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RURAL CREDITS.

COMMITTEE ON BANKING AND CURRENCY,

HOUSE OF REPRESENTATIVES,
Wednesday, January 31, 1923.

The committee this day met, Hon. Louis T. McFadden (chairman) presiding. The CHAIRMAN. The committee will please come to order. This is a hearing called on Senate bill 4280, which is known as the Capper-McFadden bill, being an act to provide for the incorporation and supervision of corporations formed for the purpose of making agricultural and live-stock loans; to amend the Federal reserve act; to amend the Federal farm loan act; to extend and stabilize the market for United States bonds and other securities; to provide fiscal agents for the United States, and for other purposes.

We have with us this morning Mr. Eugene Meyer, jr., managing director of the War Finance Corporation, who will make a statement on this bill. I will not be here because I am engaged in a conference on the bank tax bill all the time, and Mr. Strong will preside. I am going to request the members of the committee, so far as possible, to let Mr. Meyer make a connected statement and then, if the members of the committee want to ask questions when he has finished, he will gladly give them an opportunity to do so; but he desires to make a complete statement before he is interrupted. If the committee will defer to his pleasure in that respect it will be very pleasing, I am sure.

STATEMENT OF MR. EUGENE MEYER, JR., MANAGING DIRECTOR WAR FINANCE CORPORATION.

Mr. MEYER. Mr. Chairman and gentlemen, there has already been some testimony before this committee in connection with the bill under consideration (S. 4280). I refer to the testimony some weeks ago of Mr. Fred H. Bixby, president of the American National Live Stock Association, and other members of the special committee appointed by the association to consider what legislation is needed in order to provide adequate financing for the live-stock industry when the War Finance Corporation ceases to function. While some modifications were made in the bill by the Senate Committee on Banking and Currency, the provisions which Mr. Bixby discussed have not been changed in any important respect. Mr. Bixby's statement has been printed and copies are available to the members of the committee.

This bill, gentlemen, is not essentially and exclusively a live-stock financing bill, as has been frequently stated. It is intended to meet, in a comprehensive way, the problems and difficulties that have come to the attention of the War Finance Corporation in connection with credit for the production and marketing of agricultural products; to provide for the more liberal financing of agriculture generally through the existing banking structure; and also to put the financing of the live-stock industry on a sound basis.

The proposed amendments to the Federal reserve act are, in my opinion, of even greater importance than the other provisions of the bill. The live-stock industry-one of the fundamental industries of the country-is perhaps in greater need of adequate financing at reasonable rates than any other branch of agriculture, because the business is carried on largely in a territory where capital is relatively scarce; but so far as the area of credit involved and the volume of business affected are concerned, I should say that part 2, the part containing the Federal reserve amendments, is even more important than the remainder of the bill. When I use the term "live-stock industry," I have in mind particularly the breeding end of the business as distinguished from the fattening and finishing end.

In the last year and a half the War Finance Corporation, acting under the agricultural credits act of August 24, 1921, has had a very extensive experience in connection with agricultural and live-stock financing, as the figures in our

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annual report will show. The report has been published, and I would like to have a copy of it incorporated in the record.

Mr. STRONG. If there is no objection it will be so ordered. (The report referred to is as follows:)

ANNUAL REPORT OF THE WAR FINANCE CORPORATION FOR THE YEAR ENDED NOVEMBER 30, 1922.

WASHINGTON, D. C., December 4, 1922. SIR: In accordance with section 19 of the War Finance Corporation act, as amended, the corporation submits the following report for the year ended November 30, 1922:

At the time of the last annual report the machinery for administering the agricultural credits act of August 24, 1921, which broadened the powers of the War Finance Corporation and gave it authority to make advances for agricultural purposes to banking and financing institutions and cooperative marketing associations, had just been organized throughout the United States. Thirty-three loan agencies had been established in the various agricultural and live-stock districts, banking institutions had become familiar with the pow ers and purposes of the corporation, and the flow of credit to the farmers and stockmen had begun to gain momentum. From the first of November, 1921, to the end of February, 1922, the loans authorized averaged more than $2,000,000 a day.

LOANS FOR AGRICULTURAL AND LIVE-STOCK PURPOSES.

To November 30, 1922, the corporation approved advances for agricultural and live-stock purposes totaling $433,447,000 in 37 States-$182,859,000 to 4,400 bankink institutions in 37 States: $77.671.000 to 113 live-stock loan companies. old and new, in 21 States; and $172,827,000 to 32 cooperative marketing associations in 20 States.

The loans authorized on live stock in the West totaled $90,001,000; on cotton in the South, $81,848,000; on grain in the Northwest, Middle West, and Southwest, $36,790,000; on peanuts in Virginia, $2,045,000; on tobacco in Kentucky, Indiana, and Ohio, as well as in North Carolina and neighboring States, $40,000,000; on rice in California, Louisiana, and Arkansas, $10,250,000; on sugar beets in Colorado and Utah, $11,438,000; on other agricultural commodities, $1,895,000; and for general agricultural purposes, $159,180,000..

Of the amounts approved, $265,598,000 had been actually advanced to November 30, 1922-$168,258,000 to banking institutions, $73,452,000 to live-stock loan companies, and $23,888,000 to cooperative marketing associations.

Repayments received by the corporation to November 30, 1922, on account of these loans totaled $109,938,000, of which $71,243,000 was repaid by banking institutions, $24.129,000 by live-stock loan companies, and $14,566,000 by cooperative marketing associations, leaving a balance outstanding of $155,660,000, as follows: From banking institutions, $97,016,000; from live-stock loan companies, $49,323,000; from cooperative marketing associations, $9,321,000.

LOANS FOR EXPORT PURPOSES.

In addition to the loans for agricultural and live-stock purposes, the corporation, from the time it resumed operations in January, 1921, to November 30, 1922, authorized advances totaling $53,374,000 to assist in financing exports--$38,379,000 to banking and financing institutions, $9,733,000 to exporters, and $5,262,000 to cooperative marketing associations. These advances were approved for the most part prior to the passage of the agricultural credits act, when the powers of the corporation were restricted to the financing of exports. Of the total amount authorized for export purposes, $5,778,000 represented advances on grain, $3,246,000 on tobacco, $35,759,000 on cotton, $3,120,000 on other agricultural products, and $5,471,000 on manufactured commodities.

To November 30, 1922, $38,654,000 had been actually advanced against these export commitments-$28,469,000 to banking institutions, $7,547,000 to exporters, and $2,638,000 to cooperative marketing associations.

Repayments received by the corporation to November 30, 1922, on account of its export loans totaled $36,594,000, of which $28,308,000 was repaid by banking institutions, $5,648,000 by exporters, and $2,638,000 by cooperative marketing associations, leaving a balance outstanding of $2,060,000, as follows: From banking institutions, $161,000; from exporters, $1,899,000. All the export

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