Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-16

w WITH the opening Of the Sew
IA enty-second Congress. still
wv more than four months away,
there come from the agri-
cultural regions plans and
| rumors of plans by the dozen. all di-
rected toward farm relief. And promi-
! nent In the foundation Of a ma lority OF
/ these projected measures Is the magic
/ word moratorium"
! That bin or bills seeking to declare
a moratorium on farm mortgage pay
/ ments will be introduced is a foregone
! conclusion. To the grain farmer who
/ has sold his wheat at the lowest figure
| he ever received or who is planning to
| feed 1t to his live stock or use 1t for
fuel this sounds like the approach of
| the millennium. But say agricultural
| leaders, the probability of such a meas
ure becoming a law is so remote as TO
be almost negligible.
| Funds available for loans on farm
/ collateral are obtained through the pur-
chase of bonds by investors. These in
| yestors now hold debenture bonds to the
amount of 81 800 900 900, and that
amount has been lent to farmers
/ through the Federal land banks and the
! Joint stock land banks. AS the bor-
/ rowers pay their interest the money in
/ turn Is paid over to the holders of the
banks debenture bonds as interest on
/ their investments. It follows that il a
moratorium were declared on farm loans
| there would be no money with which to
| pay interest on outstanding bonds. and
! the holders of these bonds would be-
come involuntary angels" for the bene-
| fit of the farmer.
Yearly Cost Put at sAS, 0oe, zee.
The only way in which this could be
avoided would be for Congress to set up
Fzsn h. rrnks 80 49,
bonds. Three per cent interest alone
! on the 81 500 900 900 outstanding would
amount to $48.000000 annually. to say
nothing of the principal payments which
| are required by law at Six-month in
tervals. Any measure which is likely to
point to an increase in taxation is not
going to prove popular with the Seventy
/ second Congress. 1t is for these reasons
! that agricultural leaders feel that a
/ moratorium proposal however sincerely
/ 1t may be proposed. is doomed to defeat.
/ Then. too, there is the question as to
the actual need of such legislation.
| Here farm authorities inject q note Of
! optimism that in the face Of the present
/ depression is refreshing. The Federal
Farm Loan Board is authority for the
statement that in all the farm loans
included in the 81 900 ,000, 900 that has
| passed through Federal hands 80 per
!
| interest and principal payments on the
| dot and the remaining ii per cent are
only few months late. And, they add.
more than half the farms in the United
States are free from mortgage incum-
| brances.
May Modify Federal Reserve. system.
1t has been pointed out that even
should the unexpected happen and q
/ moratorium on farm loans be declared,
only about II per cent or one farmer
in eight. would profit thereby. OF the
total farm indebtedness in this country.
amounting to $4,000. 600 900. the Federal
| farm loan system holds only the above
mentioned 81 500, 600. 600 And Con-
greSs. however BENEVOLENT Its intentions,
has not the authority to regulate the
payments that shall be made to banks
/ outside the Federal system. or to indi-
yiduals or corporations holding mort
cages on agricultural land.
However, there is likelihood that
out of the plans that will be proposed
there may come some modification Of the
Federal Reserve banking system. Just
what direction this reform win take is