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STATEMENT OF HALVORD KLOSTER, CASHIER FIRST LIBERTY SAVINGS BANK, EAGLE GROVE, IOWA; SECRETARY-TREASURER FIRST NATIONAL FARM LOAN ASSOCIATION, EAGLE GROVE, IOWA; AND SECRETARY-TREASURER OF THE NATIONAL FARM LOAN ASSOCIATION OF SECRETARY-TREASURERS IN THE EIGHTH FEDERAL LAND BANK DISTRICT

The CHAIRMAN. You may give your name, occupation, and address.

Mr. KLOSTER. My name is Halvord Kloster. I am cashier of the First Liberty Savings Bank, Eagle Grove, Iowa; secretary-treasurer of the First National Farm Loan Association, Eagle Grove, Iowa; and secretary-treasurer of the National Farm Loan Association of Secretary-Treasurers in the Federal Land Bank District. The CHAIRMAN. You may proceed.

Mr. KLOSTER. I represent 430 national farm-loan associations in the eighth Federal land bank district, which district comprises the four States of Iowa, Nebraska, South Dakota, and Wyoming. This territory is a large portion of that area for which you gentlemen are going to give farm relief by the proposed new McNary bill. I refer to section 12 of said bill which says:

The board shall in cooperation with any Government establishment in the executive branch of the Government avail itself of the services and facilities thereof in order to avoid preventable expense or duplication of effort.

This is principally the reason for our appearing before your committee. At the present time we have a system in the field that is thoroughly cooperative and standardized along the same lines as those proposed in the McNary bill to provide cooperative stabilizing associations, the only difference being the nature of the commodity which we handle ours being farm loans, and the proposed new organization will handle the grain and livestock raised on the farm.

The Federal Land Bank of Omaha has been instrumental in securing $200,000,000 of farm loans to 36,000 farmers in the eighth district. Including the other 11 districts in the United States, it is evident that this system, is, therefore, the largest cooperative system in the world.

The eighth Federal land bank district has been an outstanding success in its operation, due to the fact that we have had able and efficient management at the head of the bank. And this system as a whole is at the present time efficiently in charge of Eugene Meyers, our present Farm Loan Commissioner, and under his management we feel the system is better managed than ever before.

The associations I represent in Iowa, Nebraska, South Dakota, and Wyoming are all in sympathy with the present McNary bill and we earnestly hope that it will be promptly passed in the extra session of Congress.

It seems to us, therefore, that the machinery which you are proposing to set up in this bill is in need of some financial associations that already have had the experience in handling finances on a large scale for Government agencies. The machinery is already created in the establishment we now have of the local National Farm Loan Association which will number over 6,000 in the United States.

There is no question that these associations could be of great assistance to you in placing the McNary-Haugen bill into operation at

once.

We wish to have no connection whatever with the cooperative marketing associations nor do we think that the Federal farm loan system should be in any way connected with the direct marketing of farm products at this time. That must necessarily be handled by local or newly established marketing associations to be managed by competent men selected by the proposed Federal farm board. What we stand ready to offer you is the assistance of the local associations now operating under the Federal farm loan system, to the extent that we can handle the funds to be used in connection with said marketing of crops and act purely as fiscal agent for the new proposed relief system.

The machinery is already here and in the majority of cases it is represented by secretary-treasurers who have had 10 years' experience in the handling of a large amount of money, and we believe them to be competent and able to be of valuable service to the plan now proposed in the new McNary bill.

The CHAIRMAN. The committee thanks you for your statement. Senator NORBECK. I should like to ask Mr. Kloster one question. The CHAIRMAN. Very well.

Senator NORBECK. You say that the association favors the present McNary bill. You have reference to the one without the equalization fee, have you not?

Mr. KLOSTER. The new bill.

Senator NORBECK. Has the association ever as such expressed itself on that question?

Mr. KLOSTER. Not except that at our last annual convention last fall I think the sentiment was very much discussed, and I took it from what we gathered at that convention that the equalization fee was at that time wanted in all the States which we represented, but due to change of conditions and to the result of the national election, we feel, of course, that the next best thing would be to get some measure through in spite of that.

Senator NORBECK. În other words, the attitude of your members seems to be that in order to make the tariff effective they thought the equalization fee was necessary?

Mr. KLOSTER. Yes, sir.

Senator NORBECK. Yielding to the political situation, they have sort of given up the idea of getting that kind of relief?

Mr. KLOSTER. They have.

Senator NORBECK. And they are hoping that they may get some partial relief under this other plan. Is that it?

Mr. KLOSTER. That is it.

Senator NORRIS. Did you favor the old McNary-Haugen bill, with the so-called equalization fee?

Mr. KLOSTER. I think the majority of the people in the Northwestern States did.

Senator NORRIS. Do you think that the new McNary bill without the equalization fee would bring the same relief that the other bill would have brought had it been signed instead of vetoed?

Mr. KLOSTER. I am not really prepared to answer that question, due to the fact that I am not entirely familiar with the proposed McNary bill.

Senator NORRIS. Then your organization is favoring something you are not familiar with?

Mr. KLOSTER. We are favoring, as we understand it, the principle. We favor the principle of the McNary bill.

Senator NORRIS. Which McNary bill?

Mr. KLOSTER. The new McNary bill.

Senator NORRIS. But you say that you do not understand it. Mr. KLOSTER. We understand it to be in sum and substance what the old McNary-Haugen bill was.

Senator NORRIS. Do you think that it is really the same in effect? Mr. KLOSTER. We do.

Senator NORRIS. I do not understand you.

Mr. KLOSTER. Will you ask your question again?

Senator NORRIS. When you say that you think it is the same in effect, do you mean that it is the same in effect as the McNaryHaugen bill that was vetoed?

Mr. KLOSTER. We think so; yes, sir.

Senator NORRIS. Do you think President Hoover would sign it? Mr. KLOSTER. I could not answer that question.

Senator NORRIS. You know that he was opposed to the old McNary-Haugen bill, do you not?

Mr. KLOSTER. Yes, sir.

Senator NORRIS. If you have a new bill that is just the same, do you expect him to sign it, or do you expect to fool him and make him believe that it is something different from what it is?

Mr. KLOSTER. Well, Senator Norris, I am really not prepared to answer any questions that are not germane to this hearing.

Senator NORRIS. Do you think that that is not germane?

Mr. KLOSTER. I do not think it is.

Senator NORRIS. Would you be in favor of working out a bill here, knowing it was going to be vetoed?

Mr. KLOSTER. Of course, the association I represent, our interest is merely to place our little association at the service of the new McNary bill, whatever shape or form it comes before you.

Senator NORRIS. I think we would all be glad to do that, if it would be of any help, but as I understand it, the position that you are assuming for all these organizations that you represent. it is first that you are in favor of the old McNary-Haugen bill with the equalization fee, but you realize that President Hoover is opposed to that and will not sign it. Now, you are favoring another bill that you think is just the same, and you expect him to sign that.

Mr. KLOSTER. We would expect him to sign that without the equalization fee.

Senator NORRIS. Then he must be either fooled or wrong, or your association must be wrong when you think that it is in effect the same as the old bill.

Mr. KLOSTER. I could not say as to that.

Senator NORRIS. Time will show, I suppose.
Mr. KLOSTER. Yes, sir.

STATEMENT OF S. J. COTTINGTON, STANHOPE, IOWA, PRESIDENT FARMERS' GRAIN DEALERS' ASSOCIATION OF IOWA; DIRECTOR OF THE NATIONAL FARMERS' GRAIN DEALERS' ASSOCIATION

The CHAIRMAN. Please state your name and occupation.

Mr. COTTINGTON. My name is S. J. Cottington.

The CHAIRMAN. Whom do you represent? First, what is your

business?

Mr. COTTINGTON. Farmer.

The CHAIRMAN. Where do you live?

Mr. COTTINGTON. Stanhope, Iowa.

The CHAIRMAN. Do you represent any farm organizations?

Mr. COTTINGTON. I represent the Farmers' Grain Dealears' Association of Iowa as their president; and I am also a director of the National Farmers' Grain Dealers' Association, with which our State association is affiliated.

Senator THOMAS of Idaho. Is it an association of cooperative concerns?

Mr. COTTINGTON. Yes, sir.

The CHAIRMAN. You may proceed.

Senator NORBECK. The association is made up primarily of elevator organizations?

Mr. COTTINGTON. Yes, sir.

Senator NORBECK. Do you limit them to those that are cooperatively operated, or do you admit those that were organized on a stock and dividend basis?

Mr. COTTINGTON. I will have to explain that a little. A good many were organized under the stock plan.

Senator NORBECK. Then it is not entirely cooperative?

Mr. COTTINGTON. But they operate cooperatively. They were or ganized under the corporation plan, because of the law at that time. There was no cooperative law at that time. A good many of them have not changed over, but they operate on the cooperative plan. The best elevators we have were organized as a corporation, but they operate cooperatively. That was done because there was no law at that time for them to organize under.

The CHAIRMAN. You may proceed.

Mr. COTTINGTON. This national is composed of about 5,000 local farmers' elevators in the Middle West States. Has capital investment of approximately $65,000,000; has a stockholder membership of 500,000 and patrons of over 1,000,000. Also am president National Farmers Elevator Grain Co., cooperative, which is a part of the National Federation of Cooperative Grain Sales Agency, which operates on the different terminal markets and handled over 36,000.000 bushels of grain last year. These federated corporations are made up of the individual cooperative and local elevators in the different States.

Our organization has in mind some definite ideas and policies which we think would relieve the agricultural situation. While possibly this may not be the correct committee to work out some of the necessary things that must be done to get relief, but we do hope for the cooperation of this committee to help work out the proposition as a whole.

1. We think that a Federal farm board should be set up. This board should be in a position to do investigation and research work, toward the stabilizing production as well as marketing. Should be independent and be given broad powers, farm-minded, and know the farmer situation, so that they may be able to do the things that are necessary to be done to give farm relief and make it effective.

2. We think it would be desirous that the members of this board be appointed from the leading cooperative commodity organizations rather than territorially or politically.

3. Advisory council boards should be created from the different cooperative-marketing agencies or organizations.

4. We do not think that there should be any fund for the purpose of promoting or organizing new cooperative-marketing organizations, but a small fund may be desirous for the strengthening of the cooperative organizations that are now in existence.

TARIFF

This is probably not proper to come before this committee, but it is in our program of farm relief.

First, we recommend that an energetic and concerted effort be made by the cooperatives and other farm organizations of the country looking to the creation of adequate and effective tariffs on such agricultural commodities as it is believed by the respective commodity-marketing organizations that their commodities may be benefited by the tariffs.

We believe that the most practical way of bringing these matters to the proper consideration of the Congress will be that the various cooperatives shall either individually or jointly present briefs concerning the various schedules in which they are interested, and that jointly we should create in the minds of farmers and the public generally the justice of our contention that there shall be no discrimination between agricultural and manufactured products so far as the benefits from tariff protection is concerned.

RECLAMATION AND WATERWAYS

We recommend that organized agriculture should make a determined effort in opposition to the creation of new or to enlarge existing reclamation and irrigation projects until the existing production from the farms of the United States is on a profitable basis. It appears to us that it is not only inconsistent but contrary to public welfare that we call the Congress together to deal with the subject of farm relief on the one hand, and on the other aggravate the problem by bringing new and otherwise unproductive lands into production.

It would seem that it would be more wise to develop the inland waterways to decrease the cost of transportation of the commodities of the Middle West; possibly the reduction of freight rates may be secured in some way that would be more beneficial than the development of arid lands.

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