which would have only the function of providing the services, would not be eligible and, furthermore, those services would, in no sense, be public services nor have the flexibility necessary for the marketing facility, if that were true, wouldn't you think? Mr. BELLAMY. Well, I cannot answer the question technically, Mr. McIntire. But, those of us who have discussed it, believe that there is a good possibility that such a loan could be worked out through them. Mr. McINTIRE. Those of you who have discussed it--have you specifically gone into the language and precedents established on loans already made? Mr. BELLAMY. No. Mr. McINTIRE. Are you familiar with the loans that have been made now under pooling operations? Mr. BELLAMY. No, sir, I have not. Mr. McINTIRE. I can assure you it is, I know of one-you do not know whether it is 2 or 3, or what? Mr. BELLAMY. No, sir, I could not give you the number of loans made under the pooling operation. Mr. McINTIRE. It is my understanding from your statement here that the long-term insured-lending program for refinancing of farmers' indebtedness under the Farmers' Home Administration would not meet the criterion laid down here by your statement, would it? Mr. BELLAMY. No, sir, only in time of emergency. Mr. McINTIRE. I am sure you are familiar with the Farmers Home Lending Association in Arkansas, and you are also familiar with the fact our administration does not lend until other creditors have indicated they will not lend? Is that right? Mr. BELLAMY. Right. Mr. McINTIRE. Is that the type of emergencies you are speaking of? Mr. BELLAMY. No, sir, I would say "No." Mr. McINTIRE. Thank you. The CHAIRMAN. Mr. Bass. Mr. BASS. Mr. Bellamy, first of all, I want to agree with the chairman that your statement is sort of a broad indictment of all the agencies we have set up for servicing the people throughout the country. Are you a National or State bank? Mr. BELLAMY. National bank. Mr. BASS. National bank? Mr. BELLAMY. Yes. Mr. BASS. Now, if you disagree with all of these things, and you are violently opposed to the National Government having any interest in private investors, why would you want to be a national bank? Mr. BELLAMY. I have been in a national bank all of my life. Mr. Bass. You just sort of inherited one, then? Mr. BELLAMY. That is correct. Mr. BASS. What percent of your assets does your bank invest in Government securities? Mr. BELLAMY. Oh, 35 to 40 percent. Mr. BASS. Do you think that is a proper function for a bank to do, to derive a greater part of their income from Federal Government income? Mr. BELLAMY. Well, in the banking structure, that is one of the prime Mr. BASS. That is part of the structure, is it not? Mr. BELLAMY. Yes. Mr. BASS. We think that part of the structure of the Federal Government is to provide facility for the farmers to properly market their merchandise. We think that is as much of a facility of the Federal Government as it is to provide the bankers and provide them with the great part of this income. You being a man in finance and banking, I would like you to tell me what field and areas today you, as a banker and the National Bankers Association, believe inflation exists in. Mr. BELLAMY. Well, of course, inflation goes back to supply and demand. Mr. Bass. I know, but where do we have inflation? I studied economics, too, and I know where it comes from. You mentioned this inflation and adding to it, where do we have inflation today? Mr. BELLAMY. I do not know that I exactly understand your question. Mr. BASS. The question is very simple: Where, in America today does inflation exist? Mr. BELLAMY. I would say generally, all over. Mr. BASS. Well, I do not know, it does not exist with the farmers. There is no inflation with the farmers today. Their income is down. Their expenses are up. They are having a hard time. It does not exist with builders. They say they cannot get the money to build with. Many builders today are out of business and they are telling us that we have to increase the interest rate on loans so you bankers will loosen up with some of your cash that you are saying you cannot provide unless we increase the interest rate. Now, sir, I would like to know where the inflation is: Mr. BELLAMY. It still goes back to supply and demand. Mr. Bass. I know where it comes from, but I want to know where it exists. Mr. BELLAMY. I think overall. In the case of building Mr. BASS. That is what we have been hearing, that overall there is inflation somewhere but nobody has been able to point it out. Why, they tell us to increase the interest rate so the investors get more out of their money. What kind of dividends does your bank pay? Mr. BELLAMY. Eight percent. Mr. BASS. That is pretty good. Mr. BELLAMY. Yes. Mr. BASS. That is all I have. Mr. THOMPSON. Mr. Chairman, I might say to the witness, I respect the opinion he has given very much. I would like to get straight in my mind, however, exactly where you stand on these matters of Government participation in the investment field. Am I correct that you do not object that some organization of the Government already in existence, should make the loans to these facilities? Mr. BELLAMY. I think some that are already on the books are performing a function that we are in agreement with. But, any time a subsidy-which I think is a form of subsidy in this particular loanthat favors a special group, and when you have a special group, of course it is at the expense of the taxpayers. Mr. THOMPSON. Do you have Government funds on deposit in your bank? Mr. BELLAMY. Just a small amount. Mr. THOMPSON. You realize here there are about 9 billion, the last time I heard, on deposit throughout the country. Mr. BELLAMY. I know there is a great amount. Mr. THOMPSON. And not 1 cent is paid in interest for those deposits. Mr. BELLAMY. That is correct. Mr. THOMPSON. That is sometimes called bankers' subsidy, it is a very unkind term, but it is called that sometimes. That is not objectionable to you? Mr. BELLAMY. Well, we do not have but just a little bit, Mr. Thomp son. Mr. THOMPSON. Well, your colleagues have it to the extent of $9 billion and because the Government would not draw any out of the banks some years ago, we were asked to raise the debt limit to tide us over a period of strain. How do you feel about the Federal highway program, for yourself, and for the Bankers Association? Do you know what their position is? Mr. BELLAMY. I have not discussed that with them; no. Mr. THOMPSON. Do you feel it had to be done or should have been done? Mr. BELLAMY. I am really not in a position to say, Mr. Thompson. Mr. THOMPSON. Well, in your testimony, if you forgive the suggestion, it looks as though you are opopsed to what we are trying to do to help the combination of the farmer and the consumer. This is one of the few bills we have which work both ways. If it is successful, the farmer will get his products marketed more readily and the consumer will have to pay less money. I certainly hope the association will give it some more thought, and perhaps, if they will visit some of the markets that members of the committee have visited, they will feel there is an emergency. The CHAIRMAN. Mr. Anfuso. Mr. ANFUSO. Mr. Bellamy, are you acquainted with the abominable condition of these marketing areas in the greater cities? Have you visited any of these places? Have you seen the pictures which have been passed around here of the conditions which exist in some of our great cities? Mr. BELLAMY. No; I have not visited them. Mr. ANFUSO. Haven't seen them? Mr. BELLAMY. No, sir. Mr. ANFUSO. And you have not seen the actual bad conditions which exist there; have you? Mr. BELLAMY. No. Mr. ANFUSO. Let me ask you this: Suppose small-business people which usually operate these markets, do not have the means to finance either the marketing facilities, nor the means to obtain the necessary financing from the Small Business Administration as you suggested, do you still believe it is wrong for the Government to step in and help both the farmer and the consuming public by legislation such as is proposed here, to assist the municipalities where these markets exist, to bring about the necessary changes which could not be brought about otherwise? Mr. BELLAMY. Well, I think it is a local community obligation. Mr. ANFUSO. Well, I disagree with you. I think farming products are shipped in interstate commerce, isn't that correct? Mr. BELLAMY. Yes. Mr. ANFUSO. They come from all parts of the United States. They reach a marketing area in New York City, let us say. Don't you think the consuming public in New York City is entitled to get those products at the cheapest price possible? Mr. BELLAMY. Well, it would be advantageous for the public to have the cheap prices but I still say that it is an obligation on the local community to provide these facilities. Mr. ANFUSO. Well, assuming that the cities cannot do it? After all, a municipality is a part of government. Assuming that a municipality cannot do it? Don't you think it is the function of Government to help both the farmers who deal in interstate commerce and the consuming public? Mr. BELLAMY. Well, I would say if the municipality cannot do it, in all probability it would be an unsound project. Mr. ANFUSO. The municipalities today can hardly meet their budgets. You know that, and they are all practicing economy and paying all kinds of interest rates on bonds, and so forth, and they cannot undertake projects of this kind which I think belong in the interstate field. I think that what the consumer buys, products which come from all over the United States, is something which should concern the Government. The price which the farmer gets for products which are produced in Mississippi and finally lands in New York City, is a matter of interest to the Government also. I think the Government has a perfect right to step in where other facilities cannot do it. That is all we are trying to do here. The CHAIRMAN. Mr. Tewes. Mr. TEWES. Mr. Bellamy, the fact that things are rough in these marketplaces, does not necessarily mean that the Federal Government has to do the improving. As a matter of fact, we had some testimony here that in Philadelphia new construction has been done by private capital and I think in the chairman's own town it was done by private capital. So the fact that the situation is bad, does not necessarily mean we need this legislation, does it? Mr. BELLAMY. Correct. Mr. TEWES. Now, with regard to the questions that Mr. Bass directed to you: He said he had studied economics, but he asked you if there was inflation on the farm. Wasn't he sort of confusing the words prosperity and inflation? It is true that interest rates have gone up in the bank because of inflation and the farmer has to pay more so there is inflation on the farm? Mr. BELLAMY. Possibly. Mr. TEWES. Thank you. That is all. The CHAIRMAN. Well, you said increased interest rate was prompted by inflation. I thought inflation existed when you had an abundance of money, rather than a shortage. Mr. BASS. That is what I always thought. The CHAIRMAN. The banks do not have the money to lend that they used to have. Mr. BELLAMY. That is correct. The CHAIRMAN. You used the word "subsidy" in connection with the discussion of this bill. I want you to point out to me wherein there is any subsidy involved in this program. Mr. BELLAMY. Well, a $25 million insurance fund set up or onefourth of the amount permitted on an overall lending total, I would think would be the The CHAIRMAN. The loans are to be amortized over a long period of years and are supposed to be self-liquidating, and if it is amortized over a period of years and is self-liquidating where could there be any subsidy? Mr. BELLAMY. Is there any assurance this fund will be repaid? The CHAIRMAN. The loans made by the agency will be repaid, and it is conceivable if the operations are of such magnitude as we have been talking about-it is conceivable the Government capital will be retired. You mention subsidy. I have here a study made by our staff. You say that it is all right apparently if these agencies that are now in existence want to make these loans, Federal Housing and the other agencies Small Business and Bankers Cooperatives. You are not advocating a repeal of those agencies? Mr. BELLAMY. Not in this statement. The CHAIRMAN. You are in favor of repeal? Mr. BELLAMY. I would say my personal opinion is the sooner we could repeal them, the better it would be. The CHAIRMAN. Do you know any bank in America that would make the type of loan contemplated by this legislation? Do you know any group of banks or insurance companies or group of insurance companies that would make these loans, under this bill? Mr. BELLAMY. No. The CHAIRMAN. Do you know of any bank in America that has made a similar loan? Mr. BELLAMY. On marketing facilities? The CHAIRMAN. To enable marketing authorities and municipalities to build marketing facilities? Mr. BELLAMY. Only just what I have heard in the testimony that several marketing facilities have been financed privately. The CHAIRMAN. Not through banks. You do not make any 10-year loans? Mr. BELLAMY. Ten-year loans? Yes; we make 10-year loans. Mr. BELLAMY. No, sir; through our commercial department. The CHAIRMAN. What is the longest loan you make in commercial banking activities? Mr. BELLAMY. A direct loan-10 years is the longest. We have a few under the new act-I think we have one that runs 15 is a real-estate loan. years. That The CHAIRMAN. A real-estate loan running for 15 years? Mr. BELLAMY. Yes, sir. The CHAIRMAN. At what interest rate? Mr. BELLAMY. Five and a half-5 percent. The CHAIRMAN. Well, what kind of real-estate loan is it? Is it a loan to finance a subdivision? Mr. BELLAMY. Residental. The CHAIRMAN. A residential loan? |