The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1921-02-28
FARM LOAN
ACT IS HELLO
TO Be VALID
u. S. Supreme Court
Decides Test
Case

WASHINGTON, Feb. -. The
federal farm loan act was held
constitutional today by the Su.
prrmr court Of the United States
This ls the act under which land
banks were established to extend
loans 10 farmers.
Millions Of dollars in loans to
farmers have been held up pend
ing q decision of the court in thus
ease, which was brought by Chas
w Smith, u stockhOldcr IN the
Kansas City Title and Trust com.
pauy, who sought an injunction
To- restrain that institution from
investing It's funds IN bonds issued
hy the farm loan banks.
Opinion by Day
Tho act was attacked on tho
ground that congress was without
constitutional nuth, rity TO esta blLsh
farm loan banks and Co exempt their
bonds from taxation. Justice f,ay.
who rendered thc opinion. Tor the
count said IN" power or congress
90 establish banks had. In IA broad
SENS" h''E upheld hy the supr-m.
court in th" days 90 chief Justice
Marshall
tn" court IN sustaining fcdsrnl
court dcvrcos di-missiug Injunction
proceedings brought by Mr. Smith.
also held that congress- had tho au-
thorty tn exempt the bonds of IN.
tank from taxation
The court divided. 9 To :. Justices
Holmes and M,Heyunld- dispntInE
IuWir" Iraud"is took no part In CON
sid"ring IN" case. Justices Holmes
sad Mrtoynolds held that the cause
should have been dismissed ny the
court ne being solely within the .rops
Of the Missouri courts
Loans Held Up.
Farm l,lny aEgtoE1t.nE moro than
SO, 900 600 have been held up since
Mas. 1890 ass q RESULT ~ the suit in
9u'ut'd by Charle. T. Smith. "A stock
holder In the Kansas City Title a
! Trust COMPANY 90 tcyr the validity OF
th" Federal Farm Loan net. Appn.
cation. TO this amount were pending
when Commissioner Lobdoll announr-
81 ~ q conference 90 farm loan ON
Dills herr that Official approval would
b" withheld pending a decision OF the
court
Officials placed the totni amoun, OF
loans To- farmers held In ub"yanc" by
the suit at many times $40 600. .OO0.
however tho receipt Uf appl'cb lions
having stopped with Commissioner
i.Ubdrlrs announcement ON March
!, 1890 n" farm loan board reported
! that fib5.ht7,uuO had been advanced
! tu 7H.1bi farmers and that applica-
/ lions from 1889 persons then pend
iuW tutull"d So 100000.
Ift g.# -
| iu 'h" form u an appeal from lowe,
/ court decisions refusing to issue an
/ .4H,lIuu to restrain the Kansas GO
/ III... A Trust company from invest
l lur - funds IN bonds lsnu"d by tho
! farm loan banks tn. government.
| the federal land bank OF wichltn,
/ Kansas. and IN" First Joint Stock
/ .,uG Bank Of chicago. on their own
/ application. Wei" made defendants Ia
order that the entire question might
Dee settled finally In ono suit.
Ground for Atu. }.
counsel Tor Mr. smith asserted In
substance that the farm loan 49,; WIS
an exercise uf power which congress
! did not possess under tn" constitu-
! ton. Further ground for attArk was
found iu the exemption Of IA" ftirin
loan securities from taxation. aa IN
strumvutalitirs OF the government
william q. MrAduos FORMER hrie-
| tary of IN" treasury, submitted tho
lgusrIumrut brief aa special assistant
TO the attorney general, In the argu.
meut ~ IN" case. lic asserted thar
| the banks were created az "fiS'al
Iagonts' OF m" government and that
congress, had the clear right to set
up such institutions. Size. nsStisiAn nee
to agriculture per tains to the general
wolfArr. 1t WIS argued. congress could
have made direct appropriations Tor
the purpose boo View, but chose 10
create tnoac special agencies 20 pro-
vide the necessary funds.
with regard 7p the tax exemption
feature. Mr NrNdpo coutended that
% was simply question tor congress
10 determine when tho usefulness OF
,ts agencies would be- enhanced by
exemption