The Redwood gazette., 1920-02-04
George w. Wickersham Tells
How Federal Institutions
Will Be Taken Over.
TO BUY GOVERNMENT STOCK
Eventually the Borrowers Will Ac.
quire Complete Ownership of Banks
Established Under Federal
Farm Loan Act.


eral George w. Wickersham in the fed
eral court at Kansas City, where he
appeared with Charles E. Hughes and
w. q. McAdoo to defend the constitu-
tionality of the farm loan act.
Mr.. Wickersham, who with Mr.. Nc
Adoo, appeared as attorneys for the
joint stock land banks, made very
clear the exact service which the fed
eral land hanks perform and their
exact relation to the financial system
of the country. He also made clear in
what respects the joint stock land
banks differ from the federal land
banks.
Protecting Small Borrowers Rights.
Both types of banks federal and
joint stock) were created by the gov
ernment to provide aid for the agricul-
tural interests of the country. Mr..
Wickersham said that the government
with wisdom and singular comprehen-
sion, had reached out to take care Of
every element of borrowers. Therefore
the federal land banks We're created to
provide credit for small borrowers, and
the joint stock land banks were ere
ated to provide a similar agency
through which the larger borrowers
among farmers might secure ample
funds, without having to rely upon the
funds which had been assembled for
the use of the small borrowers, and
without danger of depriving the small
borrower of the very money which had
been assembled for his particular use.
He pointed out how in the case of
the establishment of federal land
banks the government had Subscribed
to the stock of these banks as tenn
porary aid to the particular class Of
borrowers it was intended these banks
should accommodate. But, he said,
this was only a temporary aid and thar
the government had provided that the
stock which had been subscribed by
the government should be taken up
eventually by the borrowers so that in
the end, in very short time, the small
borrowers viii own their own banks.
that is, that the federal land banks
will be privately owned in the end
even as the joint stock land banks are
now privately owned.
Federal Banks for Associations.
'The federal land banks do not lend
to individuals" said Mr. Wickersham,
s'they lend to organizations of borrow
ers, who together must desire at least
$4,000, and who must organize them
selves into farm loan association,
and they must subscribe to per cent
of the amount of the loan which they
seek, in the stock of the federal land
bank, as condition to securing the
loan.
Provision is made that when these
banks are set up, if within limited
time subscriptions are not made to the
stock by others, the federal govern
ment, through the treasury depart
ment, shall take up the minimum
amount of stock with which they are
authorized TO start business, to-wit,
ST50000.00. Then, as they proceed In
their operation, as they loan to these
associations, and as these associations
subscribe to their stock by and by, by
the operations of the system, the stock
which the government has taken is re-
tired, and ultimately those banks come
into the control of their stockholders.
Farmers to Own Banks.
"The federal government, as a stock
holder, will pass out. and If the sys-
TEN be successful, after a certain
length of time, the land banks will be
owned by the various loan associations
Which are borrowing through the land
banks. and they will go ahead on the
impetus of private ownership.
Having thus provided a system
whereby this great scheme shall be
launched and become at once opera
tive and money shall become avail
able to the farmers desiring it, the art
also provides that there be created
different class of banks, namely, the
joint stock land banks.
Following the analogy of the ma.
tional banks, the act provides that
from the outset, those banks shall be
organized by private individuals. The
stock shall be subscribed by private
individuals, and when $3.50, 10000 is
subscribed, then the bank may begin
Its operations.
Joint Stock Banks Controlled
Since the enactment of the law. q
Of such banks have been organized In
different parts of the country, and thew
are set forth in the petition, and their
aggregate capital Is something more
than S5,000,O00.
"Now despite the fact that those
banks are privately owned, from the
beginning Of their operations, they and
their operations are subjected to con-
troll. They are invested with the same
powers. they are made subject to the
same liability rs are given to and I'm.
posesi aiissssi tlls eslers: ..z1::.G banks.