LAND BANK COMMISSIONER LOANS FRIDAY, JULY 30, 1954 HOUSE OF REPRESENTATIVES, The committee met, pursuant to call, at 10 a. m., in room 1310, New House Office Building, the Honorable Clifford R. Hope (chairman), presiding. The CHAIRMAN. The committee will come to order. The committee has met this morning for consideration of the bill, S. 3339. At this point in the record we shall insert a copy of the bill. (The bill referred to is as follows:) [S. 3339, 83d Cong., 2d sess.] AN ACT To authorize the Farm Credit Administration to make loans of the type formerly made by the Land Bank Commissioner Be it enacted, etc., That the Farm Credit Administration is authorized to exercise the authority conferred upon the Land Bank Commissioner by part 3 of the Emergency Farm Mortgage Act of 1933 (12 U. S. C. 1016-1019). SEC. 2. Section 32 of the Emergency Farm Mortgage Act of 1933, as amended (12 U. S. C. 1016), is amended— (a) By amending the first sentence thereof (12 U. S. C., 1946 edition, 1016 (a)), as partially repealed by section 206 (h) of the Act of June 30, 1947 (61 Stat. 208), to read as follows: "Loans to any farmer as hereinafter provided shall be secured by a first or second mortgage upon the whole or any part of the farm property, real or personal, including crops, of the farmer."; (b) By substituting "$15,000" for "$7,500" in the second sentence thereof (12 U. S. C. 1016 (b), first sentence); (c) By amending the proviso at the end of the fourth sentence thereof (12 U. S. C. 1016 (c), first sentence), to read as follows:"Provided, That any borrower under this section may be permitted to defer payment of the principal portions of installments on his loan for a period not exceeding five years under regulations prescribed by the Farm Credit Administration"; and (d) By amending the eleventh sentence thereof (12 U. S. C. 1016 (g), first sentence), to read as follows: "The Farm Credit Administration shall make loans under this section on behalf of and in the name of the Federal Farm Mortgage Corporation, but no such loans shall be made after June 30, 1959, except for the purpose of refinancing loans previously made under this section." SEC. 3. The second sentence of section 4 (b) of the Federal Farm Mortgage Corporation Act, as amended (12 U. S. C. 1020d, second sentence), is amended by striking out "at a rate not exceeding 5 per centum per annum" and inserting in lieu thereof "at a rate not exceeding the rate of interest on the loan". Passed the Senate July 17 (legislative day, July 2), 1954. Attest: J. MARK TRICE, The CHAIRMAN. We are glad to have with us this morning our two distinguished colleagues from the State of New Mexico, Mr. Dempsey and Mr. Fernandez, and also our distinguished former colleague here, and the former Secretary of Agriculture, who is now the present senior Senator from New Mexico. If it is agreeable with you, Senator, we shall be glad to have you go on first, if you will. STATEMENT OF HON. CLINTON P. ANDERSON, A UNITED STATES SENATOR FROM THE STATE OF NEW MEXICO Senator ANDERSON. I would appreciate that very much, Mr. Chairman, if I might. We are having a meeting of the Interior Committee now, trying to get rid of our calendar. The Senate always gets in that shape about this time of the year, and I am glad to be able to come here for a few minutes, and visit with you, Mr. Chairman, and members of the committee. The bill, S. 3339, was introduced at a time when it was not at all certain that it would ever be needed, but it was introduced because Senator Schoeppel and I, who presented it, thought that there might be a possibility that it could be required some time very suddenly, and that if it were required, it should be available to the Department of Agriculture to utilize as it saw fit. At no time will I say that there are conditions now which make it absolutely necessary, but I also say that I believe there are signs in the skies which indicate it could become necessary, and if it should become necessary I see no reason why the Department of Agriculture, in its wisdom, should not be permitted to make use of this well-established device. Now, why do I say that? This matter was called to my attention at a meeting of the Farm Credit Groups of the State of New Mexico in about January or February of this year. The group had a meeting at Albuquerque of all the people connected with that field of endeavor, and at that meeting one of the speakers said that he was glad to see all the types of farm legislation being introduced, but that he did not think that price supports were the only farm problem, neither did he think that many other types of legislation were the only problem. He thought that the one thing that ought to be done was to grant permission to the Department of Agriculture to make use of the landcommissioner loans. That was Mr. R. F. Trugillo, Sr., who is an officer of the National Farm Mortgage Association, and whose home is in Harding County, N. Mex., although the association with which he is affiliated has its headquarters at Springer. I went up to him after the meeting was over, and I said: "Surely you do not really mean we ought to have the old land-bank commissioner loans?" He said, "Yes; I do." He wrote me a letter a little while afterward, and said that he thought we ought to have them. He said he saw more use for this kind of credit within the next 24 months than ever before in the last 30 years, and he went on by saying that he felt there was a definite need for this type of credit, regardless of anything else. Well, I got so interested in his point of view, and I began trying to write to some other people and I got from the people in New Mexico and the petere 2 Thes thing could be very bor Now, there the womment cannot contend with. as happened a year or s made availabiť. support under the met head of cattle, and once in a while a mu credit which the bas to say that he shout some type of extract get from his ban These people vile bese drought cycles & in New Mexico. fo realize that giving program availabe Ther remer very well. It was i the ordinary rue walk in and grove a first mortgage Ta addition, he Las mortgaged. but t through and wLOYE to sweat it throug He did not warn cattle business. I do not wan new variety of ma thought at all X. down in the done a good joj je the other dar fr nt upon that? I do not, because of the fact that the Farmers can make loans for refinancing farms, but it pt where the farm is being purchased or en were a year ago, but he insisted that he thought things were going to be worse, and I tried to console him, but I did not succeed very well. I said to him: "Do you think if we had the old commissioner land-bank loan available, handled in the Department of Agriculture, that if conditions got so much worse as you say they are, that would be of any help to you? He said, "Very positively," he thought it would be helpful and very essential. He said, "We think we can see these people through and we are determined to see these people through. Our bank and the other bank in the community is going to go as far as it can possibly go to help them along." We have had good help from the Department of Agriculture. We have had every assistance that we can imagine, but these men have been through year after year after year of drought, and their credit facilities are simply gone. I went into the town of Fort Sumner, N. Mex., and I met there with a group in the office of the bank. It was only a branch bank, and the officers of that bank brought in a group of farmers-nearly all of them cattle men-and talked about this type of loan. They were very anxious to know if we were making any headway with this. They knew I had introduced, along with Senator Schoeppel, a bill to make this possible. I said "Why are you so concerned about it?" This one individual said to me that he had a ranch which he thought was worth $200,000 or $300,000. He said the value of the ranch changed with the value of the cattle because it is directly tied to the fact that you have a place with so many cattle on it, and you multiply that by the cost of the cattle, and try to arrive at the value of the ranch. But, he said, "Certainly, $250,000 is a fair evaluation." He said, “I owe $150,000 on my cattle, and a few months ago they were worth about $200,000 or $250,000." He said "I am worth somewhere around $500,000 in assets and $150,000 in debts," but he said "I have tried to get a loan on my ranch and I cannot get a loan of any size because if we have 1 more year of drought and cattle market prices stay down, I have got just some barren sand." He said “If I had this loan I would know that within a couple of years after the drought I could come back into the cattle business." He said "My daddy and I have seen them all." He meant that. He was a man 65 years old, and between his daddy and himself they had gone through about every drought period in that part of the country. They had seen the most wonderful grass you could ever imagine, and they had seen a cycle of 12 or 15 years without grass. They went through the very tough days of the drought back in 1933, 1934, and 1935. These men are determined to hang on to the cattle properties which they have, because they know no other business. However, they feel that the land bank commissioner loan would be a good thing and, for that reason, I introduced the bill, after consultation with the Senator from Kansas, who had driven with me through portions of Colorado, Kansas, Oklahoma, Texas, and New Mexico, checking on drought conditions while serving on the committee where we were associated with Mr. Poage and Mr. Belcher. It was because of that drive and those experiences and those conversations, coupled with the recent drought, that the bill was introduced. Mr. Chairman, I have tried to say frankly that I think we can. get along without the legislation today, but if the Senate should reduce its talk-and I would not say quit its talk-but reduce its talk in the next few days, we might be able to finish by the end of this coming week and adjourn the Congress. If so, we have ahead of us the very bad period of the rest of August, all of September and the first couple of weeks in October when droughts can be serious. I want only to hand to the Department of Agriculture an additional weapon which it can use to combat distress among the farmers, and say to them "When you are making loans to these farmers, when you are supplying them with protein meal where you have to, where you are making the hay program work as you have prepared to make it work, I wish you would or could have available the means of making the old commissioner type loan, if in your judgment that is necessary." That is all I had in mind saying, Mr. Chairman. The CHAIRMAN. Senator Anderson, I am sympathetic with the situation which you have in New Mexico, and which we have in Kansas, but probably not to so great an extent as you have it in New Mexico, but it happens in all of that area out there, as you very will know. Senator ANDERSON. Yes, sir. I want to say to the chairman that I enjoyed very much when Senator Schoeppel and I were on that trip to have the able chairman of this committee to come to one of our meetings, and participate, and give his very good counsel and advice to it. I am not in any way reluctant to admit that he knows the situation as well as any of us. I do not claim we have any special wisdom in this situation which is not available to him. The CHAIRMAN. We were very happy to have you come to my home county in Kansas, and I know you were putting in long hours and hard work, on that trip. I recall that you got into Garden City at about 3 o'clock in the afternoon, after having had no lunch, and from there you went farther down. I know you did do a very fine job on that trip, in checking up on the situation. However, here is the thing which disturbs me somewhat in the connection with the bill: Under the provisions of this bill, if we reinstate the commissioner loans, all that could be done would be to add an additional 10 percent to the loan which can be made now by the Federal land bank. That is, they have the authority to make a loan up to 65 percent of the value, and this would enable them to go up to 75 percent, which would not be a very large increase over the amount of loan which can be gotten now, or over the supplemental loans which might be added. I am wondering if, under the provisions which are in effect now relating to special livestock loans, as well as other provisions which deal with loans made by the Farmers Home Administration, it would not be possible to do just as much, if not more, than could be done by extending or by restoring the power of the Farm Credit Administration to make commissioner loans. Do you wish to comment upon that? Senator ANDERSON. I do not, because of the fact that the Farmers Home Administration can make loans for refinancing farms, but it cannot refinance except where the farm is being purchased or en 52463-54-6 |