FARM LOAN ACT CRITICIZED. By Hon. Louis T. McFadden, M. C., of Pennsylvania, Member of Committee on Banking and Currency. "You want to know why I am opposed to the amendment to the Federal Farm Loan Act? "That bill was not by any means of the small importance that some of its friends in the Senate asserted. It carried a permanent appropriation of $50,000,000 to be taken from the National Treasury to be used to buy farm loan bonds. "With our great war debt hanging over us and the Secretary of the Treasury at his wits' end to develop a scheme to pay current expenses, I think every Congressman ought to be careful about voting away items of $50,000,000 each. "Three years ago, when the Farm Loan Act was under consideration, I stated in debate that unless several important amendments were made that the overhead expense would be about half a million dollars a year and that great risks would be incurred by the government. My estimate was declared to be unreasonably high. "Last week an appropriation of $241,820 was made for part of the expenses of the system for the year beginning July 1, 1919., That does not include numerous general expenses otherwise provided for. The twelve Federal Land Banks started out with the free use of nearly $9,000,000 of government money as capital. At the low rate of 3 per cent that has cost over a quarter of a million dollars a year. My estimate made in 1916 of $500,000 a year for overhead expenses was too low. "But this expense of half a million dollars a year is nothing, a mere bagatelle compared with the loss the country sustained and will continue to sustain through tax exemption of farm loan bonds. Within a few years that may exceed a hundred million dollars a year through loss of taxes. "Even that loss is small compared with the impairment of the national credit and reduction of the price of Liberty Bonds through competition with farm loan bonds. "Figure out for yourself the loss sustained by owners of $17,000,000,000 of Liberty Bonds through their market depreciation from par to an average of about 95. It is over $800,000,000. Farm loan bonds drawing 5 per cent interest have the complete tax exemption the same as Liberty 32 per cent Bonds, while no other Liberty Bonds are entirely tax exempt. "Many people think that farm loan bonds are government obligations or guaranteed by the government. There is not a line, word or syllable in the law to make the government responsible. Many misleading statements have been made by people drawing salaries from the government to make the public think the government is responsible. "The principal benefit of tax exemption goes to rich people and millionaires, who buy the tax-exempt bonds. There are over 200 who receive incomes of over a million dollars a year. The income tax on the excess above a million dollars is 77 per cent on taxable securities. One of these millionaire individuals or corporations would evade paying $38,500 a year on $50,000 received from Federal Land Bank bonds. According to observations of business men and the opinions of scientific economists like the National Tax Association and also the American Economic Association, only a very small part of the tax exemption benefit goes to the borrower. Various reliable authorities estimate that the bondholder makes about six dollars to one derived by the borrower. In some localities the ratio is seven to one and in others it might be five to one. "Exemption from taxation was not so important a matter when the law was enacted before we thought seriously of entering the war. The Farm Loan Act was not passed for the purpose of enabling wealthy individuals to evade war taxes, but that is now one of its important functions. "The repeal of the tax exemption section would enable the Farm Loan Act to be used for all of the purposes intended when it was proposed, formulated and enacted. "Tax exemption of future issues of Federal Land Bank bonds and joint stock land bank bonds impairs our national credit and depreciates the price of Liberty Bonds; enables wealthy corporations and individuals to evade war taxes; causes a direct loss to the National Treasury; increases taxes on persons and property that cannot escape taxation; causes severe losses to over 20,000,000 patriotic buyers of Liberty Bonds and increases the cost of living to all consumers, because high taxes make high prices for the necessities of life." ABSTRACT NEWS AND NOTES LEGAL PROBLEMS IN TITLE MATTERS. Restating the law is a necessity for the protection of titles to property. The decisions of various courts differ so greatly that it is difficult to determine just what the law is as applied to facts upon which the action involved was based. As an instance of this let us suppose that titles to parcels of property are submitted to a Chicago lawyer and that the following enumeration is in the list: I. A title from the federal court in Chicago. (See Kirk v. Hamilton, 102 U. S. 69-78; L. R. A., 1916E 298-326; Windsor v. McVeigh, L. C. 1, 3 Gr. & Rud. et seq.) 2. A title under a state judgment presented on a record, of a mere judgment only, without pleadings or a record showing service of process or an appearance. (See authorities cited anent the Federal supra; also Harrow v. Grogan, 219 Ill. 288, stated in 2 Gr. & Rud.; also in Equity in Procedure, and under the title “Omnia praesumuntur rite," in the Law Restated with other cases pro and con; Gulling v. Bank, 29 Nev. 257-280, stated in the L. R.; Knickerbocker, 201 N. Y. 389, stated in the L. R., with other cases: pleadings are an element. Taylor's Due Process of Law. 133.) 3. A title under proceedings in the Municipal Court of Chicago. Gilman v. Chicago R. R., 268 Ill. 305 (three dissenting opinions). 4. A title where the judgment is beyond the Ad damnum from the Federal court. McDermott v. Severe, 202 U. S. 600; Quis, quid, discussed in the L. R. 5. The judgment beyond the Ad damnum in the state court of general jurisdiction. Utter v. Jaffray, 114 Ill. 470; Marone, 175 Ill. App. 649. 6. If one takes possession of real estate under an oral agreement to purchase it, will this satisfy the statute of frauds? (See Lester v. Foxcroft, L. C. 341, 3 Gr. & Rud. Halligan v. Frey, 49 L. R. A. N. S. 112-122 and notes. Kirk v. Hamilton 102 U. S. 68-79) Are these decisions consistent? 7. Does an occupant's possession of property under a contract give notice of his rights? Le Neve v. Le Neve, L. C. 396, 3 Gr. & Rud. cited in Devlin's Real Estate. 8. Can defects of the record be supplied from other documents in violation of the rule "What ought to be of record must be proved by record and by the right record?" (See No. 5, supra.) 9. In judging of a record is the rule that a general demurrer searches the record and attaches to the first fault considered? IO. 10. Is there any stage where the last rules are not operative? II. In the investigation of titles are the rules of the general demurrer to be considered? (See paragraph 2 above.) 12. Will a record defective on a motion in arrest of judgment support a title? 13. When a record is offered in evidence to support a title to what extent may it be attacked collaterally? (See L. R. A. 1916E 298-326, in paragraph 5, supra.) 14. Do the rules of pleading enter into titles to property? 16. Suppose that the defendant is described in his individual capacity in the caption while he is sued as a trustee in the statement of the cause, would this make any difference? (See Ut res magis, in the Law Restated, where Leonard v. Pierce, 182 N. Y. 431, 1 L. R. A. [N. S.] 161-167 is cited.). 17. Suppose that an essential party is absent would this vitiate the title? (See Quis, quid, coram quo.) 18. Suppose that the record shows that the judge did not order the judgment but that the clerk entered it, would this make any difference? ABSTRACT PLAN TO STOP AUTOMOBILE THEFTS. An abstract of title is always a most important consideration in the transfer of real estate. There is no valid reason why it should not be just as important in the transfer of an automobile. Land abstracts furnish the exact history of titles to property and its location. Automobile abstracts will give the history of titles to the automobile and its complete description. The abstract system will make it impossible to disfigure the car, alter and change the original car numbers without detection. The Automobile Abstract & Title Company with executive offices in the Book Building Detroit have copyrighted and had in successful operation for many months an abstract plan for automobile owners. Under their system the abstract is issued in book form to the car owner and used for the life of the car. There is provided in the abstract, bills of sale in consecutive order, and attached to each bill of sale is a duplicate in the same consecutive man ner. Upon making the purchase of a new motor car, from the manufacturer or distributor or even upon the purchase of a used car from an owner, the bill of sale will be made out by a Notary Public and sworn to before him. The notary then detaches the duplicate bill of sale and mails same to the company offices. They then mail back to the purchaser of the car, his guarantee of title which must be attached to the abstract by the purchaser. It is believed that by organizing a nation wide movement for adoption of the automobile abstract system that the tremendous losses by theft can be almost entirely eliminated. W. S. Holt, president of the Abstract and Loan Company of Little Rock, Arkansas, informs us that the usual Torren's bill popped up before the last legislature, was referred to the Committee on Agriculture, and seems to have died directly after it was reported to the House without recommendation, with the request that two hundred copies be printed for distribution. There was no general interest in the bill. It was about the most loosely drawn measure which purposes to foster the Land Title Registration scheme which has so far been drawn. Much good roads legislation was passed by the 1919 legislature. Land transaction have been fairly active throughout Arkansas, and the abstracters have been very busy. The loan business has not been brisk, owing to the fact that so many of the owners of real estate find themselves with more money on hand than they need for current operations. ILLINOIS ASSOCIATION NOTES. From all reports, the abstracters over the State of Illinois are very busy and many who have been short on help on account of one or more members of their company having been engaged in "abstracting" the power of the Kaiser have been "up against it." The sale of farm lands in Illinois has been very active and money plentiful. Prices of farm lands have advanced considerably during the past year and on account of the fine winter, sales and trades were made all winter long. Shortly after the signing of the armistice, city property commenced to move more freely on account of the fact that it could be bought very reasonable and far cheaper than it is possible to build. However, prices of city property are advancing and likewise rents. Rents have not kept pace with the increased cost of up-keep, and before others can be induced to build houses to rent it will be necessary that rents advance considerably. There is a large amount of business that has been at a standstill on account of the war that is now being being taken up, which is a good sign that business will continue to be good. Judge M. L. McQuiston, manager of the Ford County Abstract Company at Paxton, retired from the bench on December 1, voluntarily. His assistant to war and then the judge was "up against it" until his son returned from the Naval Aviation Branch of the service in January, and helped out. R. J. Phalen, formerly of the Title and Trust Company of Peoria and later |