The New York herald., 1920-01-06
ATTACK FARM LOAN
BANK LAW TODAY
IN HIGHEST COURT
Supreme Tribunal to Hear AT
guments Against Tax Ex-
cnption of Bonds.
Herald bureau,
No. I,502 III street, N. W.,
Washington. ID. c., Monday.


Attnclcag the constitutjonality OF the
Federsi Farm Loan Bank Act. opponent:
Of THE method of meeting farm obliga
tsors VIII make determined effort &c
dsfsat the provision which exeupts from
raxstion the bonds issued by the Fedora
Farm Loan Banks and the Joint Stock
Land Banks.
The case viii be argued IN the Supreme
csurt tomorrow on appeal from the
United States Court at Kansas City. De-
Tending the validity OF the Farm Loan
Bank Act and he Joint Stock Land
Banks viii be William Gibbs McAdoo.
FORMER Secretary OF the Treasury;
Charles Z. Hughes former Justice of the
ss@reme Court. and George W. Wicker
sham. former Attorney General OF the
untted States. Opposed 20 them will be
Frank Hagerman, of Kansas City. and
William Marshall Bullitt, former Solicitor
AZ the Treasury.
Falling to have the law declared un-
constitutional. opponents OF the system of
Farm Loan Banks. who have the backing
of large portion of the banking inter
ssts of the country. will centre their
efforts in securing the passage OF the
act favorably reported by the Senate
Banking Committee on December s. to
repeal the feature of the law which de-
clares the bonds issued by these concerns
exempt from all taxation.
Opponents of the law declare the
present system enables capitalists to
avoid payment OF income and other taxes
to the government through the purchase
Of these bonds, thus shifting the burden
Of taxation to the producers and the
salarted class. and that the system
carried out to its logical conclusion. will
put the burden of taxation on land
owners and farmers.
They point out that s5c0Oo0 UD worth of
bonds already have been issued under the
law creating fhe Federal Farm Loan
Banks and the Joint Stock Land Banks,
and the am ,unt that may yet be issued
10 unlimited. Owners OF incomes of more
than Sl.0O0.00O year. subject TO a tax ,f
seventy-seven per cent. would be abie,
they declare, to convert their income pro-
ducing property into these tax exennp
bonds. and thus. not only earn the five
per cent they draw. but avoid the pay
ment Of the II come tax. They argue that
the repeal of the exemption clause Of the
law would save future bind Issues from,
his unfair distribution of taxes. bit
would not take care OF bonds already
ssued. and that this can be taken care
~ only by having the entire law declared
unconstitutional.
The aryumert against the Federal Farm
.oan Bank is that It is not bank at sIl.
md that therefore the operation of 'he
pank Is not the exercise Of a govern
mental function but the exercise OF a pro-
Drstary right which IL subject to taxa
ion the same as any other property
I The flght over the law will pr~cccd
simultaneously In the courts and In Con-
sress. Representatives Of the Join, Stock
iand Banks held a meeting here Sunday
ind today conferred with the Federa]
Farm Loan Board on the attack which Is
being made upon the entire systarn-
Among them were Guy Huston. president
OF the First Joint Stock Land Bank. OF
Chicago: George L. Ramsey. Jont Stock
Land Bank Of Helena, Mont, and nine
other prominent representatives of these
suks. They will appear before the Sem
ate Committee on Banking and Commerce
January TO-
The case which viii be argued in the
Supreme Court IS ore brought against the
Kansas City Title ard Trust Company.