Mr. FERGUSON. We have so far been able to run counter to that current by keeping our appraisals down without reflecting a temporary increase in costs.

Senator Taft. The increase in raw materials has all happened in the last 3 months, 3 or 4 months, and insofar as that shows a large increase, we just are obviously going to be increased 15 percent in practically every field; and I don't think you can escape. I think if we can escape with a 25-percent increase we are lucky.

Mr. FERGUSON. I don't think we will have that much. Or let me make just one more observation about that and I am through.

I think one of the soundest things in this whole F. H. A. set-up is this:

When we take over a house, when a house goes into default and is foreclosed and is conveyed to us, we don't have to pay on the barrel head. We take that house over and we give a debenture; in other words, a promissory note, which is not due until 3 years after the mortgage would become due, and we can keep that house off of the market at times when we think the market would not absorb it.

I think most everybody will agree that the principal difficulty in 1932 and 1933 was the vast number of houses that were thrown on the market at one time.

We can keep these houses off the market if that is for the benefit of the mortgage structure, and I think that will be of a substantial amount of good.

I think that is all I have.

Senator BANKHEAD. Any other questions?

Senator TAFT. You said you had insured $4,345,000,000. Now how much of that is paid off? How much outstanding insurance today? Mr. McDONALD. That includes title I and title II?

Senator TAFT. Yes. What is the total outstanding today?
Mr. FERGUSON. Substantially $2,600,000,000 under title II.
Senator TAFT. What is the total outstanding insurance today?
Mr. FERGUSON. Can we give you that later, Senator?

Senator TAFT. Yes.

Mr. FERGUSON. Suppose we put that in the record [indicating]. (The document indicated is as follows:)

Federal Housing Administration—Summary of insuring operations for the period from June 27, 1934, to Mar. 31, 1941, or as of Mar. 31, 1941

Mr. FERGUSON. We will make a report for the Senator on that. Senator TAFT. You made a statement you had insured $4,345,000,000. Mr. FERGUSON. We will give you that, Senator.

Senator BROWN. Will you turn to page 4 of these changes.

Senator Danaher on another matter here called attention to the type and style of legislating by saying:

Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, the Administrator shall have power.

I agree with what he said at that time. But I would like the section better if it was a little more specific. For example, you could still sell a house that you had foreclosed under this provision to Senator Taft if you wanted to; there is a law that says you can.

Now, do you want to abrogate that kind of a law by what I term rather loose draftsmanship here? I think we ought to be a little more specific than that and say what provisions of existing law you are endeavoring to get away from. Let us know what they are and perhaps we could with your help and the help of our own draft service be a little more specific about that. That is very broad

notwithstanding provisions of law relating to disposal of real estate by the United States the Administrator shall have power.

That is, you may do anything. You may deal with it just as if you were not the United States, not a representative or agency of the United States, with any of this property.

Mr. FERGUSON. The reason that was worded in that way, Senator Brown, is that that is an exact copy of the paragraph in the original act.

Senator BROWN. Well I think we made a mistake there.

Mr. FERGUSON. And the language was made the same so it would be construed the same.

Senator BROWN. I agree, the Senator made a very eloquent speech about that one day and it impressed me very strongly.

Mr. FERGUSON. I am quite sure Mr. Wood can revamp that.

Senator BROWN. I would like to clear up that situation so we could find out what it is in existing law that hampers you or hinders you, and get away from it, but the blanket authority seems to me a little bit too broad. I would just like to have you consider that.

Senator DANAHER. Could you let us know, Mr. Ferguson, let us have an idea of the performance of the functions under clause 2? Mr. FERGUSON. You mean now?

Senator DANAHER. Yes.

Mr. FERGUSON. Well, the things that we are trying to get away from

are:

In the first place, we would probably have to turn all questions of law over to the Department of Justice.

We would probably have to advertise for bids to sell every house that we sold.

Senator DANAHER. Have you been doing that?

Mr. FERGUSON. Oh, no.

Senator DANAHER. Is this new?

Mr. FERGUSON. No; this is in the original act insofar as title II is concerned. Have you the original act, Senator?

Senator DANAHER. Yes.

Mr. FERGUSON. Page 10, subsection (g), word for word, that is the provision which authorizes us to sell houses which we take over under title II.

Now, we are putting the same provision in to cover houses which we take over under title I.

Senator DANAHER. Have existing limitations restricted your operations under title I?

Mr. FERGUSON. Oh, my, yes. We cannot sell these houses under title I at all. We have to turn them over to the Procurement Division as surplus property.

There is just no reason for doing that at all. The Procurement Division say they are not equipped to sell houses, where we have a department that is experienced in selling houses all over the country.

It is only to accomplish that, to sell them quickly and expeditiously without all of the Government regulations of advertised bids if over $50; and it is only for that purpose this was put in the bill.

We sometimes get a telegraphic offer for a house. We have them appraised; we know what they are worth; and we get a telegraphic offer only good for 24 hours. We have to let the buyer know. That is the only thing we want.

Senator DANAHER. Well, there are two instances of existing restrictions that you have just described. If we could have from you a list of the statutes that you would like to circumvent-and I don't use that word invidiously-it would help us.

Mr. FERGUSON. I will be glad to do that. I myself have always thought you get into trouble when you begin to particularize in legislation.

Senator DANAHER. You get into so much more trouble if you don't particularize, I find.

Mr. FERGUSON. But we will be glad to do that.

Senator DANAHER. One thing is whatever restrictions there are in the law represent the experiences of the past that made that law necessary.

Mr. FERGUSON. I think we can probably do that.

Senator BANKHEAD. Any other witnesses?

Mr. FERGUSON. No; we have no other.

Senator BANKHEAD. The members of the committee will find an additional amendment to the existing title of this bill.

Senator TAFT. Mr. Chairman, may I ask before that comes up if any other requests to be heard have been received from the building and loan people, or any other building people?

Senator BANKHEAD. I have none.

Mr. FERGUSON. I might say for your benefit we have gone over the bill with the building and loan people and they are satisfied. Senator TAFT. The real-estate associations are all very much in favor of it, as I understand.

Mr. FERGUSON. Yes.

Senator BANKHEAD. We have here, Senator Lee.

Now, this bill, this amendment that has been offered to said title is what is known as the Lee amendment, offered by Senator Lee and 50 other Members of the Senate 2 years ago, an amendment to the Bankhead-Jones Farm Tenant Act.

That bill was adopted by the Senate and sent to the House. It never had any consideration as far as I know by the House. I don't think the committee undertook consideration of it.

321774-41-4

In this session, early in the session, Senator Lee introduced the same bill I have presented here, and I want it known as the Lee amendment and not as my personal amendment, though I was one of the 51 Members who put their names on the bill.

STATEMENT OF SENATOR JOSH LEE, OF OKLAHOMA

Senator LEE. Mr. Chairman, in the last national election both political parties went on record in their platforms to aid farm tenants to become farm owners.

According to the census of 1935, 2,865,000 farm families were farming farms which they did not own. And 42 percent plus of the farmers of America are farm tenants today; 61.2 percent of the farmers of Oklahoma are farm tenants. A little higher percent in Texas and Arkansas are farm tenants. Now, Senator BankheadSenator TAFT. Are those figures the same as to acreage? Senator LEE. Those are the numbers of farmers.

Senator TAFT. Does that work out about the same as to acreage? Senator LEE. I couldn't answer that.

Senator Bankhead has long preached aid to the farm tenants because he represents a section of the country where the tenant problem is a very acute one and he has been a trail blazer in this.

Senator Bankhead and former Congressman Jones, in compliance with pledges of the party, got through a bill known as the Bankhead-Jones farm-tenant bill.

It provided for an appropriation of not to exceed $50,000,000 a year to be loaned to tenants to purchase farms; but on the basis of the average amount for each farm, that would purchase only 10,000 farms a year.

That of course could be no more than a drop in the bucket to cure this problem, but it was very advantageous in that it gave us valuable experience. It gave us a good set-up on which to build a more comprehensive farm-tenant program.

Therefore this bill which Senator Bankhead offered as amendment to the present housing bill was worked out in conjunction with Senator Bankhead, former Congressman Jones, the Farm Security organization at that time

Senator BANKHEAD. Dr. Alexander.

Senator LEE. Dr. Alexander at that time was heading it.

In conjunction with the legal representatives of the Department of Agriculture.

We had a number of conferences and made a number of changes; then we had a conference at the suggestion of President Roosevelt with the Bureau of the Budget representatives, and worked out the bill as it is here offered, which was agreed to by the Budget representatives and the council.

The amount in here is sort of a graduated proposition; the way the bill provides is that not to exceed $50,000,000 a year can be loaned the first year-or can be insured the first year; and not to exceed $150,000,000 at the end of the second year; and not to exceed $350,000,000 by 1944.

Senator BANKHEAD. A total of $350,000,000.

Senator LEE. A total of $350,000,000 is the maximum amount that can be insured by the Government under this proposition as included and provided in this amendment.

Now, because this has exactly the same principle as Federal Housing, namely the Government acting as the insuring agent of the mortgagee; because the debenture plan and all of the financial structure is identical with the Federal housing it is appropriate that it be attached to the Federal housing bill.

In other words, this proposes to do for the farmer what Federal Housing is doing for the home owner in the city.

The rate of interest is 3 percent, which is the same as the BankheadJones law which is now operating and has been for some time.

The bill provides that a local committee shall pass on the value of the farm, and that the local committee advising with the Secretary or his representative shall determine whether or not the farm is of sufficient size and fertility to support a family unit.

This provides the same debenture plan as Federal Housing; and that has been covered. I don't believe I will go into that.

This would give a farmer who has shown, according to the local committee, enough experience and ability and determination and energy to try to make a success of farming, a chance to purchase a farm on a long-time basis.

The maximum number of years is the same as the Bankhead-Jones, 40 years; but it doesn't mean it has to be that amount. The Secretary has the authority to make it a less number if it is decided that he can pay out on a less number.

This amendment provides for variable payments, which is a very important provision with respect to agriculture. Some years farmers make good crops and get good prices; other years are lean.

This provides that the farmer can make three payments in advance, and that the Secretary or his representatives will be there on the ground urging, when he has the opportunity, that he pay up three payments in advance.

Then if there comes a lean year and he is showing good faith, and can meet only part of his payments, this provides that out of the fund which has been set up that the Secretary is authorized to pay the difference in what he has paid and what he owes in order to keep his loan good; and then to reimburse the Secretary of Agriculture's fund, or the fund set up for this, out of a good year as it comes along.

This bill provides for a certain amount of supervision and guidance on the part of the Secretary of Agriculture, just as is already being done under the Bankhead-Jones law.

Senator TAFT. What is the advantage, Senator? Now the Secretary has authority to make these loans to tenant farmers directly, I think. What is the advantage of going to an insurance system? Senator LEE. Well, good. I am glad you asked that. I was presuming that you would know that.

The advantage is that it utilizes the capital which is already now invested in the farm instead of requiring the Government to appropriate money out of the Treasury and then use that as cash. It would be too great an amount for us to appropriate enough to ever meet this problem; and all of these farms are owned by somebody.