FARM TENANCY THURSDAY, FEBRUARY 4, 1937 HOUSE OF REPRESENTATIVES, The committee this day met at 10:30 a. m., Hon. Marvin Jones (chairman) presiding. The CHAIRMAN. The committee will come to order, please. This morning I asked Mr. Peyton R. Evans, general counsel of the Farm Credit Administration, to come up just for what light he may be able to throw on the provisions of the bill and not primarily as a representative of the Farm Credit Administration. He is not appearing in that particular capacity but will be glad to answer such questions pertaining to this bill as the committee sees fit to ask. At the time this measure was drafted I asked Mr. Evans, who is general counsel of the Farm Credit Administration, to assist in the preparation of the bill; he and Mr. O'Brien and others helped in the drafting of this proposed measure. I thought the committee might want to ask him some questions as to the interpretation of the scope and the means provided in the bill for carrying out its purposes thinking that might be helpful to us in the final draft of the ultimate provisions of any bill which we take action on. Mr. Evans is here this morning. STATEMENT OF HON. PEYTON R. EVANS, GENERAL COUNSEL, FARM CREDIT ADMINISTRATION, WASHINGTON, D. C. The CHAIRMAN. Mr. Evans, as I say, spent considerable time in working on the draft of this bill. There are one or two questions. that I would like to ask you, and I am sure other members of the committee will want to ask certain questions. Mr. EVANS. Yes. The CHAIRMAN. Mr. Evans, a question was raised yesterday in reference to section 3, on page 6, of H. R. 8, as to just what powers the corporation would have under the terms set out in that section as now written. Mr. EVANS. Mr. Chairman, you will remember at the time that this bill was being prepared we thought that the corporate power should be limited to a specific, primary purpose, and that all of the powers in section 3, although they are broad in their general terms, they may be used only to accomplish two purposes: One, the establishment of farms and farm homes, for the purpose of encouraging the ownership of farm homes; and, two, improving the situation of farm tenants. Although the corporation in paragraph (b) shall have power, in order effectively to exercase its functions under subsection 3 (a) to construct, maintain, or acquire necessary buildings, improvements, furnishings, equipment, implements and machinery, supplies, facilities, and livestock, all of those powers are dependent upon the main primary purpose set out in paragraph (a), the establishing of farms and farm homes and improving the farm-tenant situation. In other words, you cannot exercise the broad powers contained in section 3, except for the purpose-primary purpose stated in paragraph (a) of section 3.1 Does that answer your question? The CHAIRMAN. I think that is clear. However the language of subdivision (a) of section 3 states that may be done for the purpose of encouraging the ownership of farm homes and improving the situation of farm tenants; that language gives to the corporation rather broad powers. Mr. EVANS. Yes; that is true, but the other limitation contained in the act will restrict the scope of the operations of the corporation. The CHAIRMAN. Could the corporation make rehabilitation loans under that provision? Mr. EVANS. I have not thought that it could, Mr. Chairman. The CHAIRMAN. In other words, the main purpose in connection with that provision was the encouragement of home ownership and such other things as are considered incidental to that? Mr. EVANS. Yes. The CHAIRMAN. The supplying of livestock would be considered incidental to the encouragement of farm ownership. Mr. EVANS. And I would like to point out in that connection that the recipients of the benefits of this act are limited to those who are approved by the local committee and that the officers of this corporation will not be permitted to sell, or to lease, or to otherwise give benefits of this act to anyone except those who are specifically approved by the local committee, composed of a businessman, a doctor, and a sound credit man, all of whom must have resided in the community for at least 12 months. The CHAIRMAN. Now we have a provision in here that no property may be sold except under conditions herein laid down; that is, all applicants must be approved, and no property can be sold except with the approval of the committee; and we have another provision on page 7 Mr. FULMER. I want to ask a question on section 3 while we are on that. The CHAIRMAN. Mr. Fulmer. Mr. FULMER. In line 13. As a matter of fact, this authorizes them not only to buy land for home-ownership purposes, but there is no limit to the corporation buying supplies, machinery, and so forth. Mr. EVANS. Yes. Mr. FULMER. In other words, they can do one of two things after they secure the land; they will first proceed to lease these lands to prospective purchasers? Mr. EVANS. Yes. Mr. FULMER. But in that paragraph they will have the right to put up buildings and repair them. Under this section, beginning with line 13, they will have full authority there to buy and sell to them any type of machinery, supplies, the building of warehouses, and all types of equipment? Mr. EVANS. Yes. And I would suggest, in paragraph (b), after the word "facilities" and before the last two words, in that sentence, "and livestock", that you insert the word "poultry." Somebody might get technical and object to the purchase of poultry. I think we would all agree that poultry is necessary in building a farm home. I do not think that it will be necessary to in all cases buy poultry, but I think there should be authority in the bill to do so in proper cases. Mr. FULMER. I raised this question yesterday and the day before that this would really put the Government into the general supply business. Mr. EVANS. To a limited extent only. Mr. FULMER. How is that? Mr. EVANS. To a limited extent. Mr. FULMER. Wherein are you limited in that provision? Mr. EVANS. The corporation may use these powers only in connection with the establishment, rehabilitation, and maintenance of those farms that are to be turned over to the persons entitled to the benefits of the act or those who have leased or purchased from the corporation. After the owner has once been established in his home he should be treated as any other farmer in the community. Mr. FULMER. But under that provision you could build any type house, or put on, as stated by Mr. Alexander, $2,000 worth of repairs, and you could go further and buy any type of machinery, and as the gentleman stated the other day, stoves and refrigerators, and so forth, to any extent. The CHAIRMAN. With such limitation as is provided for carrying out the functions stated in subparagraph (a)? Mr. EVANS. That is right. Also the limitations contained in section 4 (a) (2). Mr. FLANNIGAN. Yes. The CHAIRMAN. The corporation could only do those things, insofar as I understand your statement, as will effectively carry out the purposes set out in subsection (a). Mr. EVANS. You are correct. Mr. BOILEAU. May I ask a question, Mr. Chairman? The CHAIRMAN. Mr. Boileau. Mr. BOILEAU. Can you give us an illustration of one instance that could not be taken care of under the general provisions of that broad language? It says for the purpose of encouraging the ownership of farm homes and improving the situation of farm tenants. I have tried, but I cannot conceive in my mind of any limitation on what could be done under that language. Mr. EVANS. Let me say this, that everything the corporation can do is dependent on carrying out the purposes stated in subsection (a) of Section 3. Mr. BOILEAU. That is true, but those purposes are stated in such broad language that I cannot conceive a limitation beyond which you could not go in carrying it out-under the language "improving the situation of farm tenants." 127413-37-ser. a--9 Mr. EVANS. Well, establishment of farm homes and for the purpose of encouraging the ownership of farm homes. Mr. BOILEAU. Encouraging the ownership of farm homes Mr. BOILEAU (continuing). And improving the situation of farm tenants. That is just as general and as broad as it could possibly be made and I cannot conceive in my mind any limitation. Mr. EVANS. You, of course, have to remember that all these provisions must be taken together and you will find the limitations; on those who may be benefited. The powers may be exercised only to establish homes and farms for those approved by the local committees. Mr. BOILEAU. There are two classes. Mr. EVANS. Under this, you are only going to establish farm homes and purchase farms for persons who do not have a home now, or who do not own farm property with sufficient income to maintain their families and pay operating expenses and taxes. Now, then, if you let a man have a farm, either rent it to him or sell it to him then only may those powers be exercised to purchase machinery and the other things that are necessary to give him his start. But when you get down to the value of that property it must be such a farm as would net exceed the size and value of the average farm in that community. (Sec. 4 (a) (2)). Mr. BOILEAU. It is stated in general terms. I do not know just how you are going to limit it to a particular type of farm. Is there any limitation upon the number that will be eligible for relief under this section? Mr. EVANS. No one can have the benefits under this section that has any equity in property in excess of 25 percent of its value. Mr. BOILEAU. Cannot have? Mr. EVANS. So that under this bill you could not take a man who had sufficient income to maintain his family, say, operating expenses, taxes, and so forth, and give him these benefits. Mr. BOILEAU. And this is limited to the class of farmers and tenants who are not within that group? Mr. EVANS. Yes. Mr. BOILEAU. But you could take any farmer and furnish him enough stuff to get him started under this language; it is broad enough to take a farmer or a tenant or a sharecropper; all of those come under the provisions of this bill. Mr. EVANS. Yes. Mr. BOILEAU. That is, who is not a landowner. But we all know that frequently there are landowners Mr. EVANS (interposing). Yes; but if they can make a living on what they have, they are not entitled to the benefits of the provisions of this bill. Mr. BOILEAU. When they are making a living on their own farm? Mr. EVANS. Yes. Mr. BOILEAU. There are many who are not as well off as farm tenBut if they are making a living, they would not come under the benefits of this legislation. In other words, it excludes farmers or tenants who own an equity of as much as $2,500; they are ineligible? Mr. EVANS. Twenty-five percent. |