The Nonpartisan Leader Newspaper, May 12, 1919, Page 4

U. S. Farm Loan Menabed Farm Mortgage Bankers Urging Repeal of Tax Exemption on Bonds Washington Bureau, Nonpartisan Leader. EPEAL the tax exemption of the farm loan bonds,” cries the Farm Mortgage Bankers’ Asso- ciation of America. A big pub- licity campaign has: been launched by these mortgage bankers, to help the government collect more revenue by taxing the farmers on their debts. What | they are really after is to stop the sale of the bonds issued by the federal farm loan board, and shut off the supply of cheap money to the farmers | through' the 38,700 farm loan associations in the ! winter. various states. The mortgage bankers have been having a hard In Iowa and Illinois, for example, the farmers have'always been able to get money from the private mortgage concerns at 5 per cent or 6 per cent, or in times of money scarcity perhaps 7 per cent. The bankers had no fear of invasion . of this rich field by the farm loan board and its . cheap money, yet since January 1 of the present ¢ and Wisconsin, in Indiana and Kansas : upon farm loans anywhere, by the . At the beginning of the operation of . stock are getting the benefit of the $200,000,000 of . Dakota, the number of loans is stead- 7 ily increasing, and the hold of the ' private mortgage banker is as stead- . ily loosening. - prohibit the treasury from buying . the bonds issued by the farm loan ' wartime money shortage, the rate was year the Iowa farmers have borrowed over $6,000,- 000 of these 35-year amortized loans, on which they pay 5% per cent interest. In Illinois and Nebraska, in Minnesota and North The private bankers are not giving up their control of business and poli- tics in these rich farming states with- out a fight. Last year they foresaw just what has happened, and through Senator Weeks of Massachusetts, a banker, they tried to get congress to board. That effort failed. The farm loan act provides that the highest interest rate to be charged farm loan bank, shall be 6 per cent. the system, only 5 per cent was charg- ed. In December, 1917, due to the . raised to 5% per cent. If the enemies ! OF. THE MONEY to the farm loan . board MORE THAN 6 PER CENT, of of the system can MAKE THE COST course there can be no further loans, for the system can not be operated at a loss. Exemption of the farm loan bonds from taxation is provided in the law. They are exempt from federal, state and local taxation. Because they are so desirable they are sold at a low interest rate.. That rate was originally 4% per cent. Later it was raised to 5 per cent, but since the $100 bonds soon began to sell at $105 - in the market the rate was reduced to 4% per cent. Farmers who have borrowed the money from farm loan associations and who have bought their loans thus far made. A number of the regional “ farm loan banks have paid a generous dividend, © while every man who secured a loan at the low rate, in place of the old usury rate and bonus, has had cause to thank his lucky stars that the organ-_ ized farmers secured this law. “Repeal the tax exemption from the farm loan . bonds,” cries the organization of private mort- gage bankers. TAX EXEMPTION HOLDS DOWN RATE OF INTEREST This tax exemption enables the farm loan asso- ciations to save millions of dollars annually in in- terest on the loans made by them. And what is worse—it brings down the interest rate for farm loans everywhere, because the farm loan board will send money to Oklahoma or New Mexico or Florida to be loaned just as cheaply as in Iowa or Indiana. For every dollar saved directly by this system, at . help the private mortgage bankers. least $10 has been saved in forced-down interest rates on private mortgages. That is why the mortgage bankers’ campaign of angry protests is being conducted. Ed Chassell, a former Iowa newspaper man, is in charge. Chassell claims that the government is “losing” $6 in revenue for every dollar loan- ed to the farmers. It is just as though this same gentleman should assert that the govern- ment “loses” so many millions of dollars by not taxing the farmer on the smut in his corn, or the sickness among the hogs, or the bad weather in harvest time. After the farmer has been taxed on his land, his buildings and his other belongings, he is—according to this new theory—to be taxed on his debt! And so long as he is not so taxed, the government “loses” a lot of money. : Other securities beside farm loan bonds are ex- empt.dfrom taxation. The mortgages of all mutual savings banks are exempt. All mutual building and” loan associations’ mortgages are likewise ex- empt. All municipal bonds in the United States are likewise exempt from taxation. The new Vie- tory Liberty loan is exempt. Summed up, about 80 times as much “lost” tax-b ation is involved in these other securities as in the farm loan bonds. Isn’t it strange that the Mort- gage Bankers’ Association of America has not hired a press agent to express its grief that these other bonds are tax-exempt? Especially the mu- —Copyright by Harris & Ewing. This building in Washington houses the navy and the war departments,-where during the war the affairs of the 4,000,000 men in the army and the hundreds of ships and thousands of men in the navy were administered. Next to the White House and the capitol it was the most vital spot in the country, where the destinies of the nation were being shaped. tual savings banks’ mortgages and the building and loan mortgages? And if John D. Rockefeller can be forced to buy government bonds at 4% per cent to furnish money to the farmers at 5% per cent, where could his money be put to better use? ; . The only governmental agency in operation on a large scale during the war that directly benefited the farmer was the farm loan system. It is still the only such agency that the farmer is using in a big.way. On the big map in the office of the board are stuck black pins, one for each farm loan association. They are thick over ITowa, Missouri, Nebraska, Kansas, North Dakota, western and southern Minnesota and northern Wisconsin. They are thick in parts of Montana, in Tilinois and in the middle South. The system of co-operative farm credit has grown so fast and so far that the Mortgage Bankers’ association can never overtake and cripple it. Edmund Platt, in private life a newspaper owner at Poughkeepsie, N. Y., is to be chairman of the house committee on banking and currency in the new congress. He is a member of the Mann-Can- non organization. Senator George P. McLean of Connecticut, a lawyer, will be chairman of the senate committee. * Both men will be inclined to However, they will be subject to the advice of the Republican national committee, which is looking toward the presidential election of 1920. They will be obliged to go slow in any frame-up against the farmers. A O o B i PR o e LB LSS, PAGE FOUR G I ARMY AND NAVY BUILDIN I The Michigan Contest Upper House Faces Fight on Newberry Campaign Fund Investigation Washingten Bureau, Nonpartisan Leader. —1O0W many dollars is a seat in the 21 United States senate worth? That depends on who buys it. In the days when the senate was able to- give away hundreds of millions of dollars’ worth of public lands to. railroad pro- moters, the seats came high to ; such men as Leland Stanford. Later on, when Mark Hanna wanted to take charge of his own national administration, he paid a good round price for the privilege. Then came a wave of reform, of protest from the farmers and the wage-workers, and when Chicago’s “Blond Boss” Lorimer tried the game he was thrown out. He lost both the investment and the seat. Old Senator Isaac Stephenson of Wisconsin paid more than $100,000 for his last certificate of elec- tion. The' senators decided that Stephenson was an aged millionaire who really didn’t know any better. Now comes Truman H. Newberry of Detroit, a ' millionaire with strong anti-labor views and a lik- ing for Washington society, and carrying a certifi- cate of election from Michigan. The price tag on his certificate is marked $170,000. This is a high-priced senatorial dig- nity. Some of the oldest politicians in congress estimate that neither Mark Hanna, Billy Lorimer nor Uncle Ike Stephenson were obliged to pay within $50,000 of the amount that New- berry’s family ‘and friends paid— “without my knowledge or- consent.” . The federal and state laws of Michi- gan forbid the expenditure of more than $10,000. NEWBERRY WARNED OF IMPENDING SCANDAL . On August 22, 1918, at the height of the primary campaign, a letter to Newberry, then holding a naval com- mission and stationed at the Brooklyn navy yard, was published in various _newspapers in the state, signed by Luren D. Dickinson, the lieutenant governor, who was re-elected last fall. “Men in all walks of life who have the best interests of our state at heart,” Dickinson wrote Newberry, “believe the men who are conducting your campaign for United States sen- ator are conducting one that will bring one of the greatest scandals on our state that Michigan politics ever saw, and have asked me to take the lead in attempting to rid our state of this blight. “I note by your statement that you say you do not know of these things. ¥ “I have always had the highest regard for you and must believe you will relieve the Republican party and the state of a campaign®that is being iikened to the notorious Lorimer campaign in Ti- nois. The terms ‘boodle’ and ‘rotten’ seem to be general terms that I hear. “Every section of’the state shows evidence of an expensive newspaper campaign. Thousands of men are liberally paid for work, thousands of autos already engaged for use on primary day, that practically every opponent of the primary system is backing your campaign. : “Conservative estimates say anywhere from $250,000 to $500,000 is being used. * * * Should you be successful at the polls you must expect a legislative investigation that would be demanded by an indignant populace.” Former Governor Osborn was a rival candidate for the nomination. After the primary, Newberry thanked Osborn for a promise of support against Henry Ford, the Democratic nominee, and Osborn wrote back: : “My idea is that the thing for you to de is to honestly confess that you broke the law and that you knmew all about the campaign, but that you did not realize the enormity of your . offenge. * * * The plea can not be honestly ~ made that you spent money in excess because