Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1924-02-29
FEDERAL LOANS
IN SHENANDOAH.

banks, Representative Thomas
w. Harrison from the Seventh
Congressional district brought
out the amounts borrowed from
these banks By the farmers in his
district.
The number of loans closed in
Shenandoah County to October
81. 1928. were madelto 81. farm
ers who borrowed an aggregate
of 1903. 500.
Judge Harrison's speech, in
justification OF his opposition to
the proposed tax is published in
part.
He said: Mr.. Chairman. it has
become fad to propose amend
ments to the Constitution of the
United States in these days. II
any sore on the body politics
appears, we have our political
doctors, who prescribe as the sole
and infallible cure an amendment
to the Constitution. Owing to
war conditions the Federal
Government issued vast bond
issue, and following the war the
States and municipalities issued
bonds in large amounts to make
necessary improvements. 1t so
happens that at present there is
an abnormal situa ton in the
public security market. A multi
millionaire died recently and it
developed that portion of his
estate was invested in tax-exempt
1t has been made the
basis OF a great prop uganda
against tax-exempt securities
stops to reflect that if an
evil of this character exists, it is
one that in short time must
correct itself. Federal and State
are retiring their
bonds, aud it can not be long be
fore the abnormal conditions
arising out of such a situation
will disappear.
i; is. however, wholly incorrect
to speak of public bonds as tax
xempt securities. States tax
State and municipal bonds, and
the Federal Government taxes
Federal bonds. 1t is a mere
segregation of tax subjects tol
State or Federal Government asI
The case may be. / can see mol
evil resulting from such segre-l
cation, and in some States such
4 policy is pu rsued in matters rel
lating to State and municipal
taxation. Why should not State
securities be segregated to States
tor local taxation for their pur-
poses? There is nothing strange
about this doctrine of segre-l
? ation. Tue Federal Government
does not lay direct taxes on
property, and vet it is not claimed
such property is tax exempt.
AS a matter OF fast there arel
but two classes of tax-exempt
securities; the first issue of
Liberty bonds; and second
Federal farm loan bonds. Nor
can it be said that the investor
secured these bonds tax free in
The true sense. In the Liberty
bonds referred to the investor
accepted the bonds at the low rate
Of 3 per cent interest. He paid
his tax in the low rate Of interest.
In the farm loan bonds the farmer
reaps the benefit by securing
loan at low rate of
interest. The investor pays the
tax by furnishing easy money to
our farmers. In each case the
public reaps the benefit in the
reduced rate for the money i'll
secures for public purposes
Where States or municipalities
issue money to subserve public
purposes the local taxpayer Sc
cures the benefit of reduced
rate of interest aud the investor
pays the tax to him. The farm
loan banks have been thus Ell
abled to serve the great agri-
cultural interests at greatly re-
duced rates of interest than
would be possible if State and
Federal Governments could tax
their bonds. The direct bene-
ficiary is not the wealthy investor
who pays a greater increased
price, but the farmer for whose
benefit the b md is issued.
! may say that these banl .
have obtained considerable popu
larity in the district / have the
honor to represent. There are
numerous farm loan banks
scattered throughout the several
counties of tlie district. They,
have enabled the farmer to secure
money ut long maturity and at 4
s-xk IN. A. 4