Mr JUMP. I think he is a little more than just an ordinary agent. I heard some legal term used that I had never heard used before, in connection with the word "agent." Did not the lawyers use some other word?

Mr. HOFFMAN. They did. The Attorney General rendered an opinion to the effect he was not loaning exactly as an agent, nor was he doing it in his individual capacity, but it was a sort of separate set-up under the corporation, where he handled the corporation's money for them as Secretary of Agriculture in name only and not as Secretary of Agriculture of the United States. He is acting as a statutory agent of the corporation.

AMOUNT OF LOANS AND RECEIPTS ON CROP PRODUCTION LOAN

Mr. BUCHANAN. Are you prepared to put in the record, Mr. Hoffman, an account of these loans and collections?

Mr. HOFFMAN. I have that here. It is public information and I am sure the Secretary would be very glad to have it put in the record-showing the amount of the loans, which total $64,204,503.06, and showing our collections, for instance, of one day, the collections so far this present month, the collections of last month, and showing the total amounts collected up to date, in cash, and also showing the percentage collected.

Mr. SANDLIN. That is since he has been connected with the Reconstruction Finance Corporation?

Mr. HOFFMAN. Yes, sir.

Mr. BUCHANAN. Does it show the amount collaterialized?

Mr. HOFFMAN. No, sir. We have not those figures up to date. We can supply those figures as of November 29, within the next day or so.

Loan collections deposited by regional offices

Mr. BUCHANAN. You have a heading here "Farmers' seed loans, deposits." What do you mean by "deposits?"

Mr. HOFFMAN. Deposits in the Federal reserve branches throughout the country each day.

Mr. BUCHANAN. Then what becomes of that money thus collected and deposited?

Mr. HOFFMAN. As to the feed loans it is immediately transferred from the Federal reserve banks, through the disbursing officer of the department, to the various appropriations from which payment of the original loan was made. It goes back to the appropriations.

Mr. JUMP. And in the case of the reconstruction fund, to what appropriation does it go?

Mr. HOFFMAN. It goes back to the Secretary of Agriculture's

account.

Mr. BUCHANAN. You are talking about Reconstruction Finance Corporation loans now?

Mr. HOFFMAN. The first answer I gave referred to the farmers' seed loans.

Mr. BUCHANAN. But this refers

Mr. HOFFMAN. That is a consolidated report of the two officestwo reports.

Mr. BUCHANAN. What becomes of the money collected and deposited by the Secretary of Agriculture as agent, under the Reconstruction Finance Corporation act?

Mr. HOFFMAN. It is deposited to the Secretary's credit in the Treasury Department.

Mr. BUCHANAN. To the credit of the Secretary of Agriculture? Mr. HOFFMAN. Yes, sir.

Mr. BUCHANAN. Is he authorized to check on it?

Mr. HOFFMAN. To pay expenses, yes, sir.

Mr. BUCHANAN. To do what?

Mr. HOFFMAN. To pay administrative expenses and the salaries of the employees engaged in the collection work.

Mr. BUCHANAN. Is he authorized to check on it for anything else? Mr. HOFFMAN. No, sir. We have no authority at this time to make loans; it is only the expenses we are permitted to pay. The law

itself limited loans to the crop of 1932 and that period was passed about the 1st of June last. Therefore, since about the 1st of June, there has been no money spent for any purpose except administrative expenses.

Mr. BUCHANAN. So the amount collected would be deposited in the Treasury to the credit of the Secretary of Agriculture in a separate account?

Mr. HOFFMAN. Yes, sir.

Mr. BUCHANAN. And can not be checked on for any purpose except to pay administrative expenses by the Secretary or the Reconstruction Finance Corporation, either?

Mr. HOFFMAN. I would not say as to them; because I believe on several occasions some of this fourteen or fifteen million dollars, at the request of the Reconstruction Finance Corporation, has been turned back to the Reconstruction Corporation.

Mr. BUCHANAN. According to that, then, this money is allocated to the Secretary of Agriculture for crop-production loans; he loans it, and the collections he makes are ultimately turned back to the Reconstruction Finance Corporation, or their agent, or order? Mr. HOFFMAN. I think that is correct, sir.

Mr. JUMP. And that would seem to be logical, because the money came from the corporation in the first place.

Mr. BUCHANAN. Yes; but it came from the corporation under a law of Congress, specifically to be used for crop-production loans. Mr. JUMP. Yes.

Mr. BUCHANAN. And how could they use it for any other purpose? Mr. JUMP. I do not know; but they will have to account to Congress.

Mr. BUCHANAN. Now, will they?

Mr. JUMP. I feel sure the clerk will still be able to find in that act that the corporation is required to account to Congress. I can not conceive it would be otherwise.

Mr. BUCHANAN. When you get your testimony, I wish you would put in an answer to this question: Is there any provision in the Reconstruction Finance Corporation act that requires them to make annual reports to Congress of their expenditures, or on their dealings with crop-production loans? I want to limit it to crop-production loans, showing a complete account of the allocation of this money to the Secretary of Agriculture by the Treasury, and the loaning of it by the Secretary of Agriculture, his collection of it, and the disposition of the money that is made when collected, and subject to whose check this money is that has been collected, after it has been deposited in the Treasury to the credit of a special account of the Secretary of Agriculture.

Mr. JUMP. We will look that up and insert it.

SECTION 15 OF THE RECONSTRUCTION FINANCE

JANUARY 22, 1932

CORPORATION ACT, APPROVED

SEC. 15. The corporation shall make and publish a quarterly report of its operations to the Congress stating the aggregate loans made to each of the classes of borrowers provided for and the number of borrowers by States in each class. The statement shall show the assets and liabilities of the corporation, and the first report shall be made on April 1, 1932, and quarterly thereafter. It shall also show the names and compensation of all persons employed by the corporation whose compensation exceeds $400 a month.

Mr. BUCHANAN. In this statement you have filed you have one heading here, "Farmers' seed loans, deposits"; that refers to all of the acts prior to the crop production loans authorized by the Reconstruction Finance Corporation?

Mr. HOFFMAN. That is correct.

Mr. BUCHANAN. It does not look like you are going to make a very good record in collecting these loans under acts prior to the Reconstruction Finance Corporation act?

Mr. HOFFMAN. The largest amount outstanding, of course, is in the Northwest, where the 75 per cent moratorium has been put into effect, which makes the uncollected amount, which we have no chance of collecting this year, a considerable amount to carry over.

Mr. SANDLIN. And that carry-over is just carried as an ordinary outstanding account; there is no privilege on next year's crop?

Mr. HOFFMAN. No, sir. We will have to endeavor to get security on next year's crop for the 75 per cent carry-over.

Mr. SANDLIN. You will endeavor; but, of course, the price of commodities and everything means you would be unsuccessful.

AUTHORITY FOR GRANTING MORATORIUM FOR PAYMENT OF LOANS

Mr. BUCHANAN. Is there anything in any of the acts that vested in the President, or the Secretary of Agriculture, or anybody else, authority to grant that moratorium?

Mr. HOFFMAN. Not in the acts themselves, except this, that in the moratorium that was granted the Secretary said he would grant the moratorium of 75 per cent under such rules and regulations; that is, the farmer had to pay 25 per cent and agree to give us a mortgage on next year's crop, in other words, substituting as security next year's crop for this year's crop.

Mr. JUMP. He did it under the authority of the act that empowers him to fix rules and regulations with reference to loans?

Mr. HOFFMAN. Then, of course, the President, in his statement said, as to how the balance would be paid, would be a matter for the consideration of this Congress.

Mr. BUCHANAN. Well you do not grant this 75 per cent moratorium to the farmer unless he gives you a mortgage on his next year's crop; is that it?

Mr. HOFFMAN. That is the idea.

Mr. BUCHANAN. And in every instance, where you have granted a moratorium, you have taken a mortgage on next year's crop? Mr. JUMP. No; he said he would endeavor to secure it.

Mr. HOFFMAN. We will endeavor to secure it.

Mr. BUCHANAN. I thought you said the Secretary granted the moratorium on the theory he would get a mortgage, for the 75 per cent he postponed for another year, on next year's crop.

Mr. HOFFMAN. That is what we are trying to do; yes, sir. In every case we are getting in, we are requiring the farmer to pay 25 per cent

Mr. BUCHANAN. You are doing that, anyway?

Mr. JUMP. It is a condition precedent.

Mr. HOFFMAN. We are trying to make that a condition; but in view of the price of many commodities in the Northwest, many of the farmers are unable to pay even the 25 per cent.

Mr. SANDLIN. They have nothing to give. Instead of giving security on next year's crop, they will have to give the security on next year's crop to get the money to make next year's crop.

Mr. HOFFMAN. That is right.

Mr. SANDLIN. We had just as well be frank about it, because that is the situation.

Mr. BUCHANAN. I was not talking about their ability to pay; I was talking about the authority of the President, the Secretary, or anybody else to grant a moratorium of their own volition. For instance, here are a lot of loans made for crop production; notes and mortgages are taken and recorded, and to make these loans requires a considerable appropriation. The notes are due this fall to the Government and an executive officer, whether the President, the Secretary of Agriculture, or both, says "We will not collect but 25 per cent of this note; we will not try to collect but 25 per cent of it." The question I asked is what legal authority did they have to say that.

Mr. JUMP. I suppose that we ought to consult the people who are more directly in charge of this and put a statement in the record covering that point.

Mr. BUCHANAN. I think it ought to be answered.

Mr. JUMP. It will have to be answered, now that it has been asked. Mr. BUCHANAN. If they had legal authority, I have nothing to say; if they did not, then no man is bigger than the law, no matter who he is. Mr. JUMP. I do not believe there was any requirement in the legislation that stipulated this money was to be collected this fiscal year, was there?

Mr. HOFFMAN. No.

Mr. JUMP. That may be the basis for a different mode of collection. Mr. BUCHANAN. There may not be a requirement, but there was a contract entered into between the farmer and the Government, by the terms of which the loan was due this fall out of that crop, and its only security was that crop.

Mr. SANDLIN. The question you want to know is whether the Secretary has authority to alter the contract?

Mr. BUCHANAN. Without consideration to the Government-just to say to his collection agencies, "Do not collect but 25 per cent of that loan." If he could say it to his collecting agency in that instance, then there is no department of the Government that could not say it in any other instance, or any other contract, however big it may be, without authority of law. Now if he had authority of law in this act, or any other act, I have nothing to say about it; I just believe in everybody living within the law. Another thing Mr. Orr has just suggested is are these contracts payable to the Government-or the corporation?

Mr. HOFFMAN. This year?

Mr. BUCHANAN. Yes.

Mr. HOFFMAN. Payable to the Secretary of Agriculture acting pursuant to the act of Congress approved January 22, 1932, creating the Reconstruction Finance Corporation.

Mr. BUCHANAN. Then if the Secretary had instructions from the corporation to do this, let us know it-put that in the record. Of course, if he had instructions of that corporation, that would probably put him in the clear and then we will have to go to the corporation act and find out whether they had any authority to do it, or not.