The Nonpartisan Leader Newspaper, November 15, 1920, Page 8

N R ] B T T AT oo e e - vide that farm loan bonds should be free Farmers Must Organize to Save Farm Loan System From Attacks of Mortgage Bankers and Official Sabotage : FTER lending some $360,000,000 to farmers the United States land bank system has practically suspended busi- §| nmess. Although farmers need loans | worse this year than ever before they by the banks prior to March 1, 1920, have been made but as some weeks elapse after application is made before a loan is approved it is safe to say that no loans applied for this year have been granted. And there is no immediate likelihood that any will - be granted. There are two réasons for the killing of the farm loan bank system: First—The tireless fight of the farm mortgage bankers, whose private profits have been reduced by government competition. Second—The secret hostility of government offi- cials, supposed to help the farmers, who have mis- used their positions to practice sabotage against the land banks and thus help the mortgage bankers. The fight of the mortgage bankers. - against the farm loan act started when the law first was put in operation. Mortgage bankers checked -carefully every loan for which application was made. If the gov- ernment appraiser recommended its allow- ance the appraisal was attacked as too high and an effort was made to show that the government would be likely to lose money by making the loan. If the government appraiser did not -appraise the lands high enough to allow the full amount of the loan that was asked the mortgage bankers went ‘to the farmer, told him that the govern- ment system was unfair and offered to let him have what money he needed. In addition to this intensive work the mortgage bankers started suit in the fed- eral circuit court at Kansas City attacking the farm loan act on two grounds—first, that the entire act was unconstitutional; second, that congress had no right to pro- from taxation. The federal -circuit court promptly upheld the farm loan ‘act on both grounds. Appeal was immediately taken to the supreme court of the United States. The case was argued in the supreme court in January, 1920. In April, the su- preme court, without rendering a decision, assigned the case for reargument in Octo- ber. The case was recently presented a second time. SECRETARY HOUSTON BLOCKS GOVERNMENT AID When a case is assigned for reargument it usually means that the court is evenly divided upon some feature of the case and an attempt is being made to obtain further light so that an agreement can be reached. With the status of the land banks in such precarious - condition the farm loan board decided to make no attempt to sell any bonds to the public to get funds to make loans to farmers. The only chance to con- tinue the farm loan system, as the farm loan board saw it, would be to get help from con- ress. ; ; Congress had previously given such aid. The entrance of the United States into the war and the Liberty loan drives interfered so badly with the sale of farm loan bonds on the open market that in 1918 congress appropriated $200,000,000 to be used dur- ing the years 1918 and 1919 to purchase farm loan bonds. During the two years about $135,000,000 of this appropriation has been used, leaving a balance -'unexpended of "$65,000,000; - The farm loan board went before congress, asking that this $65,000,000 left out of the 1918 and 1919 appropriations be made available for purchase of farm loan bonds in 1920. The only thing that the farm loan board asked was that this money, set aside by congress, be used during 1920. It was a perfectly reasonable request and un- doubtedly would have been granted by congress but at this juncture Secretary Houston of the treasury department addressed a letter to the chairman of the house-banking and currency system, objecting can notiget them. Loans “approved” == alread%r : to the full extension of the law of 1918 and asked that the purchase of bonds be limited to sufficient only to meet loans ‘approved prior to March 1, 1920. The effect of this was that the land banks were limited to loans already approved and were pre- _ vented from writing any new business. Only $30,- 000,000 of the $65,000,000 appropriated for the purpose could be used, and on March 1, 1920, the farm loan banks, all over the United States, prac- tically closed their doors, except for the purpose of €tompleting loans already approved. As this is written the supreme court of the United States still has the farm loan bank case under ad-. _visement and the farm loan banks are still out of " business. - The mortgage bankers are jubilant. Rates for farm loans, which were brought down to an average of about 6“per cent when the federal ~Jand bank system started operations, have jumped up again to 7, 8 and 10 per cent. The only opposi- tion that the mortgage bankers have is from such local farm loan systems as have been inaugurated, s ——="11e ApINS™ ML n T N e like “the ' state-owned. ‘Bank of North Dakota: : Since the suit against the land banks was first started the farm loan board has practically been “marking time.” No attempt has been made to: sell bonds to get money to loan the farmers. The only attempt to carry on the system at all was made ‘when congress was asked for the remaining. $65,- 000,000 of the 1918 appropriation,’and when Secret ~ [ THEN- ANDNow - | tary’Houston, notorious enemy of the farmers, ad- " vised against allowing this, the farm loan‘ board took no steps to override his advice before congress. W.. W. Flannagan, secretary of the farm loan board when it was started, addressing the National’ " #Board of Farm Organizations recently at Columbus, - Ohio, said: : 2 = : * “It is this forced policy of inaction, this tacit ac- knowledgment of defeat by the Farm Mortgage Bankers’ association, as the assumed result of an undecided lawsuit, which is criticized. It is .the +failure to suggest to congress some method and to ask for such relief as was needed, in order that the farm loan business might be continued, that is con- PAGE EIGHT L} S demned. The case before the supreme court was argued early in January and congress did not ad- journ until June. It was apparent to all of the friends of the system during this time that even a favorable decision by the court would not enable the only method heretofore adopted for securing funds —through a bankers’ bond-selling syndicate—to be continued and relied upon. . { “There is another matter which the friends of the farm loan act view with much concern. Judge Charles E. Lobdell of Kansas, who lately succeeded George W. Norris as farm loan commissioner and who is the commanding influence on the board as chief executive officer, is*opposed to the conduct of the business of the federal.land banks through the intervention of the local farm loan associations, as provided in the farm loan act. He would have loans made to the farmer borrowers through agents se- lected by the banks, thus destfoying the local asso- ciations entirely. Already a bill has been introduced by Congressman Strong of Kansas providing for the ‘voluntary’ liquidation of associations. It is said that Judge Lobdell was formerly the president of the Mortgage Bankers’ asso- ciation of Kansas.” MORTGAGE BANKERS FIGHT JOINT STOCK LAND BANKS In addition to the continued attacks of the Mortgage Bankers’ association upon the loans made by the land banks, the law- suits and the sabotage of government of- ficials, the mortgage bankers are fighting another angle of the farm loan act—the one which provides for joint stock land hanks. The joint stock land banks privately owned and controlled, were first authorized at the suggestion of the mortgage bankers. They saw a chance to get under the farm loan act and operate under a new title. 'When the law was passed, however, provision was made that the joint stock land banks should -be under government supervision. The mortgage bankers did not like this pro- vision and tried to have it eliminated. ‘When the farm loan board refused to con- sider the proposal the mortgage bankers changed their tactics. 2 Instead of going under the law and or- ‘ganizing joint stock land banks, they de- cided to fight the %joint stock_land banks, just as they were fighting the- gov- ernment land banks. Utah, noted reactionary, introduced a bill to put the joint stoek land banks -out of business. This bill is still pending in con- gress and may be taken up and put through at the next session. A ‘With the Mortgage Bankers’ association fighting the farm loan act through con- gress, the treasury department and the courts, how is this attack to be met and the land bank system preserved ? § Friends of the land bank system are now working upon a proposal to form a national union of farm loan associations. These as- - rowers from the land.banks. Their prop- erty .is pledged to repay all loans made by the land banks to their members df the individual borrowers - ° fail” to meet their obligations.. They are the men who have the best interests of the system at heart. There are at present approximately 125,000 bor- ~ rowers from the land bank, all members of the 4,000 local associations, and prospective borrowers whose loans: can not be granted because the land banks haye ceased to function probably will bring the total membership of the associations to’150,000. ; The National Board of Farm Organizations pro- poses that, these 150,000 borrowers, whose individ- ual farms are pledged as security for their own loans and their neighbors’ loans, organize a national = association to fight for the retention of the farm loan act and its improvement, just as the Mortgage Bankers? association is organized to fight against the farm loan act and to break it down. Without “some such organization to Work in its defense the farmers may as well give up as dead * the one piece of constructive legislation passed in their interests in the last 10 years. Senator Smoot of . sociations-are composed of the local bor- " " Federal Land Banks Suspend .BuéifieSs < <y LY