South Bend news-times. (South Bend, Ind.) 1913-1938, 1920-01-31
STRIKE BLOWS
ON LOAN LAWS
FARMERS Appear Before Com
nittee Opposing Attempt
At Taxation.
= al TO HE .'ews Times

aSponents of the Federal farm loan
~ struck two blows at the funda-
mcntals Of the law this week
,ourt and through legislative chan
uels In congress.
Opposition 20 the Smoot bill pro-
posing removal of the tax exemp-
ion feature from bonds issued by
Land banks. was soll5 al hearing
on he bin held by the senate com
mittee on banking and currency. A
number OF bankers as>d farmers ap-
.s6rsd before the committee Oppos-
In 8 any attempt 20 tax these bonds
and ,erming such "a proposal as n
menace 70 the very life Of the act
itself
Several days prior to this hearing
former Supreme Court Justice
Charles Evans Hughes and former
Atty Gen. George ". Wickersham
argued the cOnstitutionality Of the
act in the interests Of the federal
land and the Joint stock land banks
respectively. Suit 10 annul the tax
exemption feature IN the farm loan
act had been brought by farm mort
gage brokers
Report ON Bill
The SmoOt bill has been reported
favorably for passage by the com
nittee The purpose Of the informal
hearing was 10 enable joint stock
land bankers to present their argu-
ments against the bill Presidents
TO the II federal land banks ap-
peared before the house committee
recently. Both at the supreme court
hearing and at the senate commit
&c hearing. the real question at is
sue was as 90 whether the land
banks were functioning TO provide
capital for agricultural develOpme nt
as the act clearly intends; and that
If they were so functioning, could
they continue to operate without
the privilege Of issuing tax-exempt
bonds.
Dwelling on the constitutionality
Of the act and the right OF congress
to promote and develop agriculture
10y financing farmers through loans
az low rates. former Justice Hughes
pointed 10 so years OF constant ac-
tivity by the government in agricul-
rural fields. The endowment Of
agricultural schools: the establish
ment of husbandry bureaus allied TO
iarming the distribution Of seeds.
analysis OF soils and such activities.
hc said, pointed cOnciusively not
only to the unassaila bic power of
congress to SO promote food Troduc-
Gou but 10 the emphatic necessity
Tor IT,
National I'm Scope.
MIR Wicke-sham appearing FOR
- Joint stock land banks reiterat-
q the arguments of Mr.. Hughes.
,-hc act was national i'm scope he
said, was helpful Co all classes and
not one class alone and as evidence
that the dual banking system % ad-
minist ring the federal loan act was
necessary. said that $3.50. 100000 i'm
loans had been applied for by farm
ers for use this spring and that the
legality and helpfulness of these
loans was nullihed by existing litiga-
ton
Evans Woolleu. president Of the
FLETCHER Savings & Trust company
Lard bank of Indianapolis. answer
"a tEe question of whether the
jos. stock land banks were func-
tiouinE as helpful agencies when he
7i cared before the senate commit
Zee.
Loans by joint stock land banks
the month before last were IS per
celt of the total loaned under the
system" he said. These banks
I-ud only for agricultural purposes
ard never 90 any borrower more
than & 3 per cent of the lenders cap
itsI stock nor more than $4,000.
The maximum rate in per cent
and no commission. Banks are func-
tio-inE in such states as Virginia.
We; Virginia. Louisiana. Tennessee.
Minnesota, Montana. Texas and CAL
ifo-aia and In the corn belt
Proposed Remedy
,.r NJ a. Taylor president or the
First Trust < Savings bank. OF Chi
oaRo. III. told the committee that
III che removal OF this class Of seCur-
iues from the tax exemption rriv-
Siege would result IN legislation by
\. tates 90 establish land banks with
- privilege OF issuing state securi-
.lef rec OF all tax. as South Dakota
and other western states had al
ready done, He said that clearly.
the remedy proposed IN the bill
would not and could not reach the
tax-e= exemption evil
J. p. Finley. OF the Union STOCK
Land Bank Of Richmond. Va.
speaking to the committee.
You VIII not restrict our activi-
by taxing these bonds" ne warn
ea the committee. you viii tcrmi-
nate them. We cannot now under
-ae ,aw make turnover exceeding
IS times our capital Tx would be
impossible TO sell these bonds If
raxs Die and stu lend To the farmer
at six per cent. which Is the maxi
mum allowed by the law. The es-
Enlistment OF rural credits sys-
em was the subject OF important
platform planks I'm both national
partles in 1912 The federal farm
loan act resulted. 10 has operated
during somewhat abnormal times. II
has hardly been tested when IL IS
by mortgage brokers
no have grown uneasy az the
amortization feature OF our long