Federal Involvement: Are Good Intentions Good Enough?

From The Federal Octopus
Chapter 5 – Congress Expands Its Power

By an act of December 19, 1930, the sum of $45,000,000 was placed in the hands of the Secretary of Agriculture to lend to farmers who had suffered damage from “drought or hail”. The sum was loaned to 371,012 persons in seventeen Southern and Western States. In January 1932 an additional $200,000,000 was given to him to lend in any sort of “farm relief”. The absence of any adequate safeguards in the act has aroused Secretary Hyde’s humor and prompted him to tell the National Cooperative Council in Washington, on January 27, 1932, that he is “the world’s first prize boob” as a lending agent. He explained that he “has lent more money on less security, on thinner margins and with more losses than any other agent ever has;” that Congress had merely told him to lend the money “wherever we find an emergency, on whatever security we think proper and through any agency we see fit.”

By the summer of 1933 the urge to lend and give federal taxes to certain farm groups in favored States had produced seven distinct federal lending and donating agencies.

By an act of June 16, 1933, these were all consolidated into what is styled the Farm Credit Administration, with more the $2,000,000,000 at its disposal. It stands ready not only to make seed or “production” loans — which may or may not be repaid — to the tune of $120,000,000, but it will refinance at public expense all private farm mortgages, given or held by those who have guessed wrong in farm land speculation in recent years.

Not to discriminate against the city dweller with a mortgage on his home, the federal Home Loan Bank, through the Home Owners’ Loan Corporation, with another $2,000,000,000 will take over his burden of he doesn’t care to exert himself to discharge it.

These successive irregular appropriations of federal taxes, beginning in small abuses, led on logically to the La Follette Bill to appropriate $250,000,000 and the Costigan Bill to appropriate $350,000,000, introduced in the Senate in December, 1931, for “unemployment relief” in the States.

The politicians in the States have been taxing and bonding and spending with quite as much profligacy as the federal politicians, and, facing the prospect of exhausted local credit, they eagerly rallied behind these measures to tap the federal Treasury. Though stoutly opposed for a time, as ushering in the dole, the policy was adopted in 1932, and, to October 12, 1933, $300,000,000 had been disbursed as loans by the Reconstruction Finance Corporation.

By an act of May 12, 1933, the huge sum of $500,000,000 was made available for doles in the States.

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