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Amendment to the Farm Loan Act; Hearings before the Committee on Banking and Currency of the House of Representatives on Senate Bill 1837, Tuesday, June 7, 1921

Amendment to the Farm Loan Act; Hearings before the Committee on Banking and Currency of the House of Representatives on Senate Bill 1837, Tuesday, June 7, 1921

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This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1921 Excerpt: ...nor is it contemplated that the Government should pro ride the funds for the operation of this mutual system of farm loan banks. Congress did, however, fix the capitalization of these banks, make their organization mandatory upon the Farm Loan Board, and provide for the subscription of their initial capital by the Government. The Farm Loan Board feels positively, and in this view I concur, that the initial capital of the banks was wholly inadequate to permit their practical operation, and this fundamental defect has not as vet been overcome by the normal increase of the capital of the banks. To meet this defect, permit the steady and orderly operation of the banks, and provide for the accumulation from time to time of a sufficient volume of farm loan bonds to justify a general offering, some provision along the line of Senate bill 1837 seems essential. This bill has been drawn in such a manner as to protect the Treasury against financial loss, by permitting an interest charge on the deposit approximately equal to that paid by the Government on its current obligations, and sufficiently high to make certain that the land banks because of lack of profit in the transaction will not avail themselves of the deposit except as necessity might require. This necessity should be steadily lessened by the continuing increase of the capital stock of the banks, and should eventually pass away entirely. Very truly, yours, A. W. Mellon, Secretary. Hon. Georqe P. Mclean, Chairman Committee on Banking and Currency, United States Senate, Washington, D. C. Mr. Lobdell. I wonder, Mr. Chairman, if it would be asking too much to defer consideration of the Clague bill until another time? My colleague and I have a difference of opinion about it. The Chairman. You do not care to expr...