New-York tribune., 1919-03-23
u. S. Farm Loan
System Expensive
Folly, Lawyer Saws
Asserts Rich Reap Greatest
Benefit and That 1t Costs
American People SO. 70
To Give the Farmer Sl

Another sociallstlc bubble, fatherad
and inflated by the government. hos
been saved from collapse only Wv n.
powerful stimulation of millions "a
dollars taken from the national Tra.s
ury. This is the statement of w
Humphrey, for fourteen years penro'
sentative of the State of Washineto,
in Congress, and now practising Law
in an analysis of the Federal Farm,
Loan Banks, which he has preparea
for New York banker.
Mr. Humphrey charges that:
l. The system is class legislation
2. 1t does not promote home ouila.
ing or buying of farms.
8. 1t benefits only one farmer out
of le1.
4. Only one family in COS is bene.
fitted.
8. 1t costs the American people ss7o
to give the farmer 81.
6. 1t enables the rich to obtain nm
investment yield equal to 2l.75 ne'.
cent.
7. 1t deprives the government of row.
enues from tax because the bonds ara
tax exempt
"In the midst of war" Mr.. Hum
phrey says, "when the nation was an
pealing for funds, millions needed FOR
war purposes were taken from tha
Treasury and given to the Federal
Farm Loan banks to save the svster,,
from disaster. The purpose of the acJ
creating these banks was declared TO
be to provide capital for agricultural
development, to create standard
forms of investments based upon
farm mortgages. and to equalize in
terest rates on farm mortgages.
Who Gets the Benefit
"a more correct title would be AA
act to tax the American people to ejves
special privileges to a few well-to-dd
farmers, to furnish the super-rich thd
most profitable investment in nd
world and to give them legitimatd
wa to escape payment of their incoma
tax, to discredit the government bondA
and increase the burden of taxation %
the American people,
"Of course. the great purpose Of tla
Farm Loan Act was to aid the farmer
and to encourage the buying of farms
and the building of homes. The num-
Der of loans that have been made 10
purchase homes is practically none.
while the loans that have been made
to purchase lands for any purpose
whatever have been almost negligible.
Practically all of the home loans that
have been made by Federal Farm Loan
banks were made to take up existing
indebtedness.
Remember these loaps are not
made to the poor, to the land hungry
tn III
well-to-do farmer, the average farmer
borrower owning property worth $1,000
or more.
THE act creating these Federal loan
banks provided that the bonds of thes9
banks be free from taxation OF everA
KIND. In justice to Congress, it should
be said that the most serious result o4
this worst feature of the act was nod
anticipated and has arisen since Conc
gress passed the law, owing to the
vast issue of government bonds to
carry on the war and the heavy income
taxes that have been levied
"Wc have a remarkable situation in
this country to-day: A bond issued by
one of these banks is worth more
than a bond issued by the government.
The creator becomes greater than the
creature. A Liberty bond to-day is
worth about 81, while Federal Land
Bank bond is worth from 10412 to 107.
LII those dreaming socialistc theorists
who have SO persistently preached
that the credit of the government is
unlimited will take a look at these fig
ures they will change their opinion, if
facts will change it.
"One of these tax free bonds draw
ing per cent interest in the hands OF
rnultinillionaire, whose annual in
come is more than a million dollars
would enable him to save S3S out OF
every $50 interest that he receives. in
stead of paying it 20 the government,
as he would have to do upon other Sc
curities. In other words. the govern
ment loses $3S out of every $50 on
these bonds, and this loss the other
taxpayers must make up.
The Most Profitable Investment
"These tax free per cent bonds in
the hands of the super-rich are worth
2l.io per cent annually, the best and
most profitable investment in the world
furnished by the government at the
expense of the other taxpayers to the
2O5 richest people in America These
are the legitimate fruits of this I'M
practical socalistic plan, and yet il Is
done IN the name of the poor
The people in time of var. many OF
them at great sacrifice, bought Liberty
bonds, and they were content to ac-
cept from the government Az per cent
interest, and even less, if the Liberty
bonds are to remain at the present de-
probation. Yet the government takes
millions of its money and uses it, not
for war purposes, but gives it to these
banks that issue bonds that enable the
nations richest citizens to secure an
income of 2t.75 PER cent.
"Another thing, the selling of these
taX-free bonds has had very marked
effect in depreciating Liberty Loan
bonds. very largely because these tax
tree bonds are worth 10 the very rich,
21.75 per cent. Every person in
America that has bought Liberty
bond has sustained loss of from So
to S4 on every 500 worth purchased.
Here is the net result of this gov
ernment owned and operated bank
scheme as at present run:
ON A $1,000 LOAN
Farmer saves. Observation-Disclosures 5.pV
Multimillionaire makes. es......... 500
Federal govrnment loses income tax. Ss.sv
Local government loses in taxes. .... Nv"
American people pay. 4j'go
To give farmer. 500
Costs American people a7o
40 give 4atmcs. ~'N1