The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1921-02-28
FARM L0ANLAWS
CONSTITUTIONAL
Supreme Court Decides Con-
gress Has Full Authority.
By 6 to 2 Vote Declares Bonds
Can Be Tax Exempt.
DECISION TO AID FARMERS
Millions in Loans Held Up
Pending Court Decree.
AffirmS Lower Court in Case
From Kansas City.

Washington, Feb. 2S.-The federal
farm loan act was held constitutional
today by the supreme court. This is
the act under which land banks were
Established to extend loans to farmers.
The court divided, six to two, JUS
|tices Holmes and McReynolds dissent
ing. Justice Rrandeis took no part in
considering the case. Justices Holmes
and McReynelds held that the cause"
should have been dismissed by the
court as being solely within the scope
of the Missouri courts.
Congress Has Power.
The court in sustaining federal court
DEGREES, dismissing injunction pro-
ceedings brought by Mr.. Smith the
court also held that congress had the
authority to exempt the bonds of the
bank from taxation.
Millions of dollars in loans to farm
ers have been held up pending de-
cision of the court in this case, which
was brought by Charles w. Smith. a
stock holder in the Kansas City Title
and Trust company who sought an in
junction to restrain that institution
from investing its funds in bonds is
sued by the farm loan banks.
J Congress Awaited Decision.
! In anticipation of the direction oi
! the court in this case the house or
Saturday postponed until tomorrow &
vote on section of the sundry civi
bill. authorizing the treasury to pur
chase 100000, 900 worth of farm loar
ibonds. ~
| The supreme courts decision viii
permit the banks to 60 ahead with th'
sale of their bonds on the market ant
Esome congressional leaders do not re
gard 1t as necessary to make the pro
posed $20o.00O.0O0 appropriation.
/ The act was attackedupn the grouns
that congress was without constitu
| tional authority to re-establish farm
/ loan banks. and to exempt their bond
from taxation. Justice Day. who rem
dered the opinion for the court. sait
the power of congress to establish
banks had. in a broad sense. been up
held by the supreme court in the day
of Chief Justice Marshall.
Can Aid Farmers ,Sow.
The decision is expected to al,
greatly in relieving the financial dis
tress now confronting agricultural in
terests, as it will now be possible t.
extend more loans to the farmers.
The decision affirms decisions o
the federal district court at Kansa
City on a case brought by Charles E
Smith against the Kansas City It'll
& Trust company, the federal lam
bank at Wichita and the joint stool
land company, Chicago.
The act was defended by w. G. Nc
Adoo. George w. Wickersham an
Charles E. Hughes.
Involved S151, 100000.
The case involved the validity O
s626.321 of stock and $3.50, 100000 o
bonds issued by the joint stock Ian
banks outstanding in the hands O
the public as we'll as ss.S26,321 @
stock and $135. .000,0 900 of bonds of tn
latter banks held in the United State
, treasury.
: The contention of the opponents @
the act was that by exempting mort
, cages, stocks and bonds of the fedora
farm loan system from all taxation
unfair discrimination was practice
against the many individuals of til
: country holding other mortgages. TIL
act was declared to be class legisia
i-tion.
! Attorneys for the opponents. Fran
, Eagerman and William Marshall Bu
: litt, pointed out that the per Ger
r bond of the system had the same ia
exemption advantages as the first 8 I
? liberty bonds. Wealthy persons,
was contended. can thus avoid all ir
come and super taxes so that farl
loan bond in their hands returns tn
equivalent of g per cent per annun