The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MORRIS SHEPPARD, TEX., CHAIRMAN D U N C A N U. F L E T C H E R , F L A . HUGO L . B L A C K , A L A . J. H A M I L T O N L E W I S , I L L . M A R C U S A. COOLIDGE, M A S S . M . M. LOGAN, KY. R O B E R T R . R E Y N O L D S , N. C . N A T H A N L. B A C H M A N , T E N N . ROBERT D. C A R E Y , WYO. L . J. D I C K I N S O N , I O W A W A R R E N R. AUSTIN, VT. W . W A R R E N B A R B O U R , N . J. G E R A L D P. NYE, N. DAK. '. R Y A N D U F F Y , W I S . ALBERT D . T H O M A S , UTAH S H E R M A N MINTON, IND. L E W I S B, S C H W E L L E N B A C H , W A S H . 'TJICmteb xtcAc COMMITTEE ON MILITARY AFFAIRS Washington, D. G. VICTOR R U S S E L L , CLERK C. H. TOLBERT, ASST. CLERK June 28, 1935 Dear Governor Eccles: I shall appreciate it very much if you will give me your personal opinion as to the suggestion made in the enclosed copy of letter by one of my constituents, I am asking for this for my own information and will not quote you i y any way. i I Enclosure Governor Marriner 3, Eccles Federal Reserve Board Washington, D* G (Oopy( W. F. 3UDDATH & COMPANY tieneral Insurance Bonding Agents Henrietta, Texas, June 10, 1935 Hon. Morris Sheppard Senator from Texas Washington, D. C. Dear kr. Sheppard: Re; The Federal Land Bank The bank is of very little assistance in our County, and it appears to me that Congress ought to at least put other loaning institutions on an equity with it by exempting them from same taxes and other charges that the land bank enjoys, so that it will have a little competition and will try to give the public some service. as it now is, it operates under the Government subsidizes, pays no taxes, and takes the best loans and freezes out all competitors, with the result that Independent loaning agencies are particularly put out of business. It occurs to me that if the Independent Loaning Companies were put on an equity with the land bank, that many people would be employed who are not now employed and the land bank would not be so arbitrary and independent. As it now is, a person cannot get a fair appraisement on land nor can he obtain a loan on anything like a normal valuation, with the result that land values have not increased like they should. If all companies had the same privileges the land bank had, they would open up and begin making good loans and it would increase our property and decrease the unemployment. I would like very much to hear from you on this matter, as I consider it a serious thing. Very sincerely yours, (S) Donley duddath DS:0LD July 5, 1955 Defer Senator Sheppardi Odder the improving condition© now evident in the mortgage market, & complaint of the kind voiced in the letter enclosed with your letter to me of June £8 would most likely arise from a particular experience rather than from a situation that is general among either farm borrowers or the Federal Land Banks* I should be disposed, therefore, if 1 were advising y ur correspondent, to suggest that he explore the alternatives to a loan fro® the Federal Land Bank in his district and then consider whether the requirements of that bank or of his local farm loan association are too severe. It is true that the Federal Land Banks are givsn special privileges to enable them to obtain funds more readily from private investors and to lend these funds in turn on terms more favorable than are usualIy available through strictly -rivafce agencies. This dors not meauf however, that a land bank "takes the best loans and freezes out all competitors,* as your correspondent puts itj nor are these other agencies 1 1 put out of business,* A recent compilation Indicates that, during the last quarter of 1354, the amount of farm loans made by all classes of private agencies, including individuals, was 58 per cent of ell farm loans recorded* The same compilation indicates that new farm loans " y insurance companies totaled f61,000,000 over b a period of sixteen months to the end of January 1955, and that farm loans by banks during the same period totaled $145*000,000* From my own observation of numerous scattered reports for more recent months, and from the attitude of most bankers with whom I have been in contact, I should say that there has been a perceptible easing of the mortgage market mod a greater - £ - willingness on the part of insurance companies, banks, m d trust companies to make aortgage loans, including far* loans. Of course, all this does not meet the precise case of your correspondent, whose chief complaint with regard to the Lend Bank in his area is that w a person cannot get a fair appraisal on land nor can he obtain a loan on anything like a normal valuation** lour correspondent evidently attaches a great deal of importance to the tax exemption enjoyed by the Federal Land Bank bonds, and believes that If some comparable privilege were accorded other lending agencies "they would open up and begin staking good loans,8 Tax exemption, however, is a factor that relates to the terms on which money is obtained for lending and not to the amount of money that can be loaned on a particular property. Nor would it affect the attitude of a lending agency in making an appraisal. Leaving aside the particular case of your correspondent, I would say that there are several steps that might be taken b y Congress to simplify and improve the conditions of mortgage lending in local communities throughout the country* What these steps are I have discussed at some length in my testimony-on the Banking Bill of 1955. They may ' e stated briefly as follows! b 1, Make all sound assets heldfcyMember hanks of the Federal Reserve System eligible as security for advances by the Federal Reserve Banks* 2. Increase the proportion of their time deposits ort alternatively, of their capital and surplus, that member banks may invest in first mortgages on improved farm property end improved busint-ss and residential property. S* Increase the proportion of the appraised value of a property that a bank may lend, or leave this matter subject to regulation hj the Federal Reserve Board* 4* Abolish the legal fiction of a five-year limit on real estate loans, and leave the question of maturities subject to regulation by the Federal Reserve Board, As you know, it is my earnest belief that the inclusion of these measures in whatever tanking legislation is enacted by • 8 the present Congress would he of great benefit both to the bmnk& and to their local cofanaunitiee, and in addition would be of aaterial help in furthering industrial activity and employment, with corresponding gain© to business and agriculture generally* With kind regards, X ma lours sincerely, S. Eccles i Governor Hon. Morris Sheppard United States Senator Washington, D. C. r
