Mr. HANCOCK. I find that in the past even within the organization there were differences of opinion as to certain activities. The absence of specific policy instructions from the Congress does leave the door open for extravagant interpretations. This basic legislation you are now considering would provide the best protection against extravagant activities in the future.

Mr. COOLEY. Is it not a fact that in the future the Congress will have an opportunity, and this committee will have an opportunity, to see just what the Farmers' Loan Corporation is doing in the field of supervision, and whether or not they have given too much or too little supervision; and then the Congress can take care of that? Mr. HANCOCK. That is correct.

Mr. POAGE. That is not a good safeguard. In less than a month from now we will be voting on the continuation of the O. P. A. A majority of this Congress time and time again has gone on record as being opposed to these consumer subsidies. I do not even know where you stand; but the majority of this Congress is opposed to consumer subsidies, and so voted, not once but twice; and not twice but four times.

As you and I know, we are going to have a most difficult time to ever overcome the overwhelming objection of the majority. They tell us: Yes; Congress will have the right to review what they are doing; and if you do not like what the O. P. A. does you will have the opportunity to rewrite it all.

And now you tell us that if we do not like what is done in this matter a year from now we will have a right to pass upon the appropriations for them. Oh, yes; they will make a report or reports, and they will come to my office in a package that will probably be filed somewhere; and in your office it will probably be the same.

Mr. COOLEY. I read them.

Mr. POAGE. I do not. And most of the Members do not. Most of them do not read them. We might as well face it. It is not control over any agency to simply say that they have to file a report.

Mr. COOLEY. Mr. Hancock agrees that persons are likely to make errors, and there might be some abuses.

Mr. POAGE. We have to write into this law specific terms prohibiting things that will probably occur at some future time, even though we know that they will not occur under Mr. Hancock.

Mr. COOLEY. You would not want to put out Government money and say to the person making the loan "you cannot do anything at all in the way of supervising or servicing the loan."

Mr. POAGE. I doubt if we would want to go that far.

Mr. COOLEY. We have gone about as far in that direction as we can go.

Mr. POAGE. Mr. Hancock wants to give a little more supervision than your bill provides.

Mr. COOLEY. No. All he says is to let him have control.

Mr. POAGE. That is exactly what Mr. Baldwin said about it. He told them how many times they should take the baby up at night, and when they should milk the cow, and how big they should split the wood, and how big a bucket they should use to carry in the water. Mr. HANCOCK. I do not think that under the terms of this bill or the amendment proposed by Mr. Wickersham any coddling of that sort is contemplated. It will certainly not go on under my adminis

tration.

May I make this statement? I think Doctor Clarence Poe, the editor of the Progressive Farmer, wisely sized up the situation when he said that the type of man needed to administer a program of this kind should have both a warm heart and a cool head.

Mr. WICKERSHAM. In Oklahoma in the past the program has been handled in pretty good shape on your rehabilitation and tenant purchase, and if you do the same thing I think it would be O. K.

You have not had any objection from any medical source in connection with your grants of a medical character, have you You do ellow the Farm Security client to select his own doctor, do you not?

Mr. HANCOCK. We have received wholehearted approval of our medical care program from the American Medical Association. The farm family select their own doctor from among those who are participating in the medical-care program in the county.

Mr. WICKERSHAM. You state in the ninth paragraph on page 5 that "Administrative controls designed to effect economies in administrative and operating costs have been instituted."

It is not contemplated that if and when you do increase the local county, State, or regional area that you will in turn place more of the activities of the organization in Washington?

Mr. HANCOCK. Our hope and our purpose and our determination is to keep this program at the county level, so far as possible. In that connection I want to say that within the past 60 days the records will show that in the central offices in Washington and Cincinnati we have reduced our expenses in the neighborhood of 58 percent on travel, telephone, and telegraph.

Mr. PACE. Mr. Hancock, you are familiar with subsection (c) on page 17, which provides that the Administrator must certify, after a certification by the appropriate county committee, that the applicant for a loan under this bill is unable to secure credit at reasonable rates and upon reasonable terms from commercial banks, other private lending agencies, or from any other source. The president of the American Bankers Association has recommended to the Committee that that language be changed to read as follows:

at rates not in excess of the legal rate of interest in the several States.

I do not think those are his exact words but that is the meaning. Have you any views on that question?.

Mr. HANCOCK. Mr. Pace, I think the question of determining what is a reasonable rate of interest for this type of loan can well be determined by the Congress. You fix an interest rate on land mortgages; you fix an interest rate on tenant-purchase loans; on the H. O. L. C. loans, and on the F. H. A. loans. The legal rate of interest varies, of course, in the different States. As I understand it, some States still permit 10 percent interest charges. That would be very unreasonable and unconscionable for this type of loan.

Mr. PACE. I have here a list of the legal rates in all of the States of the Union which, Mr. Chairman, I would like to insert into the record at this point.

(The statement of interest and usury statutes is as follows:)

Interest.-Legal rate 6 percent; 8 percent permitted by contract

ARIZONA

Interest.-May contract, in writing, for any rate of, not exceeding 8 percent per annum. Any rate exceeding this is usurious. When no express contract, on bond, bill, note, or instrument of writing, or judgment, for money lent, or due on settlement of accounts from date of ascertained balance, and money received for use of another, interest is computed at 6 percent per annum.

Person, partnership, corporation, bank, or trust company, national bank doing business in State may make installment loans not to exceed $1,000 with total interest or discount of 8 percent added to principal calculated from date of indebtedness. Any additional sums charged except recording fees and fees for acknowledgment constitute usury.

ARKANSAS

Interest.--The legal rate of interest is 6 percent, but parties may contract in writing for not exceeding 10 percent. Interest exacted in excess of 10 percent forfeits the debt. In computing the interest commissions paid to the agent of the lender are counted as interest. Where usury is charged the borrower may go into equity and have the debt and securities canceled without tendering the amount lawfully due. Judgments bear the same rate of interest as the obligation sued on. Judgments against counties bear no interest.

CALIFORNIA

Interest. The legal rate of interest is 7 percent and is due upon judgments after rendition and upon other obligations unless there is an express contract in writing fixing a differenc rate, which, however, is limited to 10 percent with severe penalties for any agreement or subterfuge by which the lender profits above that rate. On loans of $300 or less, secured by pledge or chattel mortage or assignment of wages, 10 percent annual interest may be agreed upon. All other charges against the borrower shall not exceed: on amounts of $100 or under, 21⁄2 percent per month; on amounts in excess of $100, 2 percent per month.

COLORADO

Interest. The legal rate was 8 percent from the organization of the State up to March 7, 1935, when it became 6 percent, but any other rate may be fixed by agreement with the exception of loans of $300 or less made by money lenders upon which the maximum rate is 10 percent.

CONNECTICUT

Interest.-Legal rate, in absence of express agreement, 6 percent; no more than 6 percent can be recovered in either case after debt becomes payable. Express agreements in which 12 percent is charged are valid and any person making a greater charge is liable to fine and imprisonment. There is no limit to the interest charge which can be made by any national bank or any bank or trust company, incorporated under the laws of this State nor is there any limit to the interest charge on a bona fide mortgage of real property exceeding the sum of $500. Special law for pawnbrokers. Loan companies licensed by bank commissioner may loan not more than $300 and may charge not to exceed 36 percent per annum on that part of the unpaid principal balance of any loan not in excess of $100, and not to exceed 24 percent per anunm on any remainder of such unpaid principal balance.

DELAWARE

Interest. The legal rate is 6 percent. No debtor shall be required to pay more than the legal rate, but may deduct any excess from the amount of the debt. If already paid, the debtor may recover the excess paid over the legal rate in an action if brought within 1 year from date of payment. Properly registered small-loan companies, firms or individuals or State banks or trust companies, which need not be registered, may charge 6 percent on amounts up to $500 with an additional investigation fee of not more than 2 percent.

DISTRICT OF COLUMBIA

Interest. The legal rate of interest in the District of Columbia is 6 percent, and in any suit where the contract is tainted with usury the plaintiff forfeits the whole of the interest so contracted to be received. and where usurious interest has been paid it can be recovered provided action for such recovery be brought within 1 year. In an action on a contract for the payment of a higher rate of interest than is lawful in the District, made or to be performed in any State or Territory of the United States where such contract rate of interest is lawful, the judgment for the plaintiff shall include such contract interest to the date of the judgment and interest thereafter at the rate of 6 percent per annum until paid. By written contract this rate may be increased to 8 percent.

FLORIDA

If

Interest. Eight percent is allowed on contracts where interest is payable but no rate is specified. Contract for more than 10 percent is usurious. If more than 10 percent is willfully charged all interest is forfeited. If more than 10 percent interest is willfully taken double the amount of interest is forfeited. 25 percent or more interest is willfully charged or accepted both principal and interest are forfeited. All judgments and decrees shall bear interest at the rate of 6 percent per annum: Provided, however, That when such judgment or decree shall be obtained or rendered on a written contract or obligation providing for interest at a less rate than 6 percent per annum then such judgment or decree shall bear interest at the rate specified in such written contract or obligation.

GEORGIA

Interest.—The legal rate of interest in Georgia is 7 percent, but 8 percent is legal when contracted for in writing. But 12 percent per month may be charged under Small Loan Act up to $300. Parties charging usury forfeit the excess if usury is set up. Usury has no present penalty in Georgia, except forfeiture of all interest paid upon the debt.

IDAHO

Interest. Where there is no express contract in writing fixing a definite rate of interest, the rate is 6 percent per annum. Parties may agree in writing for interest at a rate not to exceed 8 percent per annum. Judgments bear interest

at the rate of 6 percent per annum. Compound interest allowed if aggregate does not exceed 8 percent on principal.

ILLINOIS

Interest.-Extreme contract rate, 7 percent, except as to corporations, no limit as to corporations: legal rate, 5 percent. Interest is allowed at the legal rate on moneys after they become due no any bond, bill, promissory note, or other instrument in writing: on money loaned ro advanced for the use of another: on money due on the settlement of an account, from the date of ascertaining the balance: on money received to the use of another, and retained without the owner's knowledge: and on money, withheld by an unreasonable and vexatious delay of payment. Judgments or decrees draw interest at 5 percent. Penalty for contracting for more than 7 percent is the loss of the entire interest, and only the principal sum can be recovered. A written contract, wherever payable made, in this State between citizens of this State and of a foreign State (or secured by a mortgage on lands in this State) is controlled by the law of this State as to the rate of interest, and the penalty for usury. Usury must be specially pleaded. In all computations of time, and of interest, and discounts, a month is considered to mean a calendar month, and a year 12 calendar months, and a day the thirtieth part of a month. A foreign corporation is subject to the same penalties for usury as a citizen of this State. Justice of peace has jurisdiction in all claims under $500. The interest rate does not apply to the loan business where $300 and less is involved upon which 3 percent per month may be charged. This requires an annual license fee of $200 in counties of 500,000 and $100 in counties less than 500,000.

INDIANA

Interest. The legal rate is 6 percent, but interest may be taken in advance. No agreement to pay a higher rate is valid unless the same be in writing, and in such case it is not lawful to contract for more than 8 percent. When a greater rate is contracted for, the contract is void as to all interest in excess of 6 percent, is usurious and illegal, and the excess may be recouped by the debtor whenever it has been reserved or paid before the bringing of the suit. Interest on judgments runs from the date of the verdict or finding, at the rate specified in the original contract, not exceeding 8 percent, and if no contract has been made 6 percent is allowed.

IOWA

Interest. By written contract, maximum legal rate, 7 percent. Judgments draw 5 percent, or such rate as is fixed by the contract on which the judgment or decree is rendered, not exceeding 7 percent per annum. Open accounts draw 5 percent after 6 months from date of last item; money loaned, money due, money due on settlement of accounts, bear interest at 5 percent per annum. Contract for more than 7 percent forfeits all interest and costs.

KANSAS

Interest.-Legal rate, 6 percent, but 10 percent may be agreed upon. Excess of 10 percent is forfeited, and in addition thereto there shall be deducted from the amount due for principal, with lawful interest, an amount equal to the interest contracted for in excess of 10 percent. The legal interest originally contracted for continues until the debt is paid, and no additional interest can be charged by way of penalty for default except from date of default. A purchaser of a negotiable note in due course takes the note free of the usurious taint.

KENTUCKY

• Interest.—The lawful rate of interest is 6 percent per annum, and contracts for a greater rate are void as to the excess of interest. The court of appeals has refused repeatedly to allow attorneys' fees to be collected. Under sections 8831-14, etc., a company engaged in making loans of $300 or less may obtain a license from the director of division of banking and legally charge 32 percent per month on the unpaid balance, on loans of less than $150, and 22 percent per month on unpaid balance on loans of more than $150 not exceeding $300.