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That is all encouraging, but we have lived on encouragement so long that we are just about at the end of our string. And business is going down.

Just before coming to the city here, following a luncheon in Des Moines, I had occasion to discuss these matters with some of our insurance officials in the city. We have a number of very strong life insurance companies located in Des Moines. Des Moines is the center of some of the largest insurance companies, outside of the very big cities, in this country. Those men said to me, “ If you are going to Washington, be sure, if you can, to impress upon the officials at Washington the absolute need of something being done that will be effective to raise this commodity price level. We are holding farms right now. A few years ago we were perfectly willing to take over these farms when the farmers felt they could not meet their obligations. We put men on them to operate them. We employed a specialist and had him supervise 10 or 12 farms, and we thought we were making money.” Then they said, “We don't want any more farms. If this situation continues, you know what is going to happen to the great insurance companies of this Nation. They have asked me to testify in their behalf here before this committee.

Now, we are not pinning our faith to one measure. We think it would be folly to do so. We think there should be an integration of several efforts here in order to keep agriculture out of the plight it is in and help bring up the status of the Nation.

I just want to refer to a matter discussed here this morning, if I may, for a moment—the McNary bill to export wheat and cotton. We must be in favor of this bill. We are piling up tremendous surpluses here. They are standing in the way of a decent price, domestic price, for our commodities. They should be lifted out of this country into some nation that perhaps can not buy it for cash. I do not know how better the money of the United States can be employed than to lift that out.

The Goldsborough bill that was discussed here a few minutes ago takes care of our money. The value of the dollar has gone up to the place where it needs five units of a commodity to secure a dollar. It is all out of proportion as a measuring stick of value. If we go any further it will throw us off the gold standard. We will come to it quickly if the dollar is not brought down to where it belongs, so that it does represent a true measure of value.

Then we have the Capper bill here that governs the short selling of cotton and wheat on the exchanges. All of those things, I think, should be integrated into a big program here and a policy.

I was very much interested in the discussion here this morning. I do not see any one thing that is going to do this job. I see a combination of several things that can do it, and do it quickly. But I will tell you gentlemen that the country is looking to Congress and they are looking to this committee largely. They feel that you men have the ability here, you have the power; they feel you have the inclination to do whatever has to be done at this session of Congress to do the right thing, and we can not and must not wait longer.

I have been here for 8 or 10 years, off and on. I was here when we were trying to get a very modest bill through, giving the farmers an opportunity to adopt a protective system for the crop partly disposed of here in this country. We did not ask for enough, Senator

Thank you.

Brookhart. I agree with you. Others came and got things. But we are now saying to you that we can not get these things. You give them to us, at least give us this much that we are asking for to-day, and we will be grateful, and whatever more there is, let us have it, because the future of this Nation depends on the success of agriculture. If our prices can not be brought up I do not know what the results will be in the next six or eight months, because disaster is upon us right now.

Just in conclusion, Mr. Chairman and gentlemen, I thank you for this opportunity to discuss so briefly these matters before you, but I do ask that no time be lost in taking action on these very important matters. We are looking for you to do this, and I do not think you are going to disappoint our people.

Senator FRAZIER. I would like to ask the last speaker how far he thinks the bankers would have gotten with that $2,000,000,000 proposition Senator Brookhart talked about if they did not come here and demand it any more vigorously than the farmers of the United States; do you think they would have gotten it?

Mr. HEARST. I am glad they did it, and I am glad you did it for them.

Senator FRAZIER. I say, do you think they would have gotten it, if they had not come here and insisted that that be passed and held the committee in session practically night and day, with nothing else done until that bill was passed? If the farmers had come in with the organization the bankers had and the representation the bankers had, do you think they would have gotten legislation?

Mr. HEARST. They might have.

Senator FRAZIER. You say you are going to stand back and let this committee do something for you. You have waited since 1920 for this committee to do something for you. The committee has tried to do it. But they can not do it all. The rest of Congress did not pass what we put up to them, and if they did pass it, the President vetoed it, and yet the farmers have sat back. They do not back the few friends they have here.

Mr. HEARST. The farmers have sent down their representatives, Senator, put up their policies and their programs squarely to the best they knew how. They tried to do it the best they could. Perhaps we have not shown enough militancy.

Senator FRAZIER. Perhaps you have not. The organizations that you have can not get together enough. It has been stated that for the first time these organizations have gotten together on one little proposition.

Mr. HEARST. Let me suggest to you, Senator, that the country is not as dormant now as it has been.

Senator FRAZIER. I realize that.

Mr. HEARST. I hope they will not be obliged to come in here to force that.

Senator FRAZIER. If they can not get it in any other way they should come here, that is all.

Mr. HEARST. I agree with you.

Senator THOMAS of Oklahoma. Mr. O'Neal, have you anyone else you want to have heard as representing your organization?

Mr. O'NEAL. No other witness.

Senator THOMAS of Oklahoma. Mr. Brinckman?
Mr. BRINCKMAN. No, sir.

Senator THOMAS of Oklahoma. I understand there are some others who want to be heard to-day, and if there is nothing further, we will stand recessed to 2.30 o'clock in the commerce room in the Capitol Building. If there is anyone else wants to be heard, take the matter up with Senator McNary or the clerk and we will be glad to give you a hearing.

(Whereupon, at 12 o'clock noon, Friday, April 29, 1932, the committee recessed to 2.30 p. m. of the same day, in the Senate Committee room of the Capitol.)

AFTER RECESS

noon recess.

The Senate Committee on Agriculture and Forestry reconvened at 2.30 o'clock p. m., Friday, April 29, 1932, at the expiration of the

Senator THOMAS of Oklahoma (presiding). At the request of Senator McNary, I will assume the chair, unless Senator Norris wants to preside.

Senator NORRIS. No.

Senator THOMAS of Oklahoma. The committee will come to order. There are three or four, I understand, who want to be heard. Mr. Lemke, I believe, is the first, as he has to get away. So if there is no objection, we will hear from him at this time.

STATEMENT OF WILLIAM LEMKE, FARGO, N. DAK.

Mr. LEMKE. My name is William Lemke, Fargo, N. Dak. Mr. Chairman and gentlemen, I may state that I appear on behalf of the Frazier farm relief bill, which is an emergency measure. I am glad that the three organizations got back of a permanent measure, which is as essential as the emergency measure, but the emergency measure is of the more vital importance to the farmers of North Dakota, South Dakota, Montana, Minnesota, Nebraska, Iowa, Kansas, and Illinois than even permanent relief, because in order to stay on their homes they must have relief immediately. I may state that in my own State of North Dakota 90 per cent of the lands and homes where the title still remains in the hands of the farmers are still in danger of being lost to them by mortgage

foreclosure. In other words, there are not over 10 per cent of all of the farms and homes in North Dakota that are still free of mortgages, and I will say that 90 per cent of the lands owned by corporations and insurance companies were gotten through mortgage foreclosure or voluntary surrender within the last 10 years.

In 1924, out of 53 counties in my State there were 21,438 mortgage foreclosures in the last 10 years and only 854 redemptions. That does not show all of the transfers made because of indebtedness, because I will venture to say that an equal amount was surrendered, where the farmer became a tenant.

Therefore, the Frazier bill is of vital importance to those people as an emergency measure, and then the other measure, which is for permanent relief.

I am sorry that these different organizations did not get together with a little fire back of the Frazier bill, because I will say in the States that I have named, if this committee were to take a referendum, 9 out of every 10 farmers would put the Frazier bill first, because human preservation is the first law of nature, and they want to hang on, in hopes something will come later.

Therefore, I am equally strong for both of these bills, but the emergency must come first, if we do not lose our homes.

What is the Frazier bill? The Frazier bill provides that the United States Government shall refinance those farm indebtednesses at 112 per cent interest and 112 per cent on principal on an amortization plan, and that it shall issue Federal Reserve notes with which to get the money.

There has been some criticism made of that. I understand our friend, the Secretary of the Treasury, says it will seriously disturb the monetary system. I say a monetary system which has put 8,300,000 people out of employment and is producing 2,800 people every day who could go to bed and eat a little more, a monetary system that has wrecked the homes of this Nation, ought to be very seriously disturbed, and I feel the time is at hand when it will be seriously disturbed, and I think the Frazier bill will disturb the international bankers and Wall street. That is why there is such opposition to it.

The Secretary of the Treasury says it will take $10,000,000 to do it. I say that two or three billion dollars of Federal reserve notes to take up the existing mortgages will create a revolving fund, so that it will find its way back into the Federal reserve banks, so that every dollar will be paying off 10 or 20 obligations, and it can be reissued to take up the next mortgage, so that about two or three billions of new money will be sufficient to take up the entire $10,000,000,000 of mortgage farm indebtedness.

Now, if the United States Government will do that, whereby it will take two or three billion dollars to refinance ten or nine billion, as it is claimed, of farm indebtedness, if the United States Government will do that, in 47 years that entire indebtedness will be paid up, and the United States Government will have made a gross profit of $6,343,000,000.

That is one reason why the banking fraternity is not very strong for this bill, because it is the first time that the United States Government has made money out of issuing Federal reserve notes. At the present time it is issuing Federal reserve notes, giving them to Federal reserve banks, to be used by insurance companies, banks, and so forth. I am not objecting to that, but I do not think they should have a monopoly on it. It gives them those notes at a low rate of interest, but at the end of 10 years Uncle Sam has no more money than what he started out with, while at 11/2 per cent interest under this bill, the Government will make $6,343,000,000 gross.

That is the operation of this bill. The farmer is willing to pay Uncle Sam the money. I do not know how many of your members have looked up this situation, but you will see that before you pass the Glass-Steagall bill, before you pass the $2,000,000,000 reconstruction bill, that before that, within the last year, the United States Government, through the Federal reserve bank, increased the currency in circulation by about $800,000,000, and mostly to four large cities, Chicago, New York, Boston, and Philadelphia. If they had added $1,200,000,000 more, they would have had enough to handle the entire existing farm indebtedness, and then they would have made a profit on it.

Senator NORRIS. How did they increase the circulation?

Mr. LEMKE. By issuing Federal reserve notes, by having securities put up through the local banks. They say you must have a 40 per cent safe reserve, or gold reserve, rather. I feel if I were a banker and went to the Government with Federal reserve notes and asked for $400,000 worth and they gave me $400,000 worth of gold, I could then turn around with that and get $1,000,000 in reserve notes, with which to finance securities for individuals who needed the financing

Senator NORRIS. I suppose they increased that currency in the regular operations of the Federal reserve bank. Mr. LEMKE. Yes.

Senator NORRIS. The local bank sent its eligible paper to the Federal reserve.

Mr. LEMKE. Yes.
Senator NORRIS. And they issued notes for it.

Mr. LEMKE. And they issued notes for it. And I imagine they were stretching it pretty far. The banks were closing. I have a letter from the Secretary of Treasury saying that it was necessary because people were hoarding:

Senator NORRIS. You said the increase took place in these four large cities you mentioned.

Mr. LEMKE. Yes.

Senator NORRIS. You do not mean that the currency stayed in those cities, do you?

Mr. LEMKE. I imagine it stayed largely there.

Senator NORRIS. I am not speaking from knowledge of it, but from the operation of the Federal reserve bank, this currency went out to the local banks, I suppose, in return for the securities they put up to the Federal reserve banks.

Mr. LEMKE. Yes.

Senator NORRIS. So that the circulation would go to the local banks.

Mr. LEMKE. In those cities.
Senator NORRIS. Yes.

Mr. LEMKE. Not out in the country. I will guarantee you, Senator, there was not any of it found its way into North Dakota.

Senator NORRIS. That may have happened. I do not know what happened there.

Mr. LEMKE. Yes.

Senator NORRIS. But under the law, taking at Chicago, for instance, the Federal reserve bank has a certain district there.

Mr. LEMKE. Yes.
Senator NORRIS. In your case, you are at Minneapolis.
Mr. LEMKE. At Fargo, N. Dak. But Minneapolis is our district.
Senator NORRIS. Minneapolis is your district.
Mr. LEMKE. Yes.

Senator NORRIS. A bank in your State, if it put up the notes that were eligible, in Minneapolis, would get the money for it, but that

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