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.

ALLOTMENT TO SECRETARY OF AGRICULTURE FOR CROP PRODUCTION

LOANS

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 of our collections goes 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 judgment. 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.

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.

FUNDS ALLOTTED TO SECRETARY OF AGRICULTURE USED FOR AGRICULTURAL CREDIT CORPORATIONS

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 bill. In 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 $47,000,000, 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 may 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.

EXPLANATION OF BALANCE OF ALLOTTED FUNDS TO CREDIT

OF SECRETARY OF AGRICULTURE

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 collections?

Secretary HYDE. Yes.

Mr. BUCHANAN. Collections, $14,474,432.72 plus unidentified collections of $72,890.68 and telegraphic notices of deposits of $1,161, 557.25 making a total of $15,708,880.65 which is placed in a special fund to the credit of the Secretary of Agriculture, in the Treasury. Secretary HYDE. Yes.

Mr. BUCHANAN. This $10,795,496.94 that you did not loan and which was left in your hands, is that to your credit in a special fund, just like collections?

Secretary HYDE. The 10,795,496.94, less expenses paid, plus the collections have been deposited in the same special account at the Treasury.

Mr. BUCHANAN. Which leaves to the credit of the Secretary of Agriculture in the special fund in the Treasury, $26,000,000?

Secretary HYDE. I would not put it in that form, because we have turned $15,000,000 back as you will see later on in the statement. Mr. BUCHANAN. That is another return, then?

Secretary HYDE. Yes; an additional return; that is a return on collections; the other was a return on allotted capital.

Mr. BUCHANAN. Then this $15,000,000 is not to your credit? Secretary HYDE. No; it is not to my credit in the Treasury. It is part of my accounting to the R. F. C. and is to my credit there. Mr. BUCHANAN. Now you had $26,504,377.59 originally to your credit, after the first return. Later the Secretary of Agriculture returned to the R. F. C. $15,000,000, leaving now to his credit, less expenses, is it not?

Secretary HYDE. Yes.

Mr. BUCHANAN. Leaving to your credit $11,504,377.59. The expenses were $3,415,168.90, which leaves $8,089,208.69 unexpended and interest deductions and collections, $2,076,897.97. That leaves the total now to the credit of the Secretary of Agriculture in the special fund in the Treasury $10,166,016.66. Now what is this "refund to borrowers" and "farmers' seed loans due borrowers"? Mr. HALL. That is where a borrower has paid in advance and we have to refund him the unearned interest we had deducted; where they have overpaid their account and we owe a refund, or where we have collected money on farmers' seed loan accounts. The collections on seed loan accounts are turned over to the department disbursing officer for deposit in the proper appropriation account in the Treasury.

Mr. BUCHANAN. Well, that is in the Treasury, then?

Mr. HALL. That is in the Treasury.

Mr. BUCHANAN. In other words, you deducted the interest in advance?

Mr. HALL. That is right.

Secretary HYDE. And when they pay in advance, we, of course, have to pay them back.

Mr. BUCHANAN. Now, you pay into the Treasury?

Mr. HALL. No; we have deducted on the loans interest in advance. Mr. BUCHANAN. And this $83,611.15, is that interest?

Mr. HALL. That is interest, refunds due, plus refunds for overpayment of accounts plus collections we have made on farmers' seed-loan accounts, that we have to pay back to the farmers' seed loan. The seed-loan collections for 1931 and prior years is deposited in the Treasury to the proper appropriation account.

Mr. BUCHANAN. The amount of that is $83,611.15.

Mr. HALL. That is right.

Mr. BUCHANAN. Making total cash deposited to the Secretary of Agriculture, now remaining, $10,249,717.81.

Mr. HALL. That is right.

Mr. BUCHANAN. Now, then, just a question or two on those seed loans. This is on seed loans, not crop-production loans.

Secretary HYDE. It is all crop-production loans?

Mr. HALL. Yes.

Mr. BUCHANAN. Now, then, Mr. Secretary, if this is a revolving fund for the purpose of crop-production loans, this $15,000,000 you returned to the R. F. C. evidently must have been returned for the purpose and used by them for the formation of the agricultural livestock credit banks.

Secretary HYDE. No. They capitalized these agricultural credit corporations out of that $47,000,000. The difference between that $47,000,000 and the $37,000,000 (which I understand is the amount of capital they put into them), or $10,000,000, plus $15,000,000, is there now, available for the use of the Secretary of Agriculture for the purposes of these loans.

Mr. BUCHANAN. You do not mean plus the $15,000,000 you returned, do you?

Secretary HYDE. Yes, plus the collections. You see, they allocated us $47,000,000 more than we used. Now they have used $37,000,000 of that $47,000,000 for capitalizing the agricultural credit corporations, leaving $10,000,000 balance. That $10,000,000 balance, plus the $15,000,000 of our collections, is in their hands, available for the purposes of this section, or a total of $25,000,000.

ACCOUNTING BY SECRETARY OF FUNDS ALLOTTED

Mr. BUCHANAN. The only question is why was it returned, then; why was it not just left in the fund to your credit?

Secretary HYDE. Under the law, I have to account to the R. F. C. There is no virtue in holding the funds in my hands. Mr. BUCHANAN. Where do you get that law?

Secretary HYDE. That I have to account?

Mr. BUCHANAN. Yes.

Secretary HYDE. Well I am acting as their agent.

Mr. BUCHANAN. I was just wondering. Have you an opinion of the Attorney General on that?

Secretary HYDE. Yes.

Mr. BUCHANAN. That you are their agent?

Secretary HYDE. That I am governed by the same terms and conditions as the R. F. C.

Mr. SANDLIN. You are part of the R. F. C., as to that?

Secretary HYDE. Yes. In other words, the R. F. C.'s job was to account on the basis of the amount of money they have given to me. Now my job to them is to account for the amount of money they have turned over to me and, in the final accounting to the Treasury, or to the Congress for their capital, for the amount of money they have used, they have to include my account, undoubtedly.

Mr. BUCHANAN. And you think their duty would go further than just merely saying "turned over to the Secretary of Agriculture" a certain amount of money?