The Covington leader. (Covington, Tenn.) 18??-current, 1921-03-03
HIGHEST COURT SAYS
FARM LOAN ACT VALID

The farm loan act, designed TO
assist the agricultural development
Of the United States by providing
readily accessible credits to farm
ers through federal land banks, was
declared valid BY the supreme court
Monday.
In an opinion which Commissioner
Charles E. Lobdell, Of the farm loan
board declared "clears away every
legal question and removes every
shadow Of questionsas to the legality
of the banks or their bonds" the
court held chat congress had full
authority to establish the land banks
and the correlatiye authority to ex-
empt their bonds from state tax
alton.
Commissioners Lobdell announced
that there would be an immediate
issue Of farm loan bonds "to an un-
determinate amount" to finance the
hundred of million 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
ready" Mr.. L0bdell said, "and inn
mediately thereafter the distribution
Of funds begun. It will be at least
30 days, however, before funds are
available for actual loaning.
"The farm loan board is hopeful
that the market may absorb form
loan bonds equal to the borrowing
euntry, but no one can predict with
safety the result of financial
operation of this magnitude"
The case decided was an appeal
from lower court DEGREES refusing
an injunction sought by Charles w.
Smith, a stakeholder in the Kansas
CITY Title and Trust Company, to
restrain that institution from invest
ing it's 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
authority under the constitution to
establish banks nor to exempt these
securities from state taxation.
The court in practically unani-
nous opinion upheld the authority
demands Of the farmers Of the
government in. both instances.
The power to designate fiscal agen-
.ies has been conceded to congress
since the days Of Chief Justice Mar
shall, the opinion held, and the tax
exemption provision was a necessary
protection.
Justices McReynolds and Holmes,
dissenting from the majority opin-
ion, explained that they took ex-
ception to the courts assumption Of
jurisdiction rather to the findings
themselves. The case should have
been dismissed, they said, as mat
ter entirely within the scope of the
Missouri laws and the state courts.
Justice Day, who delivered the
opinion for the court, said it had
been intended "that the power to
designate these (the joint stock land
banksl 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 ex-
ercise Of the authority conferred
under it.''
Congress declared it necessary
to create these fiscal agencies" he
added, "and to make them author
lied repositories Of public moneys.
It's power to do SO is no longer open
to question"
Declaring that the contention that
the attempt to create these agencies
was only "pretext" could have no
weight in court, Justice Day said
there was nothing better settled
by the decisions Of this court than
that when congress acts within the
limits of its constitutional author
ity, 1t is not the province of the iu-
dicial branch of the government to
question the motives"