Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1920-06-11

all the regulations to which the,
must submit, and you have a com
parison with the regulations under
which Joint Stock Land Banks oper
late. The wording of the law is suf
ficiently broad that the Farm Loar
Board may at any time make add
tional rulings or regulations Hmitins
their activities in any given field. NJ
farmer is compelled to borrow o.
them. They have only one thing tx
offer and that is long time money or
reasonable terms. The government
has not invested one dollar in theil
capital stock. They pay taxes or
their capital and on their income and
pay for the support of the appraisers
examiners and Farm Loan Board.
Now a word as to tax exemption
II the Chicago Bank was incorporat-
ed under state laws instead of the
federal laws, there would be no lega,
limit as to the amount of bonds we
could put out. If we could sell the
bonds, we could issue them to the
extent of hundred times our capt
tai. We could loan anywhere in the
United States and charge the hign-
est rate of interest we were able to
obtain. We would be a burden to
the farmer instead of a help. We
would pay no more taxes than we
are paying now. The only possible
profit we obtain by submitting to all
the regulations of the Federal Farm
Loan Board is that we issue tax
exempt bond and, by so doing, are
compelled to make a low rate to the
borrower. 1t is not reasonable to
assume that more than a billion of
these bonds will ever be issued I'm
der this Act. That will be a sort of
revolving fund, the payments on old
homes providing funds for new ones.
The man who purchases our bonds
has an opportunity daily to invest in
the bonds of any city or municipality
of the United States which are tax
free, or in the preferred stock of any
company, which is free from the nor
NAL income tax. The insurance COM
pany does not pay an income tax on
the mortgages it carries, neither does
the eleemosynary institution. Pri-
vate investors evade the local taxes
to notorious extent, so the loss is
small. The resident of the city has
his parks, boulevards, water works,
sewer system and, in fact, practical
| ly all of the conveniences of the city
are made possible by the issue of
tax free bonds. The city of New
York has outstanding at the present
time 81 $50, 100000 of funded debt
which is wholly tax free as to federal
income tax and is also wholly tax
free in the state of New York as to
local or state income taxes. Hun
dreds of millions of this money is
invested in water works, wharfage
and tunnels that are not only earn
ing revenue for the city but some of
them making enormous profits. This
may be right and it may be wrong.
l am not ready to say. But | do
think it is wrong to tax the bonds
issued under the Federal Farm Loan
Act, where the proceeds go into ac-
tive constructive agricultural work,
stimulating every human activity, in
creasing the supply of foods and
clothing and thus benefitting every
man, woman and child in America,
and l think it would be unfair to
tax these bonds and permit the
jewellers of the cities to continue to
issue hundreds of millions annually
of tax free bonds. They issued
$500, 900 in 1919 and there is
said to be $1,000, 100000 now out
standing, and it is these bonds of
the cities and municipalities with
which we must compete in the finan-
cial markets of the world in order to
get the money to finance these farm
ers.
We are only putting the Farm
Loan Bond on an equal basis with
the municipal bond. Tax exemption
can only be defended on the plea
that funds are used for the good OF
the public and I am sure you will
agree with me that Farm Loan
Bonds issued under this law give a
greater benefit to humanity as 6
whole than those issued by a NUM-
cipality.