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DEPARTMENT OF THE INTERIOR,
OFFICE OF INDIAN AFFAIRS,

Washington, April 3, 1930. Memorandum for the Secretary.

This will refer to S. J. Res. 156, to pay the judgment of the Court of Claims in favor of the Iowa Tribe of Indians in the State of Oklahoma. On May 6, 1929, the Court of Claims awarded said Indians the sum of $254,632.59, which was appropriated by the act of March 26, 1930 (Public No. 78, 71st Cong., 2d sess.), and is now carried in the Treasury to the credit of the tribe.

There is no authority of law for the distribution of the money among the Indians. The resolution, therefore, authorizes the Secretary of the Interior to withdraw said amount from the Treasury and to pay it, less fees and expenses, in pro rata shares to the members of the tribe living on the date of the judgment, the competent Indians to receive their own shares and those of their minor children in cash, and all other shares to be deposited to the credit of the enrollees subject to expenditure under the individual Indian money regulations.

The act of April 28, 1920 (41 Stat. L., 585), under which the suit was filed, provides that the attorneys' fees and expenses shall not exceed 10 per cent of the amount of the judgment. On March 3, 1930, the court fixed same at $25,000. which will leave $229,632.59 for distribution among the Indians, who number about 104, so that each enrollee will receive approximately $2,208. In view of the large amount of each share. I think the shares of all minors should be deposited, irrespective of the competency of the parents. Hence the language in lines 3 and 4 on page 2—“including the shares of their minor children "should be eliminated and the words “including minors" inserted after the word "Indians" in line 5 on the same page. Accordingly, if thus amended, I recommend the adoption of the resolution.

C. S. RHOADS, Commissioner. O

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PAYMENT OF EXPENSES OF THE FEDERAL FARM LOAN

BOARD BY THE UNITED STATES

APRIL 21 (calendar day, APRIL 22), 1930.-Ordered to be printed

Mr. TOWNSEND, from the Committee on Banking and Currency.

submitted the following

REPORT

(To accompany S. 4028]

The Committee on Banking and Currency, to whom was referred the bill (S. 4028) to amend the Federal farm loan act as amended, having considered the same, report favorably thereon, with the recommendation that the bill do pass without amendment.

The enactment of this legislation is recommended by the Secretary of the Treasury in his letter to the chairman of the committee under date of April 8, 1930, which letter is appended hereto and made a part of this report.

The original farm loan act provided that the salaries and expenses of the Federal Farm Loan Board and of loan registrars and examiners shall be paid by the United States. However, in 1923-seven years afterward—the law was amended whereby the farm loan system was required to bear these charges. It is now desired that the Government return to its original policy.

If this bill is enacted, about 58 per cent of the operating expenses will be borne by the Treasury and 42 per cent by the banks themselves. There has been considerable additional expense in connection with the reorganization of the Federal farm loan system, in order to put it on a more permanent and satisfactory basis, and the enactment of this bill will be of material assistance along these lines.

The Secretary of the Treasury on March 17, 1930, made a report on Senate bill 3013 which, in order to meet certain objections of the Treasury Department, has been indefinitely postponed by the committee and S. 4028 considered in lieu thereof. This report goes quite extensively into the proposition of the Government paying the expenses of the Federal Farm Loan Board, which the Ťreasury Department favors.

In view of the pertinent matter contained therein, said letter of the Secretary of the Treasury is also made a part of this report.

THE SECRETARY OF THE TREASURY,

Washington, April 8, 1930. Hon. PETER NORBECK, Chairman Banking and Currency Committee,

United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: You transmitted with your letter of March 29 a copy of Senate bill No. 4028, to amend the Federal farm loan act, and requested the report of the Treasury Department for the information of the Committee on Banking and Currency of the Senate. On March 17, a report was made to you on Senate bill No. 3013, in which it was stated in substance that this department would regard with favor legislation by which the assessments to be made against the Federal land banks, joint-stock land banks, and Federal intermediate credit banks under section 3 of the Federal farm loan act would He limited to the salaries and expenses of the employees of the Federal Farm Loan Bureau engaged in the work of its division of examinations, such expenses and salaries, together with all other expenses and salaries of the board, to be disbursed on appropriations made by the Congress. Bill S. 4028 would amend the Federal farm loan act so as to enable the accomplishment of this purpose beginning with the appropriations for expenditures of the Federal Farm Loan Board for the fiscal year beginning July 1, 1930. In the circumstances, therefore, as indicated in my letter of March 17, this department regards the proposed legislation with favor. Very truly yours,

A. W. MELLON, Secretary of the Treasury.

THE SECRETARY OF THE TREASURY,

Washington, March 17, 1930. DEAR MR. CHAIRMAN: Reference is made to your letter of January 10 with which you inclosed copies of Senate bill 3013, for the payment of the expenses of the Federal Farm Loan Board by the United States. You stated that the Committee on Banking and Currency would be pleased to receive the department's views.

The subject is one of direct concern to the Federal land banks, the joint-stock land banks, and the Federal intermediate credit banks of the Farm loan system, as well as the Treasury, because, under the Federal farm loan act as it now stands, section 3 provides that “The salaries and expenses of the Federal Farm Loan Board, its officers and employees, farm loan registrars, deputy registrars, examiners, and reviewing appraisers authorized under this act, or any subsequent amendments thereto, shall be paid by the Federal land banks, joint-stock land banks, and the Federal intermediate credit banks,” by assessments made on such equitable basis as the Federal Farm Loan Board shall determine, giving due consideration to time and expense necessarily incident to the supervision of the operation of each type of bank.

The act as originally passed, however, provided in section 3 that “The salaries and expenses of the Federal Farm Loan Board, and of farm loan registrars and examiners authorized under this section, shall be paid by the United States" and remained in this form until 1923. The law was amended on March 4, 1923, so as to require that after June 30, 1923, all salaries and expenses incurred by the board be assessed against the Federal land banks, joint-stock land banks, and Federal intermediate credit banks, and the act of March 4, 1925, amended the law to read as it now stands.

As you know, and as pointed out in the annual report of the Federal Farm Loan Board for the calendar year 1927, the Federal Farm Loan Board was reorganized in May, 1927. Unsatisfactory conditions had appeared in some of the banks during the rapid growth of the system in recent years and the administration of the Federal Farm Loan Bureau had not been developed to cope with such conditions adequately. The exigencies of the situation and the problems confronting the system have required intensive study, careful investigation, and definitive action in virtually every phase of the work in the bureau. A program of thorough reorganization, designed to ascertain and cure defects and to place the board in a position adequately to perform its supervisory functions, has been pursued actively. Problems varied and complex in nature have been attacked simultaneously or in their order of relative importance, and substantial results have been achieved and material progress has been made in every branch of the work. When the Federal Farm Loan Board was reorganized one joint-stock land bank was in the hands of a receiver and receivers for two other joint-stock land banks, the failures of which were impending, were appointed on July 1 and September 1, 1927. These three receiverships were the first since the establishment of the system and included one of the largest joint-stock land banks. Some of the other banks, both Federal and joint stock, were faced with difficult problems. All of these conditions contributed to impair public confidence. It was the task of the reorganized board not only to prevent other receiverships, if possible, but also to correct unsatisfactory conditions wherever they existed. Necessarily a very large increase in the expenses of the Federal Farm Loan Bureau has resulted from the endeavors of the Federal Farm Loan Board to bring about as rapidly as possible a restoration of proper conditions in the farm loan system.

Officers of many of the banks have expressed informally the feeling that the Congress should provide for the assumption by the United States of the expenses of the Farm Loan Bureau, or at least that only the expenses directly attributable to the examination work of the bureau should be assessed against the banks. An analysis of the expenses of the bureau indicates that the work of the division of examinations consumes nearly 42 per cent of the amounts assessed against the banks.

It has been pointed out that the Federal farm loan act, as stated in its caption, was designed to provide capital for agricultural development, to create standard forms of investment based upon farm mortgage, to equalize rates of interest upon farm loans, to furnish a market for United States bonds, to create Government depositaries and financial agents for the United States, and for other purposes,' and that to a large extent the provisions of the farm loan act were drawn and detailed supervision by the Government was provided for in the interest not only of the prospective individual borrowers but of the welfare of agriculture generally, together with that of the investing public, as well as incidentally, the protection of the Government itself to the extent that it might have financial relations with the banks.

Consequently, the suggestion has been made that it would be reasonable, in the public interest, to limit the assessments made against the banks under section 3 of the Federal farm loan act to the salaries and expenses of the employees of the Federal Farm Loan Bureau engaged in the work of its division of examinations. This view of the matter appeals to the Federal Farm Loan Board and this department as meriting the favorable consideration of the Congress, and, with a modification to that effect, this department regards the purpose of the proposed legislation with favor.

Incidentally, however, it should be mentioned that bill S. 3013 contains a reference to "Federal farm advisers." The reason for the mention of such persons is not apparent, as they are not referred to in the Federal farm loan act nor are persons of this type employed by the Federal Farm Loan Board, and therefore they should be omitted. As the bill, in effect, would amend the provisions of the act contained in section 3, to which reference has been made in this letter, and, to make the legislation effective, changes in the act making appropriations for this department would be necessary, the bill should be redrawn if its purpose be approved by the committee. Very truly yours,

A. W. MELLON,

Secretary of the Treasury. Hon. PETER NORBECK, Chairman Banking and Currency Committee,

United States Senate.

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