Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1918-03-18
LOAN BANK TO
QUIT BUSINESS
in this STATE
Seed Bonding Law Must be
Appealed Before Bank will
Again Work in N. D.

st. Paul, Mimi. March 1s.-A final
decision has been received from the
federal farm loan board at Washing
ton, D.. c.. in regard to the North Da-
kota seed bonding law, conflicting
with the federal farm loan act. with.
respect to priority of liens. says a
statement, issued by E. G. Quamme,
president of the Federal Land Bank
of st. Paul. According to this decision
the Federal Land Bank Of st. Paul
must cease doing business in North
Dakota as long as this condition ex-
lists. All loans hat were signed and
recorded in North Dakota before jan
uary 20, will be closed. ,All loans al
lowed after that date will not be
closed.
1.-The Federal Land Bank of st. Paul
will do no more business in North Da-
kota as long as the seed bonding Law
remains in full force and effect" said
ing Law De repealed or declared un-
constitutional by the supreme court of
the state or any federal court we
could of course Immediately resume
operations"
The. authoritative opinion from
Washington holds:
"The North Dakota seed bonding
law is in violation of the federal con-
stitution so far as its operation affects
mortgages given to the Federal Land
Bank, because it impairs instrument
talities of government which no state
has a right to do. The priority of the
lien of the Federal Land Bank must
be preserved. We are reluctantly
forced to the conclusion that loans
cannot legally be made by us in the
state"
'The officials of the Federal Land
Bank Of st. Paul are exceedingly
sorry that this matter came up, be-
cause the business from North Dako-
ia has been most gratifying" Mr..
Quamme said. I'VE have tried from
the beginning to render the best serv-
ice we could, realizing that h inter-
est rates there were higher than in
any other state in u district.
w have closed loans to date in
various states in our district as fol-
lows:
wisconsin, $1,000. 600.
Michigan, $1,70O.0 00.
Minnesota, SO, 100, 900.
North Dakota, $6%,500,0O0.
Total, $12.6o0,o Oo.
These loans were closed in nine
months of operation. This does not
mean that we have shown any favor
itism to North Dakota, but it does
show that the demand for our service
was greater in North Dakota than in
any other state in our district.
The Federal Land Bank system,
which uses its mortgages for security
for bond issues. must exercise the
greatest precaution n operate ac-
cordingly. This may not be so imper-
ative with farm. mortgage bankers, as
in h state Of North Dakota to their
full capacity. This is of course en-
tirely legitimate for them as they do
not operate under any such strict SUI
pervision as the farm loan act"
The federal farm loan law makes
1t imperative that funds shall he
loaned only on first mortgages on
farm lands. which are intended to. be
prior liens.
At the late extra session Of the
North Dakota Legislature there was
enacted a law providing for the rails
ing Of funds to supply iced and feed
grain to the farmers of the state who
desired to buy in this manner. This
law provides that when the county
commissioners of any county shall so
determine he bonds Of "a county may
he issued to raise none with which
to buy e n feed for the farmers
of the county; that grain may there
upon be sold to, Individual farmers
according to their needs: that the val
ue Of the grain 20 sold shall be paid
out Of the proceeds Of the crop to, be
raised. and that this sum shall be II
lien against the crop; and that If the
amount is not paid BY October Is Of
the year in which the loan is made thu.
claim shall become first lien upon
the land affected. taking precedence
over all liens filed at any time after
the passage of the act.
While this bill was before the SEN
ate committee having 1t under con-
~sideration. n of the members Of
that committee, Senator Jacobsen.
suggested that the lien provisions
would be ip conflict with the farm
loan lien provisions. and would cause
complications cver the borrowing Of
federal land and, bank funds . farm se.