Mr. BESTOR. I still maintain that you can not compare the European market with the American market when you take into consideration all the factors which concern American and European agriculture. I would like to see the farmer get as low a rate as consistently can be given him. We want to do everything within reason to see that he gets it, but I am convinced that the American farmer is more concerned over commodity prices than he is over interest rates. Senator BROOKHART. Since this European agriculture must compete in the world market of prices with the world agriculture, I think the comparison is very easy.

Senator THOMAS of Oklahoma. Mr. Bestor, may I ask you one or two questions leading up to the main question I want to ask? How many loans have you in your system at the present time?

Mr. BESTOR. About 500,000, including the joint-stock land bank system.

Senator THOMAS of Oklahoma. What is the total amount of those loans, approximately?

Mr. BESTOR. About $1,700,000,000.

Senator THOMAS of Oklahoma. How many applications have you now pending for loans?

Mr. BESTOR. I could not give you those figures, Senator Thomas, as to how many are pending.

Senator THOMAS of Oklahoma. Could you give me an estimate? Mr. BESTOR. No; I could not do that. Since the first of the year the banks have loaned about $6,000,000 in new money. Since the 1st of January. And I think to about 1,600 borrowers, as I remember. In 1931 they loaned $42,000,000.

Senator THOMAS of Oklahoma. Then you have loaned so far this year $6,000,000 and last year you loaned $42,000,000, is that correct? Mr. BESTOR. $42,000,000 in 1931, and for the first three monthswe do not have the April figures-for the first three months of 1932 they have loaned some $6,000,000.

Senator THOMAS of Oklahoma. Tell the committee what was done with the $125,000,000 which Congress has given you this session.

Mr. BESTOR. $63,243,740 was allotted to the banks in the first allotment. Of that amount $25,000,000 was made available for granting extensions to borrowers, as provided in the act that was passed by the Congress.

Senator THOMAS of Oklahoma. By granting extensions you mean that this money was used to pay interest in default and permitting them to continue without foreclosure temporarily?

Mr. BESTOR. The law says obligations which would include principal, interest, taxes, and so forth.

Senator THOMAS of Oklahoma. Mr. Bestor, you said you were a farmer, and are dealing with a half-million farmers. Now, I desire to ask you a general question, based upon your individual knowledge as a farmer and upon your contact with this half-million farmers. In your opinion what can the Congress do to improve the condition of the farmers?

Mr. BESTOR. That is a big question, Senator.

Senator THOMAS of Oklahoma. I realize that, and I think you are qualified to answer it. If you are not I do not know who can.

Mr. BESTOR. If you can do anything to raise commodity prices, I think you will relieve the farmer all right.

Senator THOMAS of Oklahoma. Do you think that should be done? Mr. BESTOR. Surely.

Senator THOMAS of Oklahoma. Now, what can Congress do to raise commodity prices, if anything?

Mr. BESTOR. Well, I will have to confess that I do not know how it can do it directly.

Senator THOMAS of Oklahoma. Are you willing, though, to stand on the assertion that if Congress can do something to raise commodity prices you think Congress should do it? Is that correct? Mr. BESTOR. Anything that is at all within the realm of reason;

yes.

Senator THOMAS of Oklahoma. Viewing the Government as an organization embracing two phases particularly, the Congress that makes rules and regulations and the administration or executive branch that enforces them, what can the Congress do and what can the administration do-I mean the executive branches-if anything, to improve the condition of the farmer at this time?

Mr. BESTOR. Aside from the matter of commodity prices, you say? Senator THOMAS of Oklahoma. Sir?

Mr. BESTOR. You say aside from the matter of commodity prices, what can be done?

Senator THOMAS of Oklahoma. No; if you have any suggestions that will elaborate on that answer, I would be very glad to get your

answer.

Mr. BESTOR. I wish I did have, Senator. I surely do. I am sorry to say that I have no suggestions.

Senator THOMAS of Oklahoma. Well, being a dealer in money in vast amounts, do you not believe that executive agents of the Government can do something to increase commodity prices?

do.

Mr. BESTOR. I think so.

Senator THOMAS of Oklahoma. Tell the committee what they can

Mr. BESTOR. I might make right there, Senator, just a brief statement in regard to what the Farm Loan Board and the banks in the system are trying to do. There has been a feeling with us that the intermediate credit bank system might be even more useful than it has been in the past. In 1931 the credit that was extended by the intermediate credit banks was nearly double that which was put out in 1929. While other institutions were restricting credits to farmers, the intermediate credit banks were increasing credits to farmers. In 1930 and 1931 the intermediate credit banks put out $485,000,000 to agriculture in total loans and discounts. The intermediate credit banks have sold $89,000,000 debentures in the first four months of this year as compared with $67,000,000 last year to finance their operations.

While it is true that the intermediate credit banks have not been able to do everything that we might wish them to do because of certain factors that have interfered very definitely, such as the nonexistence of discounting agencies in the form of credit corporations that were amply capitalized, nevertheless, we do believe that the intermediate credit banks have rendered a service and could render a still greater service, and they are doing everything that they can at the present time to do that.

Senator THOMAS of Oklahoma. Assuming that we agree that commodity prices should be increased, is there anything that your particular division of government can do to help that along? In other words can the Federal land banks do anything to increase or help increase commodity prices?

Mr. BESTOR. I do not know of anything that the Federal land banks can do directly to help increase commodity prices at all, Senator. At the present time their policy is to make all eligible loans presented to them-they have assured the Farm Loan Board in the last few days that they are prepared and ready to make all desirable loans eligible under the act. In that way they can, of course, help many farmers who are in need of financing for long terms. They are at the present time endeavoring to extend delinquent loans as much as possible to aid deserving farmers to stay on the farm. Of their loans delinquent they have only about 5 per cent in foreclosure. They are doing everything they can to encourage their borrowers to diversify their crops, to raise food crops, and to restrict production in so far as it is practical to do that in crops where there is an overproduction. They are only acting in an advisory capacity there. Senator THOMAS of Oklahoma. Are you familiar with the commodity prices at this time, that is farm commodity prices like corn, wheat, cotton, and so forth?

Mr. BESTOR. Fairly so, Senator.

Senator THOMAS of Oklahoma. What is wheat now selling for to the farmers throughout the country?

Mr. BESTOR. Well, I believe the Chicago price was about 57 cents yesterday.

Senator THOMAS of Oklahoma. Well, what does the farmer get out of 57 cents a bushel wheat?

Mr. BESTOR. About 40 cents, I guess.

Senator THOMAS of Oklahoma. What are oats selling for to the farmer? Not on the exchange, but to the farmer?

Mr. BESTOR. I have not figured it. I presume it is in the neighborhood of 18 cents.

The CHAIRMAN. The chairman of the Federal Farm Board is here.

Senator THOMAS of Oklahoma. Well, Mr. Bestor is rather qualified as an expert in dealing with 500,000 farmers, and being a farmer himself, I would like to get just what his direct knowledge is.

Mr. BESTOR. Well, in a general way, Senator, I know what prices are, but I am not as intimately acquainted with them as I ought to be.

Senator THOMAS of Oklahoma. What is corn selling for to the farmer?

Mr. BESTOR. Twenty-two cents to 25 cents, I think.

Senator THOMAS of Oklahoma. What is cotton selling for to the farmer?

Mr. BESTOR. Well, I had some I offered on the market the other day that was good white cotton; I was offered 5 cents for it. Senator THOMAS of Oklahoma. Can the farmer live, Mr. Bestor, and pay his taxes and pay his debts on those prices?

Mr. BESTOR. I do not think so.

Senator THOMAS of Oklahoma. Then we agree on that as a starting point?

Mr. BESTOR. Surely.

Senator THOMAS of Oklahoma. Now your institution you think can do nothing directly to help raise these prices. You are not created for that purpose, of course?

Mr. BESTOR. I do not know what they could do, Senator, directly. Senator THOMAS of Oklahoma. I agree with you. Now, do you know of any Federal agency, including the Congress, that can do something to increase these prices? And, if so, tell the committee what agency, and what the agency could do.

Mr. BESTOR. I do not know of any agency other than the Farm Board. I am firmly convinced that the Farm Board is doing the best it can to bring about that situation.

Senator THOMAS of Oklahoma. Well, we will come to them later. And I agree with you that they are doing what they can. Let me get down, then, to one other point. Do you think, then, the Federal Reserve Board through the increase of money in circulation could have some effect upon commodity prices?

Mr. BESTOR. From my rather sketchy knowledge of economics. and finance I would say that it should.

Senator THOMAS of Oklahoma. Well, do you thing it can?

Mr. BESTOR. Yes, sir.

Senator THOMAS of Oklahoma. The Federal Reserve Board now is putting money into circulation through the purchase of Government bonds. For some weeks past they have been purchasing $25,000,000 weekly. Within the last two weeks I think they have increased that to approximately $100,000,000 weekly. The records show that although they are putting out this money at the rate of from $25,000,000 to $100,000,000 weekly, that the circulation is greatly decreasing. In other words, when they put money out in circulation the banks get the money and send it back to the Federal reserve in cancellation of their loans.

Now, the banks have total loans of about $600,000,000. Of course if the Federal Reserve Board keeps on its present policy and keeps putting money in circulation through the purchase of bonds, the time will come when the banks have secured enough money to retire their obligations to the Federal reserve. Then having no more loans with the Federal reserve, they will have to find some other means of disposing of it.

Now, do you not believe that if the Federal Reserve Board will keep up this policy of buying bonds and putting money in circulation that very shortly the loans will all be paid back to the Federal reserve system by the banks, whereupon the banks will have to find some other avenue for the use of this money? When that time comes do you not believe that the banks will be looking for loans to get some revenue on those sums of money that they will at that time have in their vaults? Will that not have an influence to make money more plentiful, increase the circulation, and in the end tend to increase commodity prices?

Mr. BESTOR. It seems to me that it is the logical effect to expect if that policy is carried out.

Senator THOMAS of Oklahoma. You approve of that policy, do you not, that I have just enumerated?

Mr. BESTOR. The policy that is now followed?

Senator THOMAS of Oklahoma. Yes.

Mr. BESTOR. Absolutely.

Senator THOMAS of Oklahoma. That is what I wanted to get. I am interested in it and approve of it, and hoped you would, as a farmer.

You would agree that something should be done by Congress, if possible, to make it more easy for the farmer to come in and get the money at better rates, when he has to borrow?

Mr. BESTOR. Not always. I do not think it is always best to make it easy for him

Senator THOMAS of Oklahoma (interposing). I qualified that by the statement, if he has to borrow.

Mr. BESTOR. When he needs money?

Senator THOMAS of Oklahoma. I will not say when he needs it, but when he has to have it. When the farmer has to have money, do you not agree that there should be some place where he could get that money at reasonable rates of interest?

Mr. BESTOR. I fully agree with you, Senator.

Senator CAPPER. Mr. Bestor, I think you said the daily rate of interest to the farmer was 5 or 512 per cent?

Mr. BESTOR. Yes, sir.

Senator CAPPER. Now, how long has that been?

Mr. BESTOR. The 52 per cent?

Senator CAPPER. Yes.

Mr. BESTOR. The Federal land banks, with the exception of three, have had a 52 per cent rate, I think, since 1929.

Senator CAPPER. Well, there was a reduction made then, wasn't there?

Mr. BESTOR. No; the average 1929 rate was up from the 1928 rate. Some had been loaning at 5 or 514.

Senator CAPPER. Now, during recent years agriculture, we all recognize, has been on an unsatisfactory basis and unprofitably carried on. Has not the farmer reason to expect, under those conditions, that his Government will do something toward providing him a lower rate of interest? Maybe not as low as 12 per cent, as Senator Frazier proposes; but he is entitled to a reduction in his cost of operation, so far as interest charges are concerned.

Mr. BESTOR. I think, Senator, he should have the lowest rate consistent with good business and the hazards involved.

Senator CAPPER. But this business has been going on this way for some time. Should not the Government take notice of that and see the need of agriculture and give him some relief along that line?

Mr. BESTOR. Well, of course, there are many sections of the United States where rates were much over 5 per cent, Senator, especially in the South. When the Federal land banks went in there, you remember the rate of banks was much below that of other lending agencies.

Senator CAPPER. I think in my State of Kansas the rates have been about the same all along, regardless of conditions, and in spite of the fact that the farmer is finding himself more and more up against it so far as the cost of operation is concerned. And he feels, with everything else going down, and his commodities down to the lowest they have been in years and years, that he is entitled to some relief so far as his interest charges are concerned, that being a very