The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1921-08-10
CIague Fiiye-and- One 1aIf-Pef-
Cent Bond Bill Becomes Law
Hard Struggle Brings Passage Of Bill Which Means Relief
Farmers Of Northwest Federal Land Banks and Joint
Stock Land Banks Again to Function

Stock Land Banks
The Clague Five-and- One Half Per
Cent Bond Bill, which bankers are
hopeful will do much to relieve the
present financial stringency among the
farmers, passed the lower house of
Congress last week through the inia-
tive and purposeful work of Congress-
man Frank Clague of Redwood Falls.
After leaving the House the bill was
returned to the Senate to be repassed
in it's amended form, was passed by
the Senate late Saturday and then was
sent to President Harding for his
signature. The passage of this bill
brings the keenest satisfaction to Mr..
Clague's constituents who have watch
ed his work on it with the greatest of
interest. It's passage called for hard
and persistent work as well as clear
understanding of the situation in his
own state and district which necessiti-
ated it's passage, and its final victory
is distinct credit to Mr.. Clague's
ability as a statesman. Senator Kel-
logg of Minnesota introduced the bill
in the Senate, recognizing, as did Mr..
Clague, that farmers Of the north
west were entitled to the relief which
the increased sale Of these bonds will
bring. The bill provided for the rails
ing of the farm loan bond rate from
five to five and one-half per cent and
is purely an emergency measure, the
time limit being two years.
The following statements are taken
from the Congressional Record, and
were included in Mr.. Clague's talk be-
fore the Committe on Currency and
Banking. "Mr. Chairman,
there are % joint-stock land banks in
the United States. Those banks have
already loaned about SIS, 100000. The
Federal land banks have at this time
altogether loaned 1914 100000, MAX
ing a total of $450,000,000 that have
been loaned by the Federal land bank
system. It is true that the bonds is
sued by these land banks are tax ex-
empt, but there has been at this time
issued altogether, as near as | can get
from statistics / called up the
Federal reserve bank and the Federal
land bank-from sixteen to twenty
billion dollars tax-exempt securities.
Therefore Of the tax-exempt securi-
ties issued only $450,000,000, or one
thirty-second part of the total of ex-
empt securities, are farm mortgages.
The State of New York alone has is
sued over a billion dollars of tax-ex-
empt securities for municipal pur-
poses. The city alone has issued
nearly billion dollars. The State of
D.,
This being true, why should we hear
all this cry about a few millions of
dollars which have been issued on
farm mortgages?
| want to say that in principle am
opposed to the taX-exemption feature.
We have got this at this time. These
joint-stock land banks were created
some four or five years ago. At pre-
sent they can not function. This bill
was really introduced at the request
of the joint-stock land banks, and |
want to say at this time the Federal
Land Bank Board has been very fair
about this bill. Mr.. Lever, who serv-
ed in this House many years, came be-
fore our committee and stated that at
this time this bill should pass, that the
ioint-stock land banks at this time are
unable to sell their bonds at 5 per cent,
that if the rate is put up to 51z per
cent they can be sold and the banks
function. But no bank selling bonds
at a discount can sell them as well as
if selling at par If these bonds can
be offered for sale at fair rate Of in
terest, it is thought by the Joint
land banks that they can sell their
bonds, and believe they can at a rate
of 51a. per cent. Now, the Federal
farm land bonds are Government
bonds in way. They can be sold a
little cheaper than those of the joint
stock land banks. We have in the
United States IL Federal farm land
banks. They have issued about $374,-
000, ,0o0 of bonds, and they are going
to issue within 60 days new quota
of bonds, possibly of $4,000 900 or
$4,000, 900 more. Whether they can
sell them at per cent is a question,
and if they can not this bill will give
them the privilege of selling up to a
~ rate. The Federal farm law pro-
vides that no farmer can be charged
rate exceeding per cent for his
farm loan, and the law provides that
the bonds can not be sold at rate
exceeding 5 per cent. Now, by rais-
ing this rate Of interest it is believed
that there can be some twenty or thir-
ty millions of dollars of bonds sold at
once. Somebody said, How many
bonds are going to be sold? We do
not know how much the market will
absorb. No man can tell. The Fed
eral farm land banks put out $40, ,0O0,-
600 and it took nearly three months to
sell them at 5 per cent, and possibly
they would have to raise the rate lit
tie at this time, but no one knows. It
they can sell at s per cent, they are
going to do it. Now, my friends, this
IS a time when the farmers have never
been so hard pressed in the world to
get money. This bill is approved by
q -6 hvy tho