The Tomahawk. [volume] (White Earth, Becker County, Minn.) 1903-192?, 1919-06-05
.|NTERES1SSTR|kE.AT.
|. FEOERALLANO BANK
FQrqanized Propaganda to Tax
Farm Loan Bonds Conferred
in Washington. Z.
TAX WOULD FALL on FARMERS
Mortgage Brokers Would Avoid the
Successful Competition Of Govern
ment-Manaaed lnstitution-Re-
duction in Rates on Loans.


Washington, D. CAN attempt
Is being made by farm mortgage
brokers it has been revealed here,
to nulIify the farm loan board act,
under plea for repeal Of exemp-
ton for farm loan bonds. This,
it Is believed, would prevent tho
government from obtaining money
at per cent or less and thus pre-.
vent the operation Of the farm loan =,
banks without a loss. Since it is q
stipulation Of the act that the in
terest on farm loans sha!! meyer
exceed per cent, and that also
the banks must stand on their own =,
bottom, such a provision would
effectively kill the banks. ~.
An organized propaganda, with Ed.
man, has been started in Washington
with the object of obtaining the tax
exemption repeal. The repeal of the
measure would give the farm mortgage
bankers a chance to get into their
old job of getting big interest on per-
fectly good loans.
Saving Through Competition.
It is estimated that for every dollar
saved by the farm loan banks through
their own loans, $40 has been saved
through reduction of interest rates to
the private bankers. In lows, Indi-
ana and Illinois, the interest rates of
these bankers always were low, but
nevertheless, farmers from these
states preferred borrowing money
from the government to borrowing it
from the bankers.
Fhe bonds of these banks so far
have proved good investment. When
they were first issued, they bore in
terest at 51@ per cent. When the bonds
went to sos the rate was reduced to
5 per cent, and they are still selling
at par. They are exempt from federal
and state income taxes.
1t is argued by the mortgage bank-
ers that the government is losing rev.
enue by exempting them from taxes.
However, Liberty bonds, municipal
bonds and other forms of government
and civic securities are also exempt
They amount to more than 80 times
the sum Of the farm loan bonds to
date, but there was no effort to OBJ
tain the repeal OF the exemption OF
these bonds, probably because bank
ers themselves are large holders of
these securities.
Farmer Would Bear Tax.
Repeal of the tax exemption privi-
lege for these securities would actu-
ally mean that the farmer is to be
taxed, not only on his income, but
on his debt as we'll. This is true in
no other line of business.
Progressives are planning a deter
mined fight on this proposal, and 1t is
doubtful If it can be pushed through,
even though the reactiOnaries hold a
strong grip on the next congress. For
one thing, it is believed, the Republi-
cans will not dare attempt it in view
of the impending election of 1920,
when farmers votes will be valuable.
Democrats, too, are wary of the men.
ace of seeking to help out the poor
profiteer in the year preceding a pres.
idential election. All in all, it ap.
pears as though there might be some
chance for the farmer in the next
congress-
A Long. Standing Fight.
The present propaganda represents
only a speeding up of the anti-farmer
fight which began long before the law
creating the farm loan bank was
passed. At first the law provided that
the land bank had to sell its bonds
to bond houses as concession to
the hostile interests. It was hoped
that the bond houses would make only
pretense of selling the bonds and
the system would thus fail.
This sinister purpose was nearly
achieved. The bond house which con.
tracted to do the work threw It up
after selling only $31 100000 OF the
bonds and had not the organized farm
ers, reinforced by our great need for
food supplies early in the war, come
to a vigorous defense of the bank, 1t
would have been allowed to die. Due
to the farmers fight congress set
aside $100. 000, 900 to be at the disposal
of the bank and also provided that
the bank management could have its
own selling agency.
The refusal to allow the postal saw.
ings system to work with the land
bank as q source Of ready money is
another illustration Of the nearly sue.
cessful opposition o. the special in
terests. Likewise the bank has been
hit by the connivance Of local alb
stractors who frequently delay BE-
yond all reason the proving up OF
titles to land to be mortsaged.
Eighteen Fargo men who met last
week to organize home owners
lea ere " have taken the first action re