Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1921-03-01
FARM LOAN ACT
CONSTITUTIONAL
COURT OPINION
Means Ready Credits
for Farmers Through
Federal Banks
Congress Has Full Authority to
Establish Land Banks Deci-
sion Of Supreme Court
Month Before Credits Will
Be Available

:. Washington, Feb. 2S-The farm
loan act. designed to assist. the agri-
cultural development Of the United
Stated by providing readily accessible
credits to farmers through federal
loan banks, was declared valid today
by the Supreme court.
In an opinion which Commissioner
Charles e. Lobdell, Of the Farm
Loan Board. declared, clears away
every legal question and removes ev-
cry shadow of question as to the le-
gality Of the banks or their bonds" "
the court held that Congress had full
authority to establish the land banks
and the correlative authority to ex-
empt heir bonds from state taxation.
Commissioner Lobdell announced
hat there would be an immediate is
sue of farm loan bonds ito an unde-
terminate amount" to finance the
hundreds of millions of dollars in
loans which already had been APP
proved by the board and which were
held up pending the courts decision.
"a bond offering will be made as
soon as the bonds can be made rea-
dy," Mr.. Lobdell said, land immedi-
ately thereafter the distribution of
funds begun. 1t will be at least thir-
ty days, however, before funds are
available for actual loaning.
1.-The farm loan board is hopeful
that the market may absorb farm
loan bonds equal to the borrowing
demands Of the farms of the country,
but no vPne can predict with safety
the result of financial operation of
this magnitude
The case decided today was an APP
peal from lower court DEGREES refus-
ing an injunction sought by Charles
w. Smith, a stock holder in the Kan
sas City Title and Trust Company
to restrain that institution from in
vesting its funds in the securities of
the land banks. The contention was
made. that the farm loan act was in
valid as congress had neither the au-
thority under the constitution to es-
tablish banks or to exempt their =e-
curities from state taxation.
The court, in practically unan-
imous opinion, upheld the authority
of the government in both instances
The power to designate fiscal agen-
cies has been conceded to congress
since the days of Chief Justice Mar
hall. the opinion held, and the tax
exemption provision was a necessary
protection.
Justices McReynofds and Holmes,
dissenting, from tn majority opinion,
explained that they took exception
to the courts assumption of juris-
diction, rather than to the findings
themselves, the case should have been
dismissed, they said, as a matter en-
tirely within the scope of the Mis-
souri, laws and the state courts.
Justice Day, who delivered the
opinion for the court, said it had been
commended that the power to desig-
nate these (the joint stock land
banks) as repositories has not been
exercised by the government" but
added that the existence of the
power under the constitution is not
determined by the extent Of the exer-
else of the authority conferred under
it." . =
Congress declared it necessary to
create these fiscal agencies" he add
ed, land to make them authorized
repositories of public moneys. Its
power to do so is no longer open to
question"
Declaring that the contention that
the attempt to create these agencies
was only a 'pretext" could have nc
weight in court, Justice Day said
there was mot better settled by the
decisions of this court than that
when Congress acts within the limits
of its constitutional authority, it is
not the province of the judicial
branch Of the government to question
its motives"