Evening star., 1933-03-28
ROOSEVELT PLANS
TO GIVE MORTGAGE
BONDS us. BACKING
Presidents Advisers Hasten
Bill to RefinanCe Farm
Obligations.
GUARANTEE OF INTEREST
WOULD BE UNDERTAKEN
But Paper Would Not Become Di.
rect Obligation of Government
Under Proposal.
Py the Associated prceS

BY the Associated Press
President Roosevelt's farm mortgage
relief program will propose that the
Government guarantee interest pay
ments on bonds issued for the refinanc-
ing of farm obligations.
This was learned today as his ad-
visers hastened preparation OF the
measure which the Chief Executive
hopes to lay before Congress this week.
In tentative form, the bill proposes
extensive mortgage refinancing during
the next two years with funds to be
raised for the purpose by the sale of
bonds as well as the exchange Of
bonds for mortgages now privately held.
The bonds would not be a direct OBJ
legation of the Government nor will the
payment of their principal be guaran-
teed, as several farm organizations have
recommended but payment OF interest
would carry the Governments definite
guarantee
Would Help Market.
It was said in competent circles that
administration leaders feel that Gov
ernment guarantee OF interest would
greatly increase marketability OF the
bonds. This would reflect itself in
lower rates Of interest to the farmer.
The Presidents agricultural advisers
hesitate to recommend a guarantee of
the principal of the bonds in the belief
that this would rank them as a part
Of the Federal Governments obliga-
tions
The bill is aimed to provide the low
est rate Of interest yet offered the farm
er in Government mortgage financing
Whether limit would be fixed on the
amount of refinancing the Government
would be willing to undertake remains
unsettled. There is some belief that
a low interest rate and no limit might
lead to refinancing of most of the coun-
trys $4,000, 100000 in outstanding farm
mortgages.
Liquidation of the joint stock land
banks is to be proposed. OF the 48
banks, 3 are in receivership. The in
stitutions have Ssusd s506,672 900 in
bends, which are widely held. and which
enjoy tax exemption under a clau.e
which states that they are "instru-
mentalities Of the United States"
Plan Conference Today.
Several representatives of the banks
were here to confer late today with
Henry Mcrgenthau, jr., Farm Board
chairman, and DR.. w. l. Myers, his
assistant, who have drafted many pro-
visions of the relief measure.
The President will propose that the
mortgage relief plan be administered
by the new Farm Credit Administra alton,
which with congressional approval will
become effective 60 days hence under
the executive order issued yesterday.
Morgenthau is to be governor OF the
system.
At the Department of Agriculture
advance preparations fer administering
the farm relief program now before
Congress contemplate making it serve
quickly as mortgage relief for farmers.
An early payment of benefits" under
the allotment provision of the relief bill
is proposed. Under this plan-one of
several available to the Secretary of
Agriculture, who would have broad
powers to attempt the restoration Of
pre-war farm prices-adjustment Ger
tificates would be issued to farmers who
leased lands to the Government or
agreed to reduce acreages devoted to
basic commodities.
Three-Point Program.
Several plans to make cash available
by June, should the bill pass without
great change, have been studied Under
one of them adjustment certificates
would be isued and used as collateral
for loans from banks. Under the other
ho
asked to advance funds to the Secre-
tary to make the first payment of
benefits" Whether these plans can
be carried out is uncertain because Of
efforts In the Senate to revise the ad-
ministration measure.
Secretary Wallace yesterday sent to
the House figures on the farm indebt-
edness and suggestions for legislation
in preparing refinancing program.
These suggestions were closely akin to
ideas being considered by Mr.. Roose-
velt's advisers.
Wallace suggested three-point pro-
gram, contemplating machinery for
voluntary adjustment of the debts. and
financing through direct loans to farm
ers for the payment of interest, amorti-
zation installments and taxes and the
refinancing of distressed farm mort
cages.
The direct loans would be made
through regional agricultural credit
corporations and the mortgage re-
financing through land banks. All
funds would be provided by the Re-
construction Finance Corporation.
Some Details Remain.
Meantime, after a call at the White
House, Chairman Steagall of the House
Banking Committee predicted the Roose-
welt program for refinancing of farm
mortgages would be ready in day or
two.
Some details remain to be worked out,
he said. Steagall estimated the total
bond issue to be required for putting
the farm mortgages on lower interest
rate would not be more than $780,
100000. Senate leaders are planning to
incorporate this giant relief proposal in
the farm commodity relief bill now be-
fore the Agriculture Committee.