Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-06-12
PREDICT BIG FIGHT
OVER FARM LOANS
|NNEXT CONGRESS

Friends of System Preparing
Defense Against Attack by
Alleged "SeIfish Interests"
There is a big fight brewing for
the next session Of Congress over the
federal farm loan system. Preliminary
legislative moves were made during
the session just closed. Representa-
tive Edmund Plat of New York, who
was chairman of the banking and
currency committee of the House. and
who Is resigning to become a men,
Der Of the federal reserve board. was
a stanch friend of the farm loan sys-
tenn and Of the federal land banks.
Representative Louis T. McFadden of
Pennsylvania. who has been elected
chairman to succeed Mr.. Plat, Is
himself bank president. and allied
with the old-style banker crowd OPP
least not at all friendly to them.
Mr.. Nelson Takes Up Cudgels.
Representative Adolphus P Nelson
Of Wisconsin. who IS president and
director of several country banks In
the farm loan system. and who is a
member Of the banking and currency
committee. already has taken up the
cudgelS for the farm loan system
Henry A. Moehlenpah, a member of
the federal reserve board, was for
merly president of the Wisconsin
State Bankers Association.
Representative Nelson, as president
of state bank which was a member
of the association. has been close
friend and adviser with Mr.. Mohlen-
pah and this gives assurance that in
the coming fight the friends of the
farm loan system will be we'll fortified
to meet the opposition of the oldline
bankers, who see slipping away from
them the opportunity to make con-
siderable money out of the old-time
farm mortgages.
Those who have seen this fight COM
ing point to the recent hearing before
the United States Supreme Court, when
a notable array of the most famous
attorneys in the country appeared in
defense Of the validity of the tax ex-
emption feature of bonds issued by
federal land banks and the joint stock
land banks. incorporated by groups
system. The Supreme Court heard the
arguments and ordered the case re-
argued. The adjournment of the court
means that no decision can be made
until fall.
Volume of Business Held Up.
Pending this decision the banks con-
cerned have been held up on a large
volume of business since March. They
a
there has not been a good market for
their bonds. If the tax exemption TEA
ture was knocked out the bonds
would sell below par and investors
have been reluctant to take chance.
During the war the Treasury or
dered that bonds should not be noated
in competition with liberty bond
drives, but to counteract that spe-
cial wartime law was passed author
izing the Secretary of the Treasury
to buy bonds in limited amount to
keep these banks going. One-half to
two-thirds of the authorized invest
ment was made. In the closing days
of Congress an act was passed au-
thorizing the Treasury to buy UP the
rest of the wartime authorization.
Another bill of which. Chairman
Platt was the author would permit
joint stock land banks to hquidate.
This was intended to AFFORD relief IN
the present tight situation.
Emphasizes Value of System.
Representative Nelson emphasizes
the value of the farm loan system as
affording the most direct and quick
relief in the present food supply sit
uation with production reduced and
Europe largely dependent upon the
United States for food. He finds that
Legislation is demanded to relieve
the strain now placed upon asflcul-
ture as an industry
Tke federal and joint stock land
banks in the short time they have
been operating, he says, have done
more than merely to save a handsome
sum in interest for all who borrowed
from these banks. Their mere pres
ence in the farm-loan Held supplied
the competition necessary to reduce
the rates of interest for all farmers
who borrow 1t has been estimated
that they have saved already for the
farmer of the country not less than
$4,000, 900 in interest and S20.0O0,0OO
in commissions. He hints at the COM
ing fight when lie says: And that
fact has aroused the bitter opposition
of the old-style, commission-charSi
rm-mortgage broker.
He points out that the enemies of
the farm loan system are attacking it
as whole. lin order to get rid OF
the entire system" While their at
tack in the last session was centered
on the joint-stock land banks, Mr..
Nelson foresees that if they succeed in
killing off the ioint-stock land banks
it will be found that this is merely a
down the entire farm loan system
and that an attack would be made
with renewed vigor on the federal
land banks.
Gives Summary Of Benefits.
the great benefits of the farm loan
system as follows:
a. The farmers may now borrow
money at a reasonable rate without
paying commissions to any one. The
law forbids any OF the banks created
by or authorized by the farm loan
act to charge the farmer COM
(2.) TIE farmer may now borrow
his money for n long period of
years--o0 to 35-ard repay the prin-
cipal in small annual or semi-annual
inst ailments. thus escaping. all re-
ne-val charges. appraisal and inspec-
ton fee after the first year.
In calling upon his colleagues to
preserve this law. Mr.. Nelson says:
TT emancipates the American farmer
and releases him from the clutches
Of the loan shark.
Alleges "orRnnized Campaign
Laying down the gauge to those
who are trying to annul this act,
Representative Nelson says: TT Is the
purpose of the enemies Of the farm
loan act to SO cripple it by indirect
attacks that 1t will cease to function.
The men who profited for years by
lending money to farmers at high
rates OF interest plus exhorbitant
commissions. are conducting an or
sanized campaign to put the federal
farm loan system out OF business
so that they once more may control