Mr. PLUMMER. I knew that a part of the officers of that council had entered into such an agreement.

The CHAIRMAN. I judge, from your resolutions, that that agreement is not in harmony with what your organizations favor.

Mr. PLUMMER. It is not. It is not in harmony, as we see it in our commodity marketing association, with varying conditions of commodity, or even the wheat growers' association.

Senator HEFLIN. What percentage of your organization is in favor of that attitude?

Mr. PLUMMER. Of our State organization, none. The resolutions that were passed at their national conference held in Washington did not coordinate with the officers

The CHAIRMAN. The national council, as I understand it, is an organization composed of representatives from cooperative and marketing organizations of farmers.

Mr. PLUMMER. Yes.

The CHAIRMAN. I put in the Congressional Record yesterday some correspondence between Mr. Sapiro, the attorney for the national council, and Mr. Peteet, secretary of the national council, showing that the officers of the national council had made that kind of an agreement that I have mentioned. What I am trying to find out is, in making that agreement, whether they fairly represented the various organizations that compose the national council. As I understand your resolutions, they did not coincide with the idea of the organizations that you represent.

Mr. PLUMMER. As we see it, they represent a minority of such organizations.

The CHAIRMAN. Of course, they are speaking or attempting to speak for all of these organizations which together compose the national council.

Mr. PLUMMER. They represent it in that way.

Senator CAPPER. I take it from your resolutions that your people regard the problem of the surplus as the important, urgent proposal. now before Congress affecting the welfare of agriculture.

Mr. PLUMMER. We do. We regard that to be the all important problem. We consider that if, as the most of us will concede, it was: necessary to build up these industries under a protective system (and we have men in our association that contend that it was not) at any rate that time has passed. We must face the condition as it exists. We have built up industries on the American standard of living. We have created the debts on the farmers under that standard.

Now if it were possible that we could reduce the cost of what is produced by the industrial world to a price level with the farm commodities, we consider, as a whole, and I think I can almost speak forour State, that it would not be advisable for the simple reason that that would leave the farmer's debt to be paid with a cheap dollar where if his income could be raised on a parity with the industrial world he would have earned that much more a year to apply on the debt, that tearing down this industrial wall and taking the bricks off, as some say, would not decrease the dollar, the mortgage on his farm, but would increase the mortgage, whereas if you build up his industry on a parity with others, strengthen his purchasing power, he could pay with the same commodity, as Mr. Croes said in giving you the figures, nearly twice the amount of debt with the same com-modities that he can at the present time.

Senator CAPPER. The farmer's dollar is not the equal to anybody else's dollar.

Mr. PLUMMER. That is right.

Senator CAPPER. You want to bring it up to an equality with everybody else's dollar?

Mr. PLUMMER. Yes.

Just speaking for our country, I have noticed, since coming to Washington, that there seems to be the idea, to some extent, that the wheat farmer is in great deal better financial condition than he was two years ago. It is believed that that has been brought about by the increased price of wheat. Such is not the case. The wheat farmer is in as deplorable a financial condition as he ever has been, or as he was two years ago, for what has brought about this better price is the short crop. We got 75 per cent production this year, or hardly that. Therefore the price has advanced, but you can readily see that when the seed is taken out and what little is consumed on the farm, the farmer or producer is not receiving much benefit, as he has that much less to sell, to realize a profit out of. So the wheat farmers are in as much financial stress as they were two years ago or ever were. Our banks are continually closing for the reason that they have those frozen assets, the farmers' papers. They are compelled to take farms, because the farmer is not able to meet his interest and taxes. That is speaking of the wheat district.

The same condition of affairs is evident all over this country. We had five Denver banks close. These are all banks that closed in three days, but they are all banks that dealt with agricultural paper, with the stock raisers with the stockyard banks. A few in 1920 in the State of Colorado-if I have the figures right, it was about 8 per cent of the deposits were in the rural districts.

Senator CAPPER. What year was that?

Mr. PLUMMER. In 1920. In 1925 there were less than 5 per cent of the deposits of the State in rural districts.

Senator CAPPER. At the same time the farm indebtedness increased or decreased?

Mr. PLUMMER. Increased. As Mr. Croes made plain, that was not on account of speculating. That had perhaps a slight influence, but this speculation has removed the real estate farmers. The farmers that bought great quantities of land and went broke, bought it at inflated prices, are what we term in our country real estate farmers, men who went out and went to farming on a big scale. There was not any great percentage in eastern Colorado or western Kansas or Nebraska of the farmers that took on any great amount, and most of them did not increase their agricultural holdings at all. We are writing continually, the Federal land bank in our district, increasing mortgages on farms, where they have not bought tractors, highpriced machinery any more than was necessary to cultivate their own farms, but they are continually increasing their farm mortgages and we are continually writing mortgages for farmers, and some old men that never had a mortgage on their farms before.

The CHAIRMAN. When you say you are writing the bank, whom do you mean?

Mr. PLUMMER. The Federal land bank and the Federal farm loan banks.

The CHAIRMAN. The Association of Bankers at Omaha? Mr. PLUMMER. Yes, sir. I have written several applications, and they have been approved in the last five years, for a second increase on farms of farmers that never had had a mortgage on their land until that time. In 1921 and 1922 they took out a mortgage to pay up their floating debt that had accumulated. They were not able to maintain their operations in a great number of cases. In 1924 and 1925 the same men have increased their loans. As a rule they took out small loans. They did not want any more money than was necessary. The next two or three years proved that they were driven along the same financial road, and they had to come back and increase that loan for the same purpose. They said they had incurred these bills and again found themselves unable to meet them, in order to keep up their farm operations.

Senator CAPPER. Do any of them default in their interest payments?

Mr. PLUMMER. Yes. Not so much with the Federal land bank as with the other banks.

The CHAIRMAN. You are secretary of the association of the county of which Akron is the county seat?

Mr. PLUMMER. Yes.

The CHAIRMAN. Can you give us about how many loans the land banks made in that county?

Mr. PLUMMER. No.

The CHAIRMAN. I would not expect you to give more than round figures.

Mr. PLUMMER. About $6,000,000.

The CHAIRMAN. During the last few years has the interest been kept up on practically all of those loans made with the land banks? Mr. PLUMMER. Yes. We have been able to keep practically all of them up, with great effort, and there has been but two foreclosures in our part of the country by a Federal land bank.

The CHAIRMAN. When they were foreclosed, when they were sold did they sell for enough to pay the indebtedness? Did the Federal land bank lose on any of them?

Mr. PLUMMER. They did not.

The CHAIRMAN. They always paid out?

Mr. PLUMMER. Here is the way they sold them out. The Wichita bank has never closed them. They bid on the farm the amount of the mortgage and all costs.

The CHAIRMAN. That is, the bank does?

Mr. PLUMMER. The bank does.

The CHAIRMAN. When they make that bid have they often been the highest bidder, so that they got the land?

Mr. PLUMMER. They have.

The CHAIRMAN. What do they do with it then?

Mr. PLUMMER. Well, they have never acquired title to a farm. The CHAIRMAN. Never in your county? Always somebody overbids them?

Mr. PLUMMER. Well, they do not overbid them at the time, but before the redemption period expires it is redeemed or resold at a satisfactory payment.

The CHAIRMAN. So that they have in your county only two farms on hand?

Mr. PLUMMER. Yes.

The CHAIRMAN. That is a pretty good record.

Mr. PLUMMER. But that is in our county. There are other loans. I have not any idea how much the farmer has lost. They have gone to the bank or to loan companies. They have no other loan comthat protects his interests that I know of as the Federal land

pany

bank.

Senator CAPPER. And is it not true that the Federal land bank loans on a more conservative basis probably than the general run of mortgage companies?

Mr. PLUMMER. I think maybe that is true to some extent.

Senator RANSDELL. What are these loan companies who have acquired title to these lands doing with the lands? Are they farming them, letting them out to lessees or farming them in any way? Mr. PLUMMER. I would say not a very large percentage. The CHAIRMAN. They do that if they can, Senator.

Senator RANSDELL. I know they do, but I am trying to find out whether those lands are growing up in weeds.

Mr. PLUMMER. To quite an extent they are.

Senator RANSDELL. They are practically abandoned, then, in some instances, and perhaps in many instances.

Mr. PLUMMER. In a great many instances they are abandoned. It is a little bit hard to rent anything to a desirable farmer in the western country, especially in the last two or three years.

there are some who are renting, but not many. Farming is a profession, and there are lots of good farmers that have no other profession, but if they have or even think they have, within the last few years there has been a tendency to leave the farm on account of the conditions that surround the farmers.

Senator CAPPER. They can make more money at almost any other business, can they not?

Mr. PLUMMER. Almost any other line of business they can make more money with less investment.

Senator RANSDELL. Tell me this, please. Have there been enough cases of that kind where the loan companies other than the Federal farm land banks have had to take back so much land that it has caused the companies themselves to fail? Are any of those loan companies failing, so far as you know? Mr. PLUMMER. Well, I believe there are. Not right in our immediate vicinity, but that is the cause of lots of bank failures in our country, and all over the country, of course.

Senator RANSDELL. You mean those banks have been investing in land, making loans on land?

Mr. PLUMMER. No; they have not been making loans, but the farmer has not been able to take care of his obligations out of his farm operation, and there was nothing for that bank to do but to take a second mortgage on the land; not that they wanted to invest in real estate, but they had carried the farmer that they had dealt with for years, they knew his integrity, and they knew his ability, but nevertheless if he has no income they can not meet those obligations. They are renewed until finally they are compelled to take a second mortgage on the land, then at the time of foreclosure, in order to protect their interest and not lose their investment, they must take care of the first mortgage and take the land.

Senator RANSDELL. And that has caused a number of the banks to become loaded up with real estate?

Mr. PLUMMER. A great percentage of their frozen assets is represented by the real estate that they have been compelled to take as the result of the second mortgage that they were compelled to take. Senator RANSDELL. Does that apply to that section of the country out West generally, or simply to your own locality; so far as you know, of course?

Mr. PLUMMER. Well, so far as I know by personal experience, I would say to all the agricultural section of Colorado, western Kansas, and Nebraska. Of course, in a general way I know it just like the rest of you probably do, as a matter of present history.

The CHAIRMAN. This witness comes from a section of the country with which I am quite familiar myself.

Senator RANSDELL. I am asking him about these matters because I do not know the situation myself.

The CHAIRMAN. I know the situation, and he is telling it right, too. Senator FERRIS. The trend of this discussion would indicate that unless the farmers can have some relief bankruptcy is inevitable to the agricultural interests of this country. Is that right?

Mr. PLUMMER. It is.

Senator FERRIS. And there is no guesswork about it?

Mr. PLUMMER. There certainly is not. There is nothing in this so-called readjustment that is readjusting to the financial advantage of the farmer.

Senator FERRIS. And bankruptcy is the ultimate end?

Mr. PLUMMER. It is the ultimate end, I believe, for 75 per cent of the farmers in our section of the country.

Senator RANSDELL. And I take it from what you are saying it means the bankruptcy of the whole country there if all the banks are going to pieces, too. That means that the country generally will go to pieces if the farmers go to pieces. They are the bone and sinew, are they not?

Mr. PLUMMER. They are the basic industry of this country, and we consider that this is no longer an agricultural issue. We consider in our country, in eastern Colorado, that it is a national issue.

Senator HEFLIN. And involves the welfare of the whole country. Mr. PLUMMER. It does. Our bankers helped to draft these resolutions.

Senator HEFLIN. Now, this trouble that you referred to, did it commence in 1920 or 1921 when this deflation panic was brought about?

Mr. PLUMMER. We began to see the result more plainly at that time, but our history shows, the same as our mortgage record of the country shows, that they had been increasing for a considerable period of years before. In the last 20 years our mortgage record will show that the agricultural interests were on a declining basis, not to so great an extent, but to some extent. During the war there were a lot of farmers that thought they were real prosperous on account of the prices that they obtained for their products, not considering that other prices were climbing just as fast or a little faster than theirs were. But when the deflation came in 1920 it was only a deflation of the farmers' products, it developed, or the purchasing power of his dollar.