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in good faith and peaceful, adverse possession, either in person or together with his ancestors or grantors, for more than 20 years, has placed valuable improvements thereon and/or has reduced part thereof to a state of cultivation, is in equity entitled to a patent therefor upon payment of the customary price of $1.25 per acre. A letter from the Secretary of the Interior and a memorandum by the Commissioner of the General Land Office are attached and will be self-explanatory.

DEPARTMENT OF THE INTERIOR,

Washington, January 5, 1932. Hon. GERALD P. NYE, Chairman Committee on Public Lands and Surveys,

United States Senate. My Dear Mr. Chairman: In compliance with your request of December 21, 1931, for an opinion as to the merits of S. 1588 which is a bill that would authorize the Secretary of the Interior to issue patents for lands held under color of title, I transmit herewith a memorandum on the subject that has been submitted by the Commissioner of the General Land Office. After a review of the proposed measure, I agree with the commissioner. Very truly yours,

Ray LYMAN WILBUR,

Secretary.

DEPARTMENT OF THE INTERIOR,

GENERAL LAND OFFICE,

Washington, January 5, 1932. Reference is had to the attached letter from Hon. Gerald P. Nye, chairman Committee on Public Lands and Surveys, United States Senate, transmitting for report S. 1588 to authorize the Secretary of the Interior to issue patents for lands held under color of title.

The bill proposes to authorize the issuance of patents for lands in New Mexico under certain circumstances when the lands have been held under claim or color of title for more than 20 years on the payment of $1.25 per acre, with a reservation of the coal and all other minerals to the United States.

This bill is identical with S. 4308, as amended, on which the Committee on Public Lands and Surveys submitted a favorable report, No. 884, in the second session of the Seventy-first Congress, notwithstanding the report of this department that there was no necessity for the enactment of the bill because of the general color of title act of December 22, 1928 (45 Stat. 1069), and the bill passed the Senate June 9, 1930.

Said bill is similar in the matter of purchase price to the act of June 8, 1926 (44 Stat. 709). However, the said act of June 8, 1926, provided for the patenting of lands not known to be mineral, whereas the said bill provides for a reservation to the United States of coal and other minerals contained in the land.

The said act of June 8, 1926, related only to New Mexico. By the act of December 22, 1928 (45 Stat. 1069), similar provision (with reservation to the United States of coal and other minerals contained in the land) was made for the purchase of public land held under color of title without reference to any State, the purchase price to be “not less than” $1.25 per acre. The regulations issued under said act, contained in Circular 1186, dated April 15, 1929, provide for the payment of a purchase price to be fixed by appraisement in accordance with the act and hold that the said act impliedly repealed and superseded the local act of June 8, 1926 (supra), relating only to New Mexico.

The effect of the enactment of the said bill would be to require New Mexico claimants to pay $1.25 per acre for lands purchased under color of title, whereas claimants in other States under the said act of December 22, 1928, would still be required to pay an appraised price of not less than $1.25 per acre. I see no good reason for this lack of uniformity.

In view of the foregoing it is recommended that the proposed bill be not enacted into law.

C. C. MOORE, Commissioner. O

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Mr. NORBECK, from the Committee on Banking and Currency,

submitted the following

REPORT

(To accompany H. R. 6172)

The Committee on Banking and Currency, to which was referred the bill (H. R. 6172) to amend the Federal farm loan act,' as amended, to provide for additional capital for the Federal land banks, and for other purposes, has considered the same and report favorably thereon with the recommendation that the bill do pass as amended The amendments are hereinafter set forth in detail.

PURPOSE OF THE BILL

The purpose of this bill is to provide adequate capital for the Federal land banks, to enable them to meet their obligations upon their bonds and to relieve the pressure upon deserving borrowers from the Federal land bank system by providing the banks with funds with which to meet their obligations and by creating a power in the banks to enter into contracts for extensions in worthy cases. The Federal farm loan act provides a capital for the Federal land banks equivalent in amount to 5 per cent of existing loans. In addition to this there is in the capital structure of the banks $205,000 residue left over from the original subscription by the United States. The unpaid principal of the outstanding loans of all the Federal land banks of date, November 30, 1931, was $1,171,700,000. The capitalization, therefore, is approximately $65,000,000. The banks have outgrown this capital and due to failure to provide adequate reserves, they are not in position to meet the emergency caused by the depression and by conditions of drought in many sections of the country. This situation is reflected in depreciated capacity for making new loans to borrowers and has made it necessary for many of the banks to pursue a vigorous collection policy. It has, no doubt, contributed to the depreciation in the market values of the outstanding bonds. The Federal land bank bonds as of date January 5, 1932, vary in bid price from 70 on the 4 per cent bonds to 92 on the 411 per cent bonds maturing December, 1933. The depreciation in the market value of the bonds makes it inexpedient for the banks to issue new securities and, therefore, directly curtails the capacity of the banks to make new loans to borrowers.

The Federal farm loan act originally provided for subscription by the United States of $750,000 to each of the 12 Federal land banks. Under existing law the National Farm Loan Associations are required to subscribe to the capital stock of the Federal land banks to the extent of 5 per cent of each loan made, and the original capital stock acquired by the United States has been repaid by the process of issuing stock to the associations until the same has been entirely repaid, except for a sum of approximately $205,000 above referred t. In the most substantial sense the banks are, therefore, owned by the borrowers who are stockholders in the associations, but the banks are a governmental agency in that they are created under an act of Congress and are administered by a Federal board and operate under the name of Federal land banks. An eminent legal authority has held that “The obligations must be regarded as obligations having the support of the good faith and credit of the United States. And while such obligations, because of the nature of sovereignty, confer no right of action against the United States without its consent, being only binding on the conscience of the sovereign,' and hence in this aspect invite reliance on the sense of justice of Congress, still the actual relation of the Government to the issue of these bonds affords additional grounds for sustaining their validity.” The bonds are tax exempt, and there is stamped upon each bond a statement to the effect that it is the obligation of an instrumentality of the Federal Government. It is thought by the committee, therefore, that there is sound justification for the enactment of this resubscription bill, and that on account of the depression there is a strong reason why power to make agreements of extension should be vested in the Federal land banks. In the hearings conducted by the subcommittee witnesses from the Farm Loan Board, from the Federal land banks, and from agricultural organizations testified in behalf of the bill. The committee has recommended in an amendment hereinafter referred to that the authorized resubscription carried in the bill passed by the House of Representatives be increased from $100,000,000 to $125,000,000. This enlarged capitalization will more than treble the capital of the banks. It will strengthen the position of the outstanding bonds and enable the banks to make a larger volume of new loans. In the consideration of this bill it has been impossible for the committee to estimate the future requirements on the land bank system, and it has been thought wise from every standpoint to increase the capital authorized from $100,000,000 to $125,000,000 in order to insure that this amendatory act authorizes an adequate capital structure.

The total delinquency at this time is approximately $16,000,000. The sytem owns approximately 408,000 first mortgages, of which about 1 per cent are now in process of foreclosure. This data indicates the inherent soundness of the system, and there is every expectation that the money to be advanced under this amendatory act will be ultimately repaid to the United States.

AMENDMENTS TO THE BILL

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The amendments above referred to made by the committee to the bill as it passed the House are as follows:

On page 1, between lines 4 and 5, insert the following: "inserting after the word 'subscribed in the sixth paragraph thereof the words 'by national farm loan associations, by borrowers through agencies, and by borrowers through branch banks'."

"SEC. 2. Section 5 of the Federal farm loan act, as amended (U. S. C., title 12, ch. 7, secs. 691-697), is further amended by".

On page 2, lines 10 and 11, strike out “$100,000,000" and insert in lieu thereof “$125,000,000",

On page 2, line 15, strike out “from time to time".
On page 2, line 16, before the comma insert "at any time".
On page 2, line 19, after “may” insert "at any time”.

On page 2, lines 20 and 21, strike out "out of available resources of said bank” and insert in lieu thereof “if in the opinion of the board the bank has resources available therefor”.

On page 3, line 1, strike out“2” and insert in lieu thereof “3.

On page 3, line 3, strike out"amended by" and insert in lieu thereof "amended, effective July 1, 1932, by".

On page 3, lines 5 to 7, inclusive, strike out “Effective beginning with the first full semiannual period ending June 30 or December 31, following the enactment of this paragraph, every”, and insert in lieu thereof “Every”.

On page 3, line 7, after “shall” insert "semiannually”.
On page 3, line 8, strike out "semiannually”.

On page 3, line 11, strike out "shows a credit balance" and insert in lieu thereof "is".

On page 3, line 15, beginning with "No" strike out through the word "banks”, in line 25, and insert in lieu thereof the following:

After deducting the 50 per centum or the 10 per centum herein directed to be deducted for credit to reserve account, any Federal land bank may declare a dividend or dividends to shareholders of the whole or any part of the balance of its net earnings, but only with the approval of the Federal Farm Loan Board. In the case of Federal land banks the requirements of this paragraph shall be in lieu of the requirements of the first three sentences of the first paragraph of this section and in lieu of the requirements of the first sentence of the second paragraph of this section.

On page 4, line 1, strike out“3and insert in lieu thereof "4".

On page 4, lines 3 to 5, inclusive, strike out "beginning with the first full semiannual period, ending June 30 or December 31, following the enactment of this Act” and insert in lieu thereof “July 1, 1932”.

On page 4, line 8, before “carry” insert "semiannually"; and after “account” strike out“semiannually.”.

On page 4, line 9, strike out “20' and insert in lieu thereof “10”. On page 4, line 10, after the word "to"insert“25 per centum of.

On page 4, line 12, strike out “shows a credit balance” and insert in lieu thereof “has reached the sum of 25 per centum of”.

On page 4, line 13, strike out “stock 5" and insert in lieu thereof "stock, 5".

On page 4, line 13, after “be” insert "semiannually".
On page 4, line 14, strike out "semiannually".
On page 4, line 17, strike out "20" and insert in lieu thereof “l.be

On page 4, beginning with line 22, strike out through line 8 on page 5, and insert in lieu thereof the following:

Sec. 5. Section 13 of the Federal farm loan act, as amended (U. S. C., title 12, ch. 7, sec. 781), is amended by adding at the end thereof a new paragraph to read as follows:

“Tenth. When in the judgment of the directors conditions justify it, to extend, in whole or in part, any installment (which includes amortization and interest) that may be or become unpaid upon any mortgage, and to accept payment of such unpaid installment during a period of five years or less from the date of such extension in such amounts as may be agreed upon at the date of making such extension. Such amounts shall be added to and payable at the same time as the amounts of the regular installments to become due during the period of extension."

On page 5, line 9, strike out “5” and insert in lieu thereof “b”.

On page 5, line 13, strike out "as amended (U. S. C., title 12, ch. 7)and insert in lieu thereof "and/or any act or acts amendatory thereof or supplementary thereto”.

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