and created by Congress, in its booklet distributed to its fifty six thousand seven hundred and sixty-seven farmers who have borrowed $151,600,000, entitled "Why the Federal Land Bank Can Grant no Extensions," has coldbloodedly announced:

"All borrowers should understand that it is a waste of time to ask for extensions. If one can not pay, then he should sell his farm to one who can and will";

and asserting further in such booklet that the Federal land bank is not a Government institution, and that this bank at Houston has already foreclosed one hundred and twenty-four farms, and that its associations have already foreclosed three hundred and twenty other farms in Texas; and

Whereas said Houston bank in August, 1930, notified Effie May Wilson, of Rotan, Texas, a poor woman with an invalid husband, who had suffered three successive crop failures, that unless her interest payment of $68 was paid

immediately with 8 per centum penalty interest, foreclosure of her farm would ensue, thus forcing her to sacrifice her work stock, family milch cows, and laying hens at one-third their value; and said bank notified Mrs. O. A. Roberson, a poor widow of Caps, Texas, that she must pay her $101 interest at once, even though it becomes necessary that you sell your place to get the money," or her one hundred and twenty-one-acre farm would be foreclosed, and her work stock and milch cows were already motgaged to a local bank for supplies, and she was thus threatened with the loss of her farm, worth over twice the amount of the mortgage against it, but which could not be sold because of said general depression; and that when these specific cases were brought to the attention of said bank, President Gosset replied that it was his intention to foreclose against the eleven thousand six hundred and sixty-six farms in the drought area of Texas if interest payments were mot made promptly; and

Whereas Congress alone can stop this wholesale foreclosure of farms, and without appropriate action these distressed farmers and their wives and little hungry children will be turned out into the cold and lose their homes; Therefore be it

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That until January 1, 1932, all Federal land banks are directed (1) to withhold and suspend suits on and foreclosure of any mortgage securing a loan made by such bank on farm lands situated in the drought area of the United States, or in territory devasted by hail, floods, or tornado, where the borrower is financially unable to make the payments due; and (2) to extend the time for the payment of any such indebtedness to become due during 1931 until January 1, 1932.

SEC. 2. The Secretary of the Treasury is directed to advance to any such bank, out of any money in the Treasury not otherwise appropriated, or that Congress may appropriate, a sum sufficient to cover the amount of the interest payable by such bank during the period mentioned in section 1 hereof, on any Federal farm-loan bond issued by it to the extent of maturities thus exmaking such interest payments, and the Federal land bank receiving and tended. The sums so advanced shall be used exclusively for the purpose of making such interest payments, and the Federal land bank receiving any such advance shall repay the same to the United States without 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. SEC. 3. Any Federal land bank which has acquired, during a period of twelve months preceding the date of approval of this act, the land of any borrower from such bank upon foreclosure of a mortgage securing a loan made by the bank to such borrower is directed, if the bank still holds title to such land, to permit such borrower to redeem his interest in the land so acquired by the bank. Such redemption shall be permitted upon the payment by January 1, 1932, of all installments due under the terms of such mortgage to the time of such redemption. In the event of any such redemption the mortgage shall be revived and continued as security for all subsequent installments payable under the terms of the mortgage.

[H. R. 15588, Seventy-first Congress, third session]

A BILL To require the designation of agents for the service of process in suits against joint-stock land banks

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 16 of the Federal farm loan act, as amended (U. S. C., title 12, secs. 811-823), is amended by adding at the end thereof the following new paragraph:

"Each joint-stock land bank shall file with the secretary of state of each State in which it does business (other than the State of its principal place of business) a certified copy of a resolution of the board of directors of such bank, authorizing a resident of such State to act for such bank as agent for the service of process in any civil suit against such bank in the courts of such State, and containing the name and address of such authorized resident. The secretary of state of any State in which there has been a failure by any jointstock land bank to comply with the requirements of this paragraph shall, upon mailing a registered letter to such joint-stock land bank containing process served on him, be held and considered the agent of such joint-stock land bank for the purposes of this paragraph."

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Relief to Farm Loan Borrowers: Hearing[s] Before Committee on Banking and ...