Page Six 



THE I. A. A. RECORD 



March, 1933 



¥ 



farmer at a rate of interest not to 

 exceed 3 per cent. 



(3) Strengthen the Federal land 

 banks by: 



(a) Subscription of $100,000,000 

 of non-voting stock in the 

 Federal land banks by the 

 United States Treasury, to be 

 repaid out of future earn- 

 ings, to provide additional 

 funds for new loans, for 

 carrying delinquencies and 

 for aiding in the sale of new 

 bonds. 



(b) Appropriation of $50,000,000 

 to $60,000,000 to the Federal 



. ♦ land banks by Congress for 

 the specific purpose of mak- 

 ing extensions to borrowers. 

 These extensions should be 

 added to the principal debt 

 and amortized over the life 

 of the original loan. 



(4) Strengthen the national farm 

 loan associations, as follows: 



(a) Subscription of 50 to 75 mil- 

 lion dollars to the capital 

 stock of solvent national farm 

 loan associations by the 

 United States Treasury, to be 

 repaid out of future commis- 

 sions and dividends. 



(b) Permit direct loans by the 

 Federal land banks to farm- 

 ers, but require such bor- 

 rowers to subscribe to the 

 stock of the system and to 

 join national farm loan asso- 

 ciations whenever as many 

 as ten farmers in that local- 



— ity become borrowers. 



(c) Amend Federal Farm Loan 

 Act to provide a fixed com- 

 mission rate for the associa- 

 tions at V4 of 1 per cent semi- 

 annually on the unpaid prin- 

 cipal of any loan endorsed 

 by such association. The 

 banks should be required to 

 repay any commissions which 

 they have denied to associa- 

 tions heretofore. 



(5) Reduce the interest rate on 

 existing loans and on new loans 

 in the Federal Farm Loan system 

 very materially. A rate of 5 per cent 

 is too high under present and prob- 

 able future conditions. Govern- 

 ment guarantee of new issues of 

 Federal land bank bonds would 

 surely result in lowering the inter- 

 est rate. - - 



(6) Liquidate the joint-stock land 

 banks without injury to the Fed- 

 eral land banks and repeal the sec- 

 tions of the Federal Farm Loan 

 Act which relates to the joint-stock 

 land banks. 



How Plan Operates 



Farmer owes $12,000 at average 

 interest rate of 7 per cent. 



Present appraised value of his 

 property $11,000. 



Original appraised value of his 

 property $22,000. 



Foreclosure would wipe out all 

 of the farmer's equity and entail 

 losses to the creditors, even if a 

 cash buyer could be secured, which 

 is doubtful. 



Farmer appeals to local debt con- 

 ciliation commissioner, who gets to- 

 gether the debtor and his creditors 

 and works out a settlement as fol- 

 lows: 



Creditors are willing to scale 

 down principal to $8,000 if paid 

 cash in full. 



A loan of $8,000 at 3 per ceftt in- 

 terest is obtained for the farmer, 

 with the proceeds of which he pays 

 off his creditors in full. 

 RESULTS: 



Farmer's debt is reduced 33-1/3 

 per cent and his interest charges 

 are reduced from $840 to $240 an- 

 nually. 



Creditors, get rid of frozen assets 

 and obtain $8,000 in cash which can 

 be put to immediate use. 



The loan of the government 

 agency represents less than 75 per 

 cent of the value of all the farmer's 

 property, based on a new appraisal. 

 It may take a mortgage on the 

 land, a chattel mortgage on other 

 property, and, if necessary, a crop 

 lien, as security for the loan. 



; * :^ Hull Debt Bin V L H 



Another mortgage bill has been 

 introduced by Senator Hull of Ten- 

 nessee which would refinance farm 

 mortgages wholly through the Re- 

 construction Finance Corp., largely 

 disregard the Federal Farm Loan 

 system, financing only corporate 

 holders of mortgages, thus not 

 serving directly 60 per cent of the 

 farm mortgagors. This bill is ob- 

 jectionable to the Farm Bureau, 

 and is not making much progress. 



The A. F. B. F. likewise is seek- 

 ing to amend the R. F. C. Act so 

 that financial aid to co-operative 

 marketing activities, the acquisi- 

 tion of facilities for handling farm 

 crops, and similar functions will be 

 definitely authorized in the R. F. C. 

 law, as amended, beyond the power 

 of unfavorable interpretation by 

 legal counsel. The present farm 

 crop loan feature of the R. F. C. act 

 has been of no value to agriculture 

 because of adverse legal interpreta- 

 tion. 



Acreage Lease Plan 



Some support has been given to 

 a plan, along the line suggested by 

 Secretary Hyde, involving govern- 

 ment leasing of surplus acreage 

 formerly devoted to growing corn, 

 cotton, wheat and other crops. The 

 government would get its funds to 

 pay rental from a small fee or ad- 

 justment charge levied on the proc- 

 essors who handle the crops for- 

 merly produced on the rented acres. 

 The farmer who rents his acres to 

 the government is to be obligated 

 in some way not to put in equiva- 

 lent acreage somewhere else. 



"I feel that if we accept the 

 acreage rental plan, it will be given 

 us," said Mr. O'Neal in a recent 

 statement. "And, moreover, that is 

 all we will ever get in the way of 

 surplus control legislation. It is my 

 thought that we need to cover more 

 ground in surplus control legisla- 

 tion than merely to rent and with- 

 draw acreage from production. We 

 need to be on guard that instead of 

 getting a loaf in regard to surplus 

 control, we will be handed less than 

 one slice." 



Demand Freight Cut 



The recent petition of the Ameri- 

 can Farm Bureau Federation to the 

 Interstate Commerce Commission 

 asking for a general study of freight 

 rates on basic commodities with a 

 view towards a reduction has 

 created a tremendous impression at 

 Washington and throughout the 

 nation. There are many who feel 

 that organized farmers are wrong 

 in trying to get price-raising 

 legislation through surplus control 

 plans or inflationary measures or 

 both. They would like to see farmers 

 sharpen their axes and go after 

 freight rates, taxes, utility rates, 

 the protective tariff, etc. with the 

 idea of bringing everything else 

 down to the level of farm prices. 



"Such representative publications 

 as Business Week and Whaley- 

 Eaton Service have picked our peti- 

 tion out for special mention as of 

 great national consequence," re- 

 ports President O'Neal of the A. F. 

 B. F. "The Interstate Commerce 

 Commission also has recognized it 

 by immediately declaring a date 

 for oral arguments and then post- 

 poned that date until Friday, 

 March 24 at the request of rail- 

 road representatives. Senator Cap- 

 per put the entire document in the 

 Congressional Record of February 

 8 with a brief introductory state- 

 ment by himself, expressing his 

 general interest on the question of 

 reduced freight rates." 



If the bitter-end deflationists 

 win their fight in the proposed spe- 

 cial session of congress after March 

 4, it means that a lot of railroads 

 will be forced into receivership, 

 debts both public and private will 

 have to be scaled down wholesale, 

 taxes cut another 25 to 50 per cent, 

 and freight rates reduced to pre- 

 war levels. — Editor. 



Hancock Coun+y Back 



To $15 Membership 



After one year's experience with 

 a $10 membership fee, the Hancock 

 County Farm Bureau went back to 

 their former $15 annual dues. In 

 the county, state, and national or- 

 ganizations. The $10 fee had no 

 appreciable influence in increasing 

 membership. . ^ 



