the worst storms of economic adversity. As early as January of this year, repayments on agricultural and live-stock loans reached a total for the month of nearly $2,000,000. By March the amount had increased to $9,500,000, and from then on fluctuated between $9,000,000 and $12,000,000 a month until, in October and November, they averaged more than $15,000,000. Altogether, more than $109,000,000, or 41 per cent of the amounts advanced, has been repaid on the corporation's agricultural and live-stock loans. These repayments represent voluntary liquidation and a considerable number of them were made in advance of due dates.

On export loans made since January, 1921, out of a total of $38,654,000 advanced, repayments to November 30, 1922, amounted to $36,594,000, leaving a balance outstanding of only $2,060,000. At the time of the last annual report, export loans made prior to the suspension of operations in May, 1920, were outstanding to the extent of $23,761,000. During the year ended November 30. 1922, these loans were repaid in full.

Of the loans made under the war powers of the corporation, $65,491,000 was outstanding when the last annual report was submitted. The repayments during the year on account of these loans totaled $37,841,000, leaving a balance outstanding of $27,650,000.

The total repayments on all loans, from January 4, 1921, to November 30, 1922, amounted to $230,028,000.

SECURITY FOR LOANS SAFEGUARDED.

Although it has been necessary for the corporation to handle an enormous volume of business within a short period, every safeguard required by sound banking practice has been adopted. Each loan to a bank is secured by carefully selected collateral, generally notes of farmers whose financial statements have been examined and approved. A substantial margin of security has been required in virtually every case. Advances to live-stock loan companies are secured by chattel mortgages upon live stock, conservatively valued. Loans to cooperative marketing associations are secured by nonperishable agricultural commodities, properly warehoused, with a large margin in the value of the security. The corporation has endeavored not only to provide an adequate margin of security in each case, but by means of frequent inspections, and by keeping close watch upon the condition of the market for the pledged commodities, to see that this margin of security is not permitted to decrease. Warehoused commodities are inspected by inspectors working under the supervision of the Department of Agriculture, or, where this is not possible, special arrangements are made for adequate inspection under the supervision of the local committee of the corporation. In the case of live stock, a system of inspection by experienced inspectors is organized by the corporation in each district, and every care is taken to see that the margin of security is maintained both as to the number and the condition of the animals.

Before a loan is approved the local committee of bankers and business men, who are chosen on account of their familiarity with local banking and agricultural conditions, passes upon each application from a bank or a loan company, examines the financial statement of the applicant, and analyzes and appraises the collateral submitted. If the application is approved by the committee, it is forwarded to Washington, accompanied by a certificate, signed by at least three committee members, showing that they have examined the financial condition of the bank or loan company and the collateral, and that, in their opinion, the loan is adequately secured. In Washington the application is analyzed by experienced examiners, generally men with banking experience, selected because of their familiarity with agricultural and live-stock credits. The legal aspects of each loan are examined by attorneys. Finally, each loan is carefully considered by the board of directors of the corporation.

Of course, every institution doing a large banking business must expect a certain percentage of losses. There are risks inherent in the business, which were accentuated during the troubled financial times through which we have passed. Judging by the flow of repayments already coming in, and the assurances received from the local committees, as well as the character of the security held by the corporation, the precautions exercised in passing upon loans and the fundamental soundness of American agriculture, there is every reason to believe that the loans made by the War Finance Corporation for agricultural and live-stock purposes will be paid without undue losses, and that the funds invested in the enterprise by the taxpayers of the United States will be returned intact, with a reasonable return on the money while it was in use.

LOCAL COMMITTEES ESSENTIAL FACTOR IN CORPORATION'S ACTIVITIES. The agricultural loan agencies established in the various agricultural and live-stock districts, and administered by committees of local bankers and business men, have constituted an indispensable factor in the conduct of the business of the corporation. Whatever success has attended the corporation's efforts to meet the emergency is due, in large part, to the fact that it was able to enlist locally the services of some of the best bankers and business men in the various States, working devotedly and without compensation in the public interest. These men have borne the brunt of the burden of the corporation's rescue work in the field. They have shown a fine spirit of public service, and have in many instances given more of their time to the work of the corporation than to their own business. They have, in fact, been the backbone of the organization through which the corporation has functioned. Not only have they examined collateral, made recommendations to the board regarding loans, and carried on the regular work involved in answering inquiries, handling applications, and the like, but through them the board of directors has been able to establish and maintain close and sympathetic contact with the various problems, in each district. With their thorough knowledge of conditions in their communities, both from the banking and the agricultural point of view, they have supplied that element of local understanding and decentralization which was an absolute necessity if the corporation was to function in a sound and businesslike way and at the same time with the efficiency and dispatch required by the emergency. Throughout the year the directors of the corporation have maintained close contact with its committees all over the country and, through frequent consultation with them both in Washington and in the field, as well as by correspondence, have kept in constant touch with their activities and with banking and agricultural conditions in their respective districts.

At the peak of the work there were 33 agricultural loan agencies in operation, but with the improvement in the general situation and with the decline in the calls upon the corporation for aid, it was found possible, without detriment, to discontinue three of them. The agencies at Detroit, Mich., and Indianapolis, Ind., were discontinued on June 13, 1922, and their records and activities transferred to the Chicago agency. The agency at Richmond, Va., was closed on October 16, 1922, and its records and activities transferred to Washington, D. C. A statement showing the headquarters of the various agricultural loan agencies and the personnel of the committees in charge of them is attached to this report as Exhibit G.

CORPORATION'S AUTHORITY TO MAKE LOANS EXTENDED.

Although by June the acute phases of the agricultural crisis had passed and there had been a steady decline in the number of applications received by the corporation, it was apparent that the steadying effect of its activities was still needed. The Congress, therefore, by an act approved June 10, 1922, extended until June 30, 1923, the period during which the corporation may make advances.

PERSONNEL.

The term of Angus W. McLean, a director of the corporation, expired on May 17, 1922. Fred Starek was nominated by the President on June 12, 1922, for the vacancy thus created, and the nomination was confirmed by the Senate the same day. Dwight F. Davis, director, whose term expired on May 17, 1922, was reappointed by the President. Gerard C. Henderson tendered his resignation as general counsel of the corporation on June 30, 1922, but continues to assist the corporation as consulting counsel. Mr. Henderson was succeeded as general counsel by G. A. Marr, of Salt Lake City, Utah.

A. W. MELLON,

Secretary of the Treasury.

HENRY C. WALLACE,

Secretary of Agriculture.

EUGENE MEYER, Jr.,

Managing Director.

GEORGE R. COOKSEY,

Director.

DWIGHT F. DAVIS,

Director.

FRED STAREK,

Director.

EXHIBIT A.

Summary of the operations of the War Finance Corporation from January 4, 1921. in November 30, 1922, inclusive.

Summary of the operations of the War Finance Corporation from January 4, 1921, to November 30, 1922, inclusive-Continued.

Advances for "Agricultural and live stock purposes" under section 24 (par. 1), August 24, 1921, to November 30, 1922, inclusive.1

Section 24 was added to the original War Finance Corporation act by the agricultural credits act of Aug 24, 1921.

Includes applications totaling $9,231,096.19 which were approved by the corporation but subsequently withdrawn by the applicants.

EXHIBIT C.

Advances to assist in financing exports under sections 21, 22, and 24 (par. 2), January 4, 1921 to November 30, 1922, inclusive.1

1 Section 21 was added to the original War Finance Corporation act by the act of Mar. 3, 1919, and sections 22 and 24 by the agricultural credits act of Aug. 24, 1921.

2 Does not include advances aggregating $27,387,816.10 originally applied for and approved under section 21 for export purposes, and subsequently withdrawn by the applicant and resubmitted and approved as advances for agricultural purposes under section 24.

Of the total amount $40,947,785.40 represents advances approved subsequent to Aug. 24, 1921.

EXHIBIT D.

Status of all advances made by the War Finance Corporation from April 5, 1918, to November 30, 1922, inclusive.

powers of the corporation.... $306, 742, 153.96 $231, 231, 683. 05 $10, 019, 373. 25 $37, 840, 909. 98 $27, 650, 187.68

Advances for export purposes prior to resumption of operations in January, 1921..

Advances for export purposes

38,653, 539.82

8,554,013. 41 28, 039,530.35 2,059,996.06

106,095. 12 109, 832, 062. 19 155, 659, 917.61

since resumption of operations in January, 1921.. Advances for agricultural and live-stock purposes under agricultural credits act...

Total....

265,598, 074.92

657,341, 422.97 241,943, 794.07 30, 554, 414.30 199, 473, 113. 25 185, 370, 101.35

NOTE. When the corporation resumed operations in January, 1921, there was outstanding the sum of $111,117,610.41.