FEDERAL FARM LOAN ACT FRIDAY, MAY 16, 1947 HOUSE OF REPRESENTATIVES, The committee met at 10 a. m., Hon. Clifford R. Hope (chairman) presiding. The CHAIRMAN. It is going to be necessary to take witnesses a little out of order because of the fact that there are some who must leave town today. Before we call on the next witness, however, Mr. Duggan has one or two matters which he would like to insert in the record at this point, as a part of his statement of yesterday. You may proceed, Mr. Duggan. Mr. DUGGAN. Mr. Chairman, Mr. Carl H. Schwyn had to leave last night, and I would like to insert into the record the statement he would have made if he had been here. The CHAIRMAN. Without objection, that may be done. (The statement referred to is as follows:) STATEMENT BY CARL H. SCHWYN. DIRECTOR. FEDERAL LAND BANK OF LOUISVILLE, KY. My name is Carl H. Schwyn. I reside on my farm located in an agricultural community in northwestern Ohio, known as Cygnet, Wood County, Ohio. I have had 34 years' experience as a banker, 7 years of which was spent with a city bank, 27 years in my present bank, of which I am president, dealing almost exclusively with farmers. I am also a director of our national farm-loan association as well as a director of the Federal Land Bank of Louisville. I operate my own farm of approximately 1,000 acres, specializing in Hereford beef cattle and Jersey dairy cattle. I also have other interests. My experience as a banker leads me to say that in my opinion the Federal land-bank system is just as important to the country banker as the Federal Reserve System is to a metropolitan bank. I feel that the only source in time of extreme need that a country banker has to look for relief or as a clearinghouse for such loans that he finds are going to be slower to mature for reasons that were not anticipated by either the borrower or the bank at the time they were made, is the Federal land-bank system. With the present method of appraisal that is now employed by the land-bank system, which in my opinion is the best system of appraisal that has yet been employed, known as the normal agricultural value, a loan limited to 75 percent of such value will be from 10 to 20 percent less than a loan placed upon the same property by the average bank at present. I do not mean by this statement that the system employed by the land-bank system is too conservative. I do feel that this system over a period of years is the only system that can safely be employed. During the 1933-34 period, when most banks found themselves in difficulty, the only possible source for a bank to look for relief was through the land-bank system. Insurance companies, commercial banks, and private lenders were only interested in liquidating their holdings and not taking on new credits for they were not able to do so and where they were able to, the banker was rather skeptical in granting farmers credit. Should we again find ourselves in this 27 condition, I am satisfied that all bankers will be only too pleased that the land banks are permitted to grant a line of credit up to 75 percent of the normal agricultural value of the farm, for even so, in most cases, the country banks will then be holding loans that are in excess of the amount of the loan that would be approved by the land banks. In taking the obligation of making 75 percent loans over from the Government, it would be necessary for the banks to have a reasonable reserve. I feel that at times this reserve will be drawn upon quite heavily and that at other times we will add to the reserve, depending, of course, upon financial conditions that exist over the period. Without this reserve it would be asking the land banks to take on a risk that would be unfair, for the banks now enjoy a good credit rating throughout the Nation. They have earned that rating and to ask them to do anything that would throw in jeopardy this rating would be unfair to the farmers. I know of no country bank that would not be benefited by this act and I am confident the city banks would be benefited to some extent. When Congress passed the law permitting the Federal land banks to operate in 1916, it was the intent of Congress to permit farm tenants and those desiring to become farmers to own their own farms. If we are limited to 65 percent of the normal agricultural value of a farm, it simply means it will delay the day for a good many tenant farmers who desire to own their own property to purchase such a tract. In some cases the farm desired by the farm tenant would then have changed hands and they never would be in position to acquire this farm. For the consideration of the committee, I am pleased to attach hereto a list of loans which were granted in three Ohio counties. What is reflected here I am sure would be reflected in most of the other counties in the districts. Recent Federal land bank and Land Bank Commissioner commitments in Wayne, Ashland, and Holmes Counties in Ohio 1 As determined by recent sale of farm, or estimated sale value by land-bank appraiser. 2 Financed by local bank for $12,000. 3 Financed by local bank for $6,500. Recent Federal land bank and Land Bank Commissioner commitments in Wayne, Ashland, and Holmes Counties in Ohio-Continued Farm mortgages given to other creditors for the month of March 1947 in Wayne, Ashland, and Holmes Counties in Ohio Mr. DUGGAN. Also I would like to insert in the record a list of the conferences and activities that we have gone through in the development of the report required under Public Law 505. The CHAIRMAN. Without objection, it may be inserted in the record. (The list referred to is as follows:) LIST OF CONFERENCES AND ACTIVITIES FOR DEVELOPMENT OF REPORT REQUIRED UNDER PUBLIC LAW 505 August 14, 1946: Conference in Governor's office. Plans laid and committees discussed. Messrs. Duggan, Wel's, Isleib, Farrigton, Willingham, Colvin, Thomas, Battles, Patterson, and Johnson in attendance. August 22, 1946: Morning-Conference in Mr. Wells' office. Messrs. Wells, Isleib, Colvin, and Johnson attending. This meeting was preliminary to conference with farm organizations. Afternoon-Meeting in office of National Grange with representatives of farm organizations. September 5-6, 1946: Meeting with members of the subcommittee of the bond committee. Messrs. Droste, Evans, and Thompson in conference with central office group. Representatives of farm organizations met with the group on September 6. September 10, 1946: Preliminary report sent to Federal land-bank presidents. September 23-26, 1946: Conference of vice presidents of the land banks in charge of loans at St. Paul, Minn. October 10, 1946: Conference in Governor's office. Members of committees and central-office officials in attendance. October 17-18, 1946: Second meeting of the committee of land-bank presidents (Droste, Evans, Thompson). Representatives of farm organizations met with group on October 18. · October 28-31, 1946: Conference of all presidents of the Federal land banks. Mr. Goss met with the group one afternoon for further discussion of report. October 30, 1946: Conference with Under Secretary Dodd. Land-bank presidents and FCA officials in attendance. October 30, 1946: Conference of Governor Duggan with Mr. Webb, Director, Bureau of the Budget. November 6, 1946: Revised report sent to directors and Federal land-bank presidents. November 7, 1946: Conference of Messrs. Isleib and Lawrence with W. A. Jump and members of his staff in office of budget and finance. November 13, 1946: Conference of Mr. Isleib and others with representatives of Bureau of the Budget. November 8, 1946: Conference with Mr. Bartelt of the Treasury Department. December 2-4, 1946: Conference of members of the boards of directors of all districts. January 14, 1947: Conference in Governor's office for discussion of the report as prepared. January 21, 1947: Meeting at Grange office with farm organization representatives. Messrs. Isleib, Farrington, Colvin, and Johnson representing FCA. January 24, 1947: Final report sent FLB presidents. January 30, 1947: Final report sent directors. February 24, 1947: Meeting with representatives of Bureau of the Budget. One Farm Credit director from each district and Messrs. Droste, Avery, and Thompson present. Mr. DUGGAN. We have also placed at each committee member's chair a copy of the table used yesterday with respect to the percentage distribution by lender groups of the amount of farm mortgages recorded in the United States from 1934 to 1946. The CHAIRMAN. I believe you asked permission to insert that in the record yesterday. Mr. DUGGAN. Yes. Also I would like to call the attention of the chairman to the fact that the Bureau of the Budget has written a letter to the chairman of the Banking and Currency Committee in the Senate suggesting certain changes in the bill, and transmitted with his letter |