Omaha daily bee., 1920-01-11
SENATORS ARE
firm IN STAND
FOR SM00T BILL
Bankers Say Passage 3
Measure Would Destroy
Joint StoCk-Land
Banks.
By e, c. SNYDER,


Washington Correspondent Of Omaha Bee
Washington, Jan. l0-(Special
Telegram.)-At the hearing OF the
Smoot bill, repeating the tax ex-
etnption on bonds of joint stock land
banks, before the senate committee
on banking and currency group OF
Ncbraskans interested in institutions
OF this character were very much III
evidence and followed the testimony
for and against the bill with the
kccnest interest. The Nebraska men
included ExCongressman Dan V.
Stephens of Fremont, w. S. Weston,
president of the Omaha Joint Stock
Land bank; Don L. Love and ]. L.
Teeters OF Lincoln, officials of the
institution at the state capital. Sen
ators Norris and Hitchcock also at
tended the hearing. both being mem
bers of the committee. Without ex-
ception, the Nebraska men and other
Joint stock-land bankers opposed
the Smoot bill, while Senators Nor
ris and Hitchcock seemed to favor
the legislation.
]. S. Finley of Virginia, NJ. A.
Traylor of Chicago, Evans Woolen
Of indianapolis and J. H. Allen of
Dcs Moines. all land bank officials,
presented the arguments in opposi-
ton to the legislation proposed.
The Stnoot bill has been favorably
reported to the senate by the COM
nlittee and there was an evident dis
position to stand by that action
Some sentiment was disclosed ia
voring the liquidation Of the joint
stock-land banks, and on collateral
questions, such as 4 proposition to
increase the amount which federal
farm loan banks may loan from
$4,000 to $25,000, witnesses were
told they "were wasting their time"
as the committee never would in
crease the limit.
Norris Favors Bill.
One evidence of the fact that
the committee will not recall the
Smoot bill was shown by Senator
Norris, who asked the first speaker,
Mr.. Finley, what methods he would
suggest for protecting the Joint
stock-land banks in case congress
finally passed the bill. Mr.. Finley
said they had no suggestion, because
they did not wish to 60 into 1iquida-
ton, and thought the committee and
congress ought not to destroy" the
institutions which had been estab-
lisled through laws hitherto enacted
and asserted that the Smoot bill
would destroy the joint stock-land
banks.
Summarizing the reasons for this
belief. Mr.. Finley said that with the
amount of loans restricted to $4,000
for joint stock-land banks by order
OF the federal farm loan board, with
interest restricted to per cent, and
the bonds made subject to taxation
as proposed by the pending legisla-
ton, the banks cannot live. He said
the highest profit made by any bank
was less than 10 per cent. that the
average loan was below $4,000. al
though he admitted that there were
many loans which were above the
$4,000 limitation imposed upon the
farm loan banks. He insisted that
the dual form of banks served use
ttl purpose, that was within the le-
gitimate scope of the intent of the
farm loan act. Several members of
the committee disputed this asser-
ton.
Senator Hitchcock presented fig
ures to show that by exempting the
Joint stock land banks from taxation
the government lost $192 every year
~ taxes that otherwise would be paid
on loan of $4,000, and asked who
got the benefit of the loss. His own
position being that the banker made
it.. Mr.. Finley tried to show that it
was for the general good. and Sena-
tor Owen, democrat, Oklahoma, as
serted, in opposition to Senator
Hitchcock's view, that the tax ex-
ennption was iustihable in farm loans
because it was for the purpose of
food production, and reduction in
the cost of living.
"Must Stop Somewhere
Senator Mclean of Connecticut,
chairman of the committee, reminded
the bankers that the pressure from
all sides for tax exemption was
enormous. That proposals were be-
fore the committee for creating gov
ernincnt building and loan associa-
lions to aid home building among
the poor. That congress must stop
somewhere" and said that he could
see nc reason why joint stock bonds
should be exempted. In answer to
this the witness quoted remark of
enc of the supreme court justices
made in the argument before the
court On the constitutionality of the
farm loan law, to the effect that zone
might. get to the edge of the preci-
nicc without jumping off," and in
sisted that tax exemption for the
Joint stock bonds was sound and
proper.
At the conclusion Of the hearing
il was admitted that some changes
hight be made in the Smoot bill
without, however, disturbing its main
purpose to tax the bonds. Senator
Gronna of North Dakota said he was
preparing legislation to protect the
tax exemption on bonds already is
sued. and several members expressed
the belief that if joint stock banks
were to be put out Of business, fair
ness demanded that those who had
money invested ought to be pro-
tected from loss. Further considera-
lion is TO be given to legislation of
this character.
Even though the Smoot bill
should pass the senate its approval
by. the house is doubtful. as the
chairman of the house banking and
currency committee is strongly op-
rosed to it.
E;nn hr{c cnriofu Will