associations only to meet prior commitments, or for additional amounts necessary to protect the security behind the old loans, or to enable the corporations to continue in business and eventually pay their old obligations.

The total receipts on the loans made from this fund, including those outstanding on June 30, 1933, will amount to approximately $75,000,000 during the fiscal year 1934.

(2) RECONSTRUCTION FINANCE CORPORATION FUNDS

FARM MORTGAGE LOANS

The Emergency Farm Mortgage Act of May 12, 1933, section 32, directed the Reconstruction Finance Corporation to make available to the Farm Loan Commissioner (now Land Bank Commissioner) $200,000,000 for making direct mortgage loans to farmers to relieve distress and prevent foreclosures. The expenses of making these loans have been paid out of the fund. For the fiscal year 1934, the Land Bank Commissioner estimated the expense would amount to $2,720,000. Up to January 27, loans had been made amounting to $120,000,000 while approved applications on hand, on which no disbursement had been made, exceeded $275,000,000.

In view of the importance of this activity, Congress passed the Federal Farm Mortgage Corporation Act of January 31, 1934, establishing a corporation that will continue making loans on farm property. The act provides for the transfer to the Corporation of the unexpended balance in the fund, together with mortgages and other credit instruments taken by the Land Bank Commissioner.

Pursuant to this authorization, we will transfer to the Corporation first and second mortgages amounting to $120,000,000, cash with Reconstruction Finance Corporation subject to call, $65,000,000; cash with disbursing officers, $14,000,000; and sundry assets, including accruals of interest on mortgages, accounts receivable, furniture, fixtures, and so forth, aggregating $1,000,000.

LOANS TO JOINT-STOCK LAND BANKS

Under sections 30 and 31 of the Emergency Farm Mortgage Act of May 12, 1933, $100,000,000 was made available for a period not to exceed 2 years for the purpose of making loans to joint-stock land banks, organized under the Federal Farm Loan Act, with a view of securing their orderly liquidation, and of obtaining postponement of foreclosures on mortgages held by these banks.

In connection with the administration of this fund, we have reserved $100,000 for possible administrative expenses in 1934 and a similar amount in 1935, but to date the cost in connection therewith has been small, the total being less than $1,000.

CROP-PRODUCTION LOANS AND REGIONAL AGRICULTURAL CREDIT CORPORATION

FUNDS

The crop-production loans were authorized by the Acts of January 22, 1932, and February 4, 1933. The former act directed the allocation of $200,000,000 by the Reconstruction Finance Corporation to the Secretary of Agriculture to be expended in 1932 for loans to enable planting, fallowing, cultivating, harvesting, etc. The latter act permitted the continuation of the loans in the calendar year 1933, placing, however, a limitation thereon of $90,000,000.

The total crop-production loans made during 1932 amounted to approximately $64,200,000 and during 1933 to $57,450,000. The administrative expenses in connection with these loans are paid out of the fund. Aside from the crop-production loans, the capital stock of the regional agricultural-credit corporations has been purchased out of this fund. Section 201 of the Emergency Relief and Construction Act of 1932 authorized the Reconstruction Finance Corporation to create in any of the Federal land-bank districts a regional agricultural-credit corporation with a paid-up capital of not less than $3,000,000. In all, the capital stock of the 12 regional agricultural-credit corporations subscribed and paid for amounts to $44,500,000. The expenses incurred in connection with operation of the regional corporations are paid by the Reconstruction Finance Corporation on our authorization.

The Farm Credit Administration has effected substantial savings in the administration of the crop-production loans and the regional agricultural credit corporations. The actual expenses for administering crop loans from February 1932 to June 30, 1933, amounted to $6,359,395, of which $4,893,007 was applicable to the fiscal year 1933.

While the volume of loans made during the fiscal year 1934 will not be nearly so heavy as during the preceding fiscal year, nevertheless, the estimated collections (reported as $53,170,000 in the Budget) in all probability will exceed $60,000,000, a sum greater than that loaned in 1933. The administration of both loans and collections during the fiscal year 1934 will require the sum of $3,601,899, a reduction of $1,291,108 from the preceding year.

The savings on operating expense of the regional agricultural credit corporations are even larger. Between December 1, 1932 (the approximate date of their organization), and June 30, 1933, the administrative expenses of the regional corporations amounted to $3,126,982, or an average of $446,712 per month, making an annual budget of $5,360,000. Actually at the time they were taken over, their monthly expenses were running somewhat in excess of this figure.

Beginning July 1, 1933, a substantial reduction was made in the allowances for the regional corporations. A maximum of $4,000,000 was set for their operating expenses for the fiscal year 1934, which reflects a reduction of $1,360,000.

The total deductions in these two items amount to more than $2,650,000. Accordingly, I can report that the Farm Credit Administration has more than complied with the promise of former Governor Morgenthau, made at the hearings on April 20, 1933, before the subcommittee of the House committee on the ndependent offices appropriation bill, that the Farm Credit Administration would effect savings of more than $2,000,000 in the operation of these activities in the fiscal year 1934.

The regional agricultural credit corporations are now on a liquidating basis and will ultimately be replaced by the production credit associations. Until these latter organizations are in a position to provide adequate credit facilities, however, the regional agricultural credit corporations will be continued and will be liquidated only when each district becomes adequately provided with credit facilities through the production credit associations.

At this time, the total expenses for the regional agricultural credit corporations are estimated for 1935 at $3,250,000, which is $750,000 less than the estimate for the fiscal year 1934.

APPROPRIATIONS TO TREASURY DEPARTMENT FOR PAYMENTS ON AUTHORIZATION OF THE FARM CREDIT ADMINISTRATION

SUBSCRIPTIONS TO PAID-IN SURPLUS OF FEDERAL LAND BANKS

The Fourth Deficiency Act, fiscal year 1933, appropriated $50,000,000 to the Treasury Department to enable the Secretary of the Treasury to pay for subscriptions to the paid-in surplus of Federal land banks in accordance with the provisions of section 23 of the Emergency Farm Mortgage Act of May 12, 1933, in return for extensions of installments on mortgages held by Federal land banks. Under the law, it is the duty of the Secretary of the Treasury, at the request of the Federal land bank making the extension, and the approval of the Land Bank Commissioner, to subscribe to the paid-in surplus of such bank an amount equal to the extensions or deferments made by the bank. The subscriptions to paid-in surplus of Federal land banks on January 31, 1933, amounted to $20,000,000. Recent estimates made by the Farm Credit Administration indicate that $75,000,000 will be needed for this purpose for the fiscal year 1935, which will be requested in a supplemental estimate to be submitted by the Treasury Department.

PAYMENTS TO FEDERAL LAND BANKS FOR REDUCTION OF INTEREST AND DEFERMENT

OF PRINCIPAL

Payments to the Federal land banks on account of reductions made in interest rates on mortgages held by them are authorized in section 24 of the Emergency Farm Mortgage Act of 1933. The Secretary of the Treasury pays each Federal land bank an amount which the Land Bank Commissioner certifies is equal to the reduction in the amount of interest payments occasioned by section 24. Furthermore, no payment of the principal portion of an installment of any loan is to be required within 5 years after the act, if the borrower is not in default with respect to any other condition or covenant in his mortgage.

For these purposes Congress appropriated $15,000,000 in the Fourth Deficiency Act, fiscal year 1933, which is available only during the fiscal year 1934. In order to continue these payments, the sum of $15,000,000 will be needed during the fiscal year 1935. This item will also be made the subject of a supplemental estimate to be submitted by the Treasury Department.

DISTRIBUTION OF GOVERNMENT-OWNED WHEAT AND COTTON

On July 22, 1932, Congress, by joint resolution, authorized an appropriation of $40,000,000 to enable the Federal Farm Board to carry into effect the distribution of Government-owned wheat and cotton to the American National Red Cross and other organizations for relief of distress. On February 8, 1933, a supplemental appropriation of $4,100,000 was authorized for advancing amounts to repay loans held by commercial or intermediate-credit banks against the cotton which would be released and to retire storage and carrying charges against the cotton. In Executive order of March 27, 1933, the President directed that $2,000,000 of the unexpended balances in these appropriations (Public Resolutions Nos. 43 and 51) should be impounded in addition to other savings effected by the Farm Credit Administration. This amount was accordingly covered into the Treasury by an appropriation transfer warrant on June 30, 1933. By reducing carrying charges and securing other economies in the handling of the cotton, the Farm Credit Administration effected a further reduction of $2,047,685, which also was covered into the Treasury by appropriation transfer warrant dated November 27, 1933.

TABLE III.-Loans and discounts of Farm Credit Administration lending institutions for the period Jan. 1, 1933, through Jan. 31, 1934, and balances outstanding Dec. 31, 1933

1 To be liquidated. Credit formerly extended by these agencies will be handled by the appropriate permanent institutions listed above.

? Loans aggregating $12,665 were canceled during January 1934.

Includes balances outstanding of loans made during the period 1921-33, inclusive.

4 These totals include duplication arising from the fact that the loans and discounts of the Federal intermediate credit banks include discounts for the regional agricultural credit corporations aggregating $1,864,484 for the period Jan. 1 through May 26, 1933, and $121,013,874 for the period from May 27, 1933, through Jan. 31, 1934; and discounts for production credit associations aggregating $178,179 for the period May 27, 1933, through Jan. 31, 1934. Of the Federal intermediate credit bank balances outstanding on Dec. 31, 1933, $73,263,447 represent discounts for the regional agricultural credit corporations and production credit associations.

Mr. SANDLIN. In addition to this statement, Governor Myers, we will be glad to have any other statement that you wish to make giving us information on the workings of this institution.

Mr. MYERS. Thank you, Mr. Chairman.

I want to point out, that the investments, loans, and advances for the fiscal year 1934 given in the first column of table I of the statement are the items adding to the total of $617,645,261 referred to on the preceding page.

Of the operating expenses, $2,300,000 is from appropriated funds from the Budget, and $800,800 from an appropriation for production credit corporations carried in the Farm Credit Act-an appropriation of $2,000,000 to be available until used.

Then the expenditures below, from the Reconstruction Finance Corporation, show the whole picture instead of just the figures relating to the Budget, with which I believe you are primarily concerned,

SALARIES AND EXPENSES 1935

Mr. SANDLIN. Carried in this estimate for 1935 is $2,389,666; in other words, that is all that is estimated for on the direct appropriation?

Mr. MYERS. That is right. The increase from the $2,300,000 to $2,389,666 is only the 5-percent increase in salaries that the Director of the Budget provided. There is no increase other than that represented by the 5-percent deduction from salaries that was intended to be put back on July 1.

PERSONNEL

Mr. SANDLIN. Is the personnel provided for under this item in the Washington office or in the field, or both in the Washington office and in the field?

Mr. MYERS. It is primarily in Washington, but there is some in the field.

Mr. SANDLIN. The personnel is carried in the pages following the estimate. The personnel for 1934 was 595.5, and I notice the estimate for 1935 provided for a personnel of 542.

Mr. MYERS. That represents a slight reduction in number.

Mr. SANDLIN. This is the only direct appropriation you are asking for in this bill, is it?

Mr. MYERS. Yes, sir.

DISTRIBUTION OF COST OF ADMINISTRATION TO OPERATING AGENCIES

Mr. THURSTON. Governor, in your statement under "Expenditures, fiscal year 1935", you say:

Our ultimate objective is to distribute the entire cost of administration against the several operating agencies, although it is not feasible under existing economic conditions to carry such a program entirely into effect so soon after the organizations have been created.

That means that ultimately you expect to transfer the cost of operating the Washington office and allocate or prorate it among the respective land banks?

Mr. MYERS. Yes, sir; among the land banks, intermediate credit banks, the production credit corporations, and the banks for cooperatives.