The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-04-24

suarsntor In fact Of the deposits. NV.
ings. shares and bonds Of the system
Investors would not bother themselves
about the mortgages or borrowers
They would look to the United States
Government for the return Of their
money. with every logical and lega'
right to do so. and all land credit
features Of the system would disap.
pear.
Congress and the people have failed
to grasp the full Significance OF this
Hollis bill and the appalling extent
Of the State aid to b granted and the
liabilities to be incurred under II by
the United States. Misled into be.
lievlng that the p proposed system Il
cooperative and would be managed
by the farmers At their W risk and
expense. and deceived by assurances
that only twelve Federal land banks
are to be established. that the shares
Of tho United States may be with
drawn. and that only $4,000. 900 are to
be advanced q year out OF the United
states Treasury. they have closed their
eyes to the fact that Q use OF Govern
ment cash and Government credit y
contemplated for private purposes on
a scale never attempted in any other
country.
are unparalleled. Every Federal land
bank and every association, Its capital
stock, shares, reserve. surplus and in
come. together with the bonds OF the
Federal land banks and the mortgages
Of the private land banks. shall be
exempt from Federal, State. municipal
and local taxation. except taxes on
real estate. The exemption Of mort
cages when used as security for bonds
Is not Objectionable. since II would
prevent double taxation.
But to exempt bonds. shares and de-
posits without limiting the amount In
the hands or name Of n person. as
in the Hollis hill. cannot be justified,
because II would relieve from taxation
the wealth Of those who are not the
intended benefcisries OF the system
and simply shift the inevitable burden
Of taxes to other kinds of real and per-
sonal property. The object OF this
total tax exemption 10 Of course to
divert funds from existing savings
banks and building and loan associa.
tions and. y possible. to put these prl-
waite mutual and cooperative concerns
IA OF business.
The Sc, 900. 900 OF 2 DER cent. money
which the hill calls for would be a
very minor part Of thu eventual tn
vestment OF the United States In the
proposed system. The Secretary OF
the Treasury could deposit unlimited
sums at the same low interest ate
In the Federal land banks. The bd-
reau coulo establish hundreds Of Fed
eral land banks. II IL chose. and COM
pei the United States to supply The
scrihing TO shares yielding no divi-
dends. And this would but open the
way for stlll further OUTLAWS. by rea-
son Of certain remarkable clauses
which would deprive the Federal land
banks Of most of the cash profits and
require the United states to stand
good for practically all the losses of
the associations and to put one dollar
the system for every $50 OF loans
made.
This astounding result would come
the peculiar and impracticabie
arrangement whereby an association.
IL 1t need money for current expenses
may borrow the same from its Fedora.
bank. TO lie paid back only from
dividends belonging TO the association.
Again. the associations must subscribe
for shares in their Federal land oank
up TO 5 per cent. OF any funds oh
tanned from II Tor making loans 10
their members. The associations shall.
in their turn, require subscriptions for
their own shares hy borrowers up to a
like percentage OF their loans.
Then ome the Joker. which il that
the borrowers could compel the Fed
erai lan,i banks to advance them the
money necessary fn- buying their Oh
shares In the associations and
fer meeting al, the costs " the loans.
The United States would. NJ course.
this Burden upon itself. because
investors would not be So
inclined as to tolerate the
Of their funds by farmers for buy
.ng shares and meeting deficits IL the
associations 81 an experimental sys-
In this roundabout and absurd way
profits. reserves and SURPRISES of
the Federal and tanks would te con-
sune9 N creating the system and
meating the ,,sts and losscs of It's
business. TIE United States would
nave &" supply all the initial share cap
ital # the ASSOCIATE; ms, as We'll as the
i,itsl stocks Of the land hanks while
inv individual member. however
humble he be in private life. could
the United Sta'es to pu, up 81
Tor every $50 Of loans made through
he system.
This places tho "apstone on this State
and centrally controlled Govern
system. The possible drain on
public resources Ia ~incalculable. Sena-
tor Hollis. in keeping with his designs.
mas very properly taken the lock of
he doors Of the United States Treas
lry and backed the tax exempted
'rcdi, instruments by the mutual liza
,ility Of all the land bank. and the
guaranty Of the United States Gov
'rnment, In order to supply the
eve ending and continually incrcas-
ne demand for funds. However,
Z state aid must be granted II would
&c far better FOR Congress to appro-
,riate fixed annual sums for giving
bonuses To rural land II than
involve the credit Of the United
'tates indefinitely through the indi-
'ect, cumbersome and expensive way