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which each individual borrower can obtain is limited to an amount not exceeding

Note.—Under the regulations of the Secretary dated July 21, 1932, the amount 60 per cent of the par value of the stock offered as security. Livestock Loan Co., the individuals put up 40 per cent and the amount loaned that we report so few here is the aetivity under the Reconstruction

Mr. JUMP Mr. Buchanan, you have in mind one reason, I presume, Finance Corporation act, which was passed subsequent to Public started these agricultural credit corporations. You see, there are two struction Finance Corporation. applications were received after the passage of this act but before

Mr. HOFFMAN. Those were the only two commitments and the the Reconstruction Finance Corporation was set up. form the same character of corporation? Mr. BUCHANAN. Does the Reconstruction Finance Corporation Mr. HOFFMAN. Yes, sir. there is a difference. The corporation created by the Reconstruction Mr. HOFFMAN. No, not exactly the same character of corporation; Mr. JUMP. Not exactly the same character of corporation. officers and agents to be appointed by the Reconstruction Finance

Mr. BUCHANAN. One of them was the Dakota Livestock Loan Co. of Rapid City, S. Dak.

Mr. HOFFMAN. Yes, sir.
Mr. BUCHANAN. Formed by two men.
Mr. HOFFMAN. Yes, sir.

Mr. BUCHANAN. One of them borrowed $16,500 and the other borrowed $13,500, making $30,000.

Mr. HoFFMán. Yes, sir.

Mr. BUCHANAN. Now what amount of their own money did they put in?

Mr. HOFFMAN. I do not know in that particular case; I do not know in either one of those cases what amount they contributed, whether 40 per cent, 60 per cent, or higher.

Mr. BUCHANAN. The second company formed was the North Plains Livestock Co., of Stratford, Tex., formed by seven individuals and they applied for loans. The lowest loan applied for was $900 and the highest loan applied for was $10,800, totaling in all, $30,000.

Mr. HOFFMAN. Yes, sir. Mr. BUCHANAN. Those applications were approved and the money advanced and the corporation formed?

Mr. HOFFMAN. Yes, sir.
Mr. BUCHANAN. How much did they put in of their own money?
Mr. HOFFMAN. I do not know how much they put in of their own

Mr. BUCHANAN. Have you any records on that in your department?

Mr. HOFFMAN. Yes, sir.

Mr. BUCHANAN. I wish you would get the record on both of them and put it in in reply to that question. You know, I think there are wonderful credit possibilities in these institutions.

was 60 per cent. No. 11, and which has had a great activity in getting

are required by the law to be managed by

by the Department


that paper.

Mr. BUCHANAN. Is the amount required to be subscribed out of private funds about the same?

Mr. HOFFMAN. I do not know, sir; I am not familiar with the Reconstruction Corporation's requirements.

Mr. BUCHANAN. What do they call them-agricultural and livestock corporations?

Mr. HOFFMAN. Regional Agricultural Credit Corporations.

Mr. BUCHANAN. Does that have any connection with this establishing of the 12 local banks?

Mr. Jump. That is what it is; the banks you are talking about are the agricultural credit corporations.

Mr. HOFFMAN. And there will be additional branches of each one of those.

Mr. BUCHANAN. Then the paper of those local agricultural and livestock corporations of the Reconstruction Finance Corporation will be rediscounted with the intermediate credit banks?

Mr. HOFFMAN. The Reconstruction Corporation will discount Mr. BUCHANAN. They do not go to these intermediate credit banks?

Mr. HOFFMAN. They may discount their paper with the Federal reserve banks and the Federal intermediate credit banks and any paper they acquire which is eligible for such purpose.

Mr. BUCHANAN. Do you know whether or not there have been a good many corporations established under that act?

Mr. JUMP. I do not know.
Mr. HOFFMAN. I am not in a position to state.

Mr. JUMP. It is only recently that the 12 regional banks were formed.

Mr. HOFFMAN. I do not believe all of them have been formed as yet; I am not sure.

Mr. BUCHANAN. I know they formed them in Fort Worth, Tex. Mr. HOFFMAN. Yes.

Mr. BUCHANAN. So it is not necessary for this language to be in this bill, at all?

Mr. JUMP. It is permanent legislation. Regardless of the Reconstruction Finance Corporation act, it would have been bracketed.




Mr. BUCHANAN. Mr. Secretary, this committee does not have a clear understanding of theses last so-called crop-production loans made by the Government through an allotment of money from the Reconstruction Finance Corporation. Of course, we understand it was allotted to the Secretary of Agriculture to make the loans under such rules and regulations as he might prescribe and presumablyalthough the law does not say so, so far as I can find out—the Secretary is to collect these loans. Then we are at a loss as to where the

money goes when it is collected, whether it goes back into the Treasury, or whether it is deposited to a special account of the Secretary of Agriculture; if so, to whose check is it subject and what has become of it. However, before we get to that latter part, the committee would like to know about the amount of the loans; also, the progress made in collecting them. And on the point of collection, there has been some question in the minds of some members of the committee, I among them, as to the authority the Secretary or the President had to instruct a 25 per cent collection on each loan and release the balance of the crop, and to instruct the collateralizing of the cotton loans at 9 cents a pound in full satisfaction of the mortgage and releasing the balance of the crop from the mortgage loan. We would like to know whether or not that authority exists and if not, on what theory the Secretary or the President, or whoever authorized it, proceeded.

Now those are the questions that are in the minds of this committee and the committee would be glad to be advised of them.



Secretary HYDE. Well, I do not know that I can remember all of those at once. Of course the committee understands that under the terms of the original R. F. C. bill, section 2 provided that $50,000,000, plus a proportional allotment of whatever securities they issued, were allocated to the Secretary of Agriculture for the purpose of crop-production loans. I take it that is a special fund, a revolving fund if, in fact, we could make it revolve. I mean, by that, that all of the collections on that fund and the total amount is impounded in the hands of the R. F. C., available for the purposes mentioned in the terms of the section. The section, however, limited loans to crop purposes in 1932, so that it would be impossible for it to revolve under that provision. The fund itself is revolving in character, but the limitation to crop purposes in 1932 was such that it can not revolve; that is all. So that every dime that has ever accumulated under that fund, by virtue of the first $50,000,000, plus its accretion from further sales of securities, is impounded in the hands of the R. F. C. as a revolving fund for the use of the Secretary of Agriculture for the purpose of crop-production loans for 1932, and every dollar collections


back to the same fund. Mr. BUCHANAN. Then what becomes of the fund?

Secretary HYDE. The R. F. C. has the fund, available for the purposes of that section. (Sec. 201 (e).)

Mr. BUCHANAN. Then if there is no law authorizing further cropproduction loans, that fund is frozen right there? Secretary HYDE. Absolutely. That is my opinion of it, my judg

I do not think they can loan it for any other purpose whatsoever, except that the emergency relief bill later provided for using part of the same fund for the capitalization of 12 agricultural credit corporations.

Mr. BUCHANAN. There has been no opinion given by the Attorney General, has there?

Secretary Hyde. Not on that point. There has been an opinion of the Attorney General on the question of whether it is a revolving fund.

of our

Mr. BUCHANAN. Did he hold it was a revolving fund?
Secretary HYDE. Yes.

Mr. BUCHANAN. For the purposes of that section, that is, for crop-production loans?

Secretary HYDE. That is right.
Mr. BUCHANAN. Then there is a hiatus or defect in the law?

Secretary HYDE. The only defect is that if Congress decides to make more loans, they will have to change the 1932 to 1933. If, on the other hand, Congress decides to leave the loan operations in the hands of the new Agricultural Credit Corporation and wants to make this money available to the R. F. C. for other purposes, they would have to say so.

Mr. Buchanan. They would have to pass a law authorizing it? Secretary HYDE. Yes.



Mr. BUCHANAN. The committee was left under the impression the other day that the R. F. C. could or had been checking out some of these funds: Do you know anything about that?

Secretary HYDE. The R. F. C. has used some $37,000,000 for the purposes of setting up these agricultural credit corporations that they were authorized to set up in the second act, (sec. 201 (e) Employment relief and construction) in what is known as the relief bil. İn other words, the money which they got to capitalize these 12 regional agricultural credit corporations comes out of the funds provided by this section (2) by the terms of the second relief bill.

Mr. BUCHANAN. It comes out of that section, yes, but the question in my mind is does it come out of that section in money that has not been allotted? It has not all been allotted to the Secretary of Agriculture.

Secretary Hyde. No. The original act allotted $50,000,000 to the Secretary of Agriculture plus 10 per cent of all issues of securities. The total amount thus far allocated, including the original allocation, is $122,000,000 as of December 6.

Mr. BUCHANAN. The only question in my mind is does it come out of money that has been allotted to the Secretary of Agriculture, or does it come, under that section, out of further money to be raised under the terms of that section?

Secretary HYDE. The funds for capital stock of agricultural credit corporations comes out of the amount allotted to the Secretary of Agriculture. If you will think of that in this connection, I think it will clarify it somewhat. I have always thought of that section 2 in terms of the maximum amount of money which might accrue under it-$200,000,000; $50,000,000 immediately available and $150,000,000 potentially available as they issued securities. Now, we have had allotted to us $122,000,000, and out of that we have received in cash from the R. F. C. $75,000,000. The difference between the allotment of $122,000,000 and the cash received of $75,000,000, or $17,000,000, has been released to the R. F. C. for use as capital stock in setting up agricultural credit corporations. In addition to the $47,000,000 released, we have returned to the R. F. C. $15,000,000 from our original fund and collections. This makes a total of

$62,000,000 in the hands of the R. F. C. available for capital stock of agricultural credit corporations or for the purposes of the act as set out in section 2. The R. F. C. reports that as of December 6 they had used $37,000,000 of this fund for capital stock of agricultural credit corporations and are carrying as a credit to the account of the Secretary of Agriculture on their books $25,000,000 available to him or for further capitalization of agricultural credit corporations. Does that make it clear?

Mr. BUCHANAN. Yes; that makes clear what has actually been done. The question in my mind is, after it has been allotted to you, whether or not there is any authority to reallot it or to return it to them.

Secretary HYDE. Yes.

Mr. BUCHANAN. You are authorized to do it by the terms of the later act?

Secretary Hyde. Yes.
Mr. BUCHANAN. And they called on you and you reallotted it?

Secretary Hyde. I released it, so that they could have it. Now they have got there $25,000,000, which is the difference between what they allotted to us and what has been released, back to them, after paying 37,000,000 into capital of agricultural credit corporations. I take it we are entitled, at any time we want that $25,000,000, to demand it. In the meantime, it is not mingled with their funds.

Mr. BUCHANAN. It is considerably mixed up.

Secretary HYDE. Maybe I do not get your point. It does not seem so mixed up to me; I


be wrong Mr. SANDLIN. It seems like it is being handled as the law directed it to be handled.

Secretary Hyde. Yes. If you will examine this little table, Mr. Buchanan, maybe that will help out a little. That is just a rough table so that anybody can see what has happened (indicating).

Mr. BUCHANAN. This shows the total allotted to the Secretary of Agriculture by the R. F. C. as $122,000,000; and released by the Secretary of Agriculture back to R. F. C., as not used for crop-production loans, $47,000,000.

Secretary Hyde. And made available, you might say for the purpose of clarity, for capitalizing Agricultural Credit Corporations.

Mr. BUCHANAN. Under a later act of Congress?
Secretary HYDE. Yes.



Mr. BUCHANAN. That leaves as the total amount in the hands of the Secretary, or originally turned over to him

Secretary Hyde. Yes; for which we must account.
Mr. BUCHANAN. For which you must account_$75,000,000.
Secretary HYDE. That is right.

Mr. BUCHANAN. The total loaned is $64,204,503.06, leaving a balance of $10,795,496.94.

Secretary HYDE. Yes.
Mr. BUCHANAN. Then collections -I presume this is cash collec-


Secretary Hyde. Yes.

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