The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1921-03-01
FARM LOAN ACT IS
VALID, IS RULING
Of SUPREME COURT
Immediate Bond Issue to
Finance 100 Million In
Loans Approved BY Board
Is Announced
By Associated Press

Washington, February 2S.-The
farm loan act, designed to assist the
agricultural department of the Uni
ted States by providing readily ac-
cessible credits to farmers through
federal land banks, was declared
valid by the supreme court today.
In an opinion which Commissioner
Charles f. Lobdell OF the farm loan
board, declared clears away every le-
gal question and removes every shadow
OF question as TO the legality tf the
that Congress had full authority to es-
tablisch the land hanks and the cor
relative authority 10 exempt their
bonds from state taxation.
missioner LobdeII announced
that there would be an Immediate
issue of farm loan bonds .sto nm
nndeternainate amount, to finance
the hundred OF million of dollars i'm
loans which already had been ap-
proved by the board. and which
were held mp pending the courts
decision.
"A bond offering will be made as
soon as the bonds can be made ready
Mr. Lobdell said, s'and Immediately
after the distribution of funds begun.
1T will be at least 80 days. however, be-
fore funds are available for actual
loaning.
"The farm loan board is hopeful that
the market may absorb farm loan
bonds equal to the borrowing, demands
of the farmers of the country. but no
one can predict with safety the result
OF financial operation of this mag
nitude'
APPEAL FROM DECREE
This case decided today was an ap-
peal from lower court DEGREES refusing
an Injunction sought by Charles w,
Smith, a stockholder in the Kansas
City Title anu Trust company. to re-
strain that Institution from investing
its funds Il. he securities Of Rhe laid
banks. Tie contention WAS made that
the farm loan act was Invalid, ais Con
gress had neither the authority under
the constitution to establish banks or
to exempt these securities from state
taxation.
The court in practically unanimous
opinion upheld the authority of the
government in both instances. The
power to designate fiscal agencies has
been conceded to Congress since the
days OF Chief Justice Marshal, the
opinion held, and the tax exemption
provision was a necessary protection.
Justices McReynolds and Holmes
dissenting from the majority opinion
explained that they took exception to
the courts assumption OF jurisdiction
rather than to the findings themselves
The case should have been dismissed
they said. as a matter entirely within
the scope OF the Missouri laws and the
state courts.
Justice Day, who delivered the opin-
ion for the court, said II had been con-
tended that the power to designate
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 con-
stitution, is not determined by the ex-
tent of the exercise OF the authority
conferred under it,
Congress declared it necessary e
create these fiscal agencies" he added
land to make them authorized deposit
tories of public moneys. Its power te
do so is no longer open TO question
Declaring that the contention thai
the attempt to create these agencie:
was only a ''pretext" could have nc
weight in court, Justice Day said. There
was nothing better settled by the de.
cisions Of this court than that wher
Congress acts within the limits of its
constitutional authority. it is not thu
prudence Of judicial branch of the gov.
eminent to question its motives"