Showing papers in "Law and contemporary problems in 1937"

The Bankhead-Jones Farm Tenant Act

Abstract: With the enactment of the Bankhead-Jones Farm Tenant Act,' signed by President Roosevelt on July 22nd of this year, another feature was added to the new national land policy that has been slowly evolving under the New Deal This act gives outright and specific legislative authorization for the continuance of the federal programs of rural rehabilitation loans and submarginal land purchase and development, which have heretofore been carried out under executive orders and financed by funds from appropriations for relief and work relief projects2 It places these programs under the administration of the Secretary of Agriculture, and, at the same time, authorizes him to inaugurate a system of long-term mortgage loans to aid landless rural families in becoming farm owners From some viewpoints the Act is more important as a declaration of policy on the part of Congress than as an instrument for immediate accomplishments Nevertheless, it lays the first foundation stones, upon which may eventually be built a comprehensive land program The following discussion of the Act has three purposes: (i) to present a resume of the legislative history of the law; (2) to describe its principal provisions which directly pertain to the promotion of farm ownership; and (3) to point out some of the obvious weaknesses of those provisions, and make suggestions for their improvement Those sections of the Act which provide for rural rehabilitation loans to distressed families and for the purchase and development of land unsuited for farming will be only briefly mentioned They are, however, very significant parts of the law I

Farm Tenancy Distribution and Trends in the United States

Abstract: At the present time only half of the acreage that is in farms in the United States is farmed by its owners, the owners working personally with or without assistance of family and hired labor. The other half is farmed by managers or by tenants who have to lease part if not all of the land they use. This was the situation in I935 and also in 1930 but a greater proportion of the acreage in farms was formerly owneroperated. In 1900 almost three-fifths, 59%, of the acreage in farms was farmed by its owners. These figures relative to acreage suggest that the tenure position of the American farmer is weak and is on the decline. This is a conclusion that may be confirmed by statistics of farms by number and kind, and also by what is known about the investment interests of farmers and others in farm real estate.

Investment Banking Methods Prior to and Since the Securities Act of 1933

Abstract: This discussion of investment banking methods and the effects of the Securities Act of I933 upon the practices in the distribution of securities cannot possibly possess the stamp of finality. Certain limitations must constantly be borne in mind. For example, there is not always agreement among persons active in the origination, underwriting, and distribution of securities as to the meaning and significance of some of the observed changes; consequently, many of our interpretations and conclusions represent statements of opinion. Then, too, we are dealing with a very brief period of time, considering that our problem is to evaluate and decide upon economic trends. The Securities Act of I933 has been operative for about three and one-half years, and during the first half of this period there was little or no corporate financing of the sort which required investment banking assistance. Therefore, many of the features of today's investment banking mechanism are probably no more than the tentative adjustments of this industry to the changing economic and financial background. We most certainly have not yet seen all, or even most, of the permanent effects of recent legislation. This conclusion is strengthened by our knowledge that the Act itself is still in the process of being interpreted and defined. These adjustments will continue as the administration of this legislation is oriented to new facts and to the changes which are, themselves, a result of this new machinery. Any analysis of the effects of the Securities Act upon the methods of distributing securities at the present time cannot overlook the fact that the period since the passage of the Securities Act has not only been short, but also somewhat unique in economic history. We have been operating during years of transition, while our productive and financial economy has been moving towards a new phase in its development. Business and finance are not only convalescing from a major depression, but are also faced with new problems and operating conditions, of which this legislation is * Director of Research Division, Securities and Exchange Commission. Former Head Economist of Kuhn, Loeb & Company, New York City. The author was assisted in the preparation of this article by Mr. S. L. Osterweis of the Research Division of the Securities and Exchange Commission.

Settlement and Unsettlement in the Resettlement Administration Program

Abstract: In the by and large, the Resettlement Administration had no particular program which can be said to have arisen strictly out of the administrative set-up which functioned during the period from July i, 1935, down to December 31, 1936. On the one hand, the program which it administered was an adopted child whose paternal forbear was the F.E.R.A., which later employed tutors and guardians in the form of state Rural. Rehabilitation Corporations.' The particular phase of the Resettlement Administration's program known as rehabilitation related especially to that portion of its work which was designed primarily to advance subsistence and capital goods to very low-income farmers who, without such assistance, could not continue to carry on their farming operations. This inability to carry on resulted, from region to region or within a given region, from a multiplicity of causes such as, crop failure, foreclosure on land or livestock, loss of supplementary employment, or the occupancy of poor land giving forth only meager yields that had to be sold at depression prices. The other aspect of its program was inherited from the National Resources Committee and attempted to deal primarily with those aspects of the farm problem which grew out of a misdirected, not to say vicious, national land policy. The program, therefore, cannot be said to be that of any particular national or state governmental agency. It rather represented the consolidated programs of various national and state agencies, some portions of which were designed to be stop-gaps, plaster, and patch-work upon the tattered and smeared agricultural pattern then existing. For the most part they consisted of emergency measures for an emergency situation. Other phases of the program attempted to apply remedies to chronic maladjustments that had been destined sooner or later to bring the distress to agriculture which was in fact ushered in sooner by the depression.

Regulations of Farm Landlord-Tenant Relationships

Abstract: The most obvious solution for the problems of the farm tenant is to enable the tenant to become an owner. In America, indeed, this has generally been assumed to be the only solution. In the early days it was believed that the tenant would save his money and eventually purchase a farm.. Since it has been found that the optimism which assumed that this was a natural process was unjustified, a demand has arisen for assistance by the government to aid the tenant in attaining ownership. Beginning with the Homestead Act,2 where land was given to settlers, through the period where easier credit through such agencies as the Farm Credit Administration3 was regarded as the solution of the problem, government assistance in some form has been available to those who desired to own farms, but the American ideal of the owner-operated farm has been accompanied by the fact of a steady increase in the number of farms operated by tenants.4 The most recent study of the farm tenancy problem, the Report of the President's Committee on Farm Tenancy, recommended a double approach to the problem through more liberal federal aid to tenants to become owners and through state action to improve the condition of those who remained tenants by regulation of their relationships with their landlords.5 The first line of approach has already been adopted with the passage of the Bankhead-Jones Farm Tenant Act6 and the establishment of the Farm Security Administration. The second line of approach has been largely overlooked. It is only with this second approach to the problem that this paper is concerned. With regard to the number of farmers who may be immediately affected, it may well be that a regulatory program is of greater immediate importance than a farm purchase program. The funds available do not permit any immediate prospect of a * A.B., I930, LL.B., I934, Duke University. Member of the North Carolina Bar. On the staff of the Land Policy Division, Office of the Solicitor, United States Department of Agriculture. Author of A Note on the Civil Remedies of Injured Consumers (1I933) I LAW AND CONTEMPORARY PROBLEMS, 67. 1 THE FUTURE OF THE GREAT PLAINS, REPORT OF THE GREAT PLAINS COMMITTEE (1936), 66. 2Homestead Act of May 20, i862, as amended, 43 U. S. C., ??i6i-302. Act of July I7, I9I6, 39 STAT. 360, as amended, I2 U. S. C., ??636-I I48a. 4FARM TENANCY, REPORT OF THE PRESIDENT'S COMMITTEE (Nat. Resources Comm. I937) Table V, Percentage of Farm Tenants, by States, I880 to I935, p. 96. (Hereinafter cited as "FARM TENANCY REPORT.") 'FARM TENANCY REPORT, 11-20. 'Pub. No. 210o, 75th Cong., ist Sess. (I937).

The Development of the Rural Rehabilitation Program

Abstract: The rehabilitation loan program is designed to aid destitute and low-income farm families in becoming self-supporting at a decent standard of living, by the extension of credit for operating goods, furnished upon the basis of individual farm and home management plans, and through the provision to such families of the advice and guidance necessary for the successful completion of such plans A brief summary of the economic and social justifications for this program is found in the Report of the President's Special Committee on Farm Tenancy,2 which pointed out that approximately 420,000 farm families, already near the bare subsistence level, had been forced below it by agricultural depression, that 500,000 or 600,000 families, normally well above the subsistence level, had, largely as a result of drought, exhausted their resources of capital and credit, and that another large class of farm families, including "probably the great majority of the I,83I,000 tenant and cropper families of the South," is obliged to seek operating capital at crippling rates and under such conditions as to perpetuate the cash-crop system The Report, in developing the type of loan program suitable for these classes of farm families until they are able to qualify for bank credit, stressed the need of technical guidance to assure an effective expenditure of funds and stated that "a primary objective" of the system of rehabilitation loans "should be to stimulate the development of better lease contracts" The

The Effect of Price Controls on Non-Price Competition

Abstract: It has been said that the National Recovery Administration operated under a law which gave it legislative, executive, and judicial functions. But in retrospect it seems to have scarcely passed beyond the legislative phase in most of the matters which came under its jurisdiction. The essential part of its record for the economist is the record of the attempts to formulate policy in connection with the code-making process. The NRA, which might have assumed historic importance as an effort to operate under a new national economic policy, in practical effect resolved itself into a great national forum for the discussion of the elements of such a policy. Questions of price control brought many divergent viewpoints into the national forum. Economists were in general opposed to such measures. Business men were much more divided in their opinions. But among these who favored some form of price control there were large firms and small firms, advertisers and non-advertisers, profitable and unprofitable concerns, manufacturers, wholesalers, and retailers. In short it could not be said that business men of this persuasion conformed to any particular type. Arguments offered in favor of price control measures were of similar scope and variety. Very frequently their logic rested more on social grounds than on economic. An argument to which a number of economists listened with some sympathy was the plea for the preservation of the small enterprise as a means of giving fuller opportunities to individual initiative. An attempt was sometimes made to give this view a more acceptable economic flavor by insisting on the essential nature of the services performed by some of the firms which were on the verge of business failure. If these firms were not permitted to survive, it was argued, great social costs might be incurred in replacing them. Similarly in the raw materials industries, such as coal and petroleum, the demand for price control was frequently linked with the need for conserving natural resources. Both types of arguments stressed structural features of economic life. Thus they created resistance and uneasiness in the minds of economists who preferred to

The Securities Exchange Act as Supplementary of the Securities Act

Abstract: The broad purpose of the Securities Act of I933 is to protect the buyer of a newly issued security by requiring a fair disclosure of material facts and by penalizing the failure to furnish them in connection with the sale of the security through the use of the mails or of the instrumentalities of interstate commerce.' In addition, Section 17 of the Securities Act makes unlawful the use of the mails or the instrumentalities

The Status of Agricultural Labor

Abstract: It has long been customary to regard the farm laborer, not as an ordinary employee, but as a farmer's apprentice. Often he was a neighbor's son or a thrifty, hardworking immigrant from northern Europe. Farmers complained that as soon as he became really useful he left for a farm of his own. This was the only labor problem. Today, however, in some quarters, this view is held to be quite obsolete. The farm laborer is described as an economic half-caste, cut off from any chance at ownership and denied even the meagre legislative protection which is given the worker in industry. For the picture of the hired man eating at the farmer's table is substituted that of a group of ignorant Mexican field hands camped by a ditch at the roadside. The status of the farm hand on the "agricultural ladder" is truly a matter of significance. If the laborer is a tenant in the making, his conditions of employment are of less importance than if he is destined to remain a laborer for life. It has been saidc that it is doubtful if, in this country, farm wages ever have been high enough to warrant any man deliberately adopting farm labor as a life occupation,-that, as a matter of fact, wages have ordinarily been only part of the remuneration, the rest consisting of training in the business of running a farm.' More recently, however, it has been asserted that the agricultural ladder has become difficult, if not impossible, to climb. Many tenants and small owners, debt-burdened, have become laborers. The proportion of owner-operators of farms has decreased while that of tenant operators has increased. It is suggested, moreover, that in such movement through tenancy to ownership as does occur, the rate of ascent has of late been much retarded.

Governmental Farm Credit and Tenancy

Abstract: The battle waged by Congress against farm tenancy started years ago. In recent years it has been an uphill struggle because tenancy instead of decreasing has been steadily gaining. Far from discouraged, however, Congress has redoubled its efforts to make the typical farmer in this country an owner-operator. Of the various measures enacted to keep ownership open to tenants, those providing farm credit have been the most important. Has governmental farm credit been used successfully in promoting ownership by farmers? To put the question in another way, would tenancy be more prevalent if the federal and state governments had kept their hands off farm credit? Let us see what kind of answer can be given to this query. In tackling our problem, we shall break it into three stages: the first, that of governmental land credit in the period 1787-I820; the second, developments beginning about I9oo, including the creation of the Federal Farm Loan System and state farm credit schemes, and the efforts of the federal government to settle farmers on reclamation projects; and finally, the last stage, now in its infancy, which begins with legislation in 1933. As we take up each of these stages the discussion will turn first to the kind of credit provided, next to the use made of the credit by farmers, andl then to an appraisal of results.

Solidarity in the Distributive Trades in Relation to the Control of Price Competition

Abstract: The problem of this paper is to attempt the hazardous task of interpreting the attitudes of the members of the retail and wholesale trades in relation to the rising tide of demand for legislative control of price competition. The extraordinary temerity of the writer is demonstrated by the census figures for the retail and wholesale trades. The 1935 Census of Business listed 1,653,961 retail establishments in the United States. Of this total 1,474,i49, or 89.1 per cent were classified as independent stores and 127,482, or 7.7 per cent, as chain stores. The remaining 3.2 per cent were divided among leased departments, utility operated stores, mail order firms, direct selling types and miscellaneous groups, including consumers' co-operatives. The 1935 retail sales volume totalled $33,161,276,ooo and was divided among the chief competitive types as follows: independent stores 73.1 per cent, chain stores 22.8 per cent, all other types 4.1 per cent.' For the same year, the Census of Business listed 176,756 wholesale establishments with net sales of $42,802,913,o0. 0 2

Some Effects of the Securities Act Upon Investment Banking Practices

Abstract: The actual mechanism of investment banking, except for slight changes in form, has not been materially affected by the Securities Act of I933. Examination of most of the apparent changes discloses that they are no more than continuations of trends commencing prior to I933 or that they are adequately explained otherwise than by the Securities Act. Even were the Act aimed at producing an altered structure, it would be surprising to find that really basic changes had occurred during the initial period of adaptation. Apart from technique, it can scarcely be denied that the Securities Act has promoted the exercise of greater care in the issuance of securities by investment bankers and officers of issuing corporations. There is no certainty that the Act has produced that result, for there were other factors in the aftermath of the nineteen-twenties that might well have had the same effect. It is perhaps true, also, that the Act has induced greater caution among those who offended least in the era which gave rise to the legislation, while it has had no comparable effect upon those who were reckless or less scrupulous. In addition to a change of attitude, functional changes of real moment have been taking place in investment banking. For the most part, these relate to capital, real underwriting ability, markets, and "merchandise." Since they have been produced by causes other than the Securities Act they need not concern us here. Experience under the Act may be divided into two periods: that before and that subsequent to the I934 amendments. The earlier period is now only of academic interest. Extremists may claim that the original Act stifled most legitimate financing or that the lack of such security flotations during the period was entirely the result of other causes, but the truth undoubtedly lies somewhere between those views. It should be recognized that time is required for adjustment to any major legislative change. From the point of view of investment bankers it was fortunate that the law was introduced when the capital market was stagnant. As an aid to recovery it was unfortunate, for reopening of the legitimate capital markets was sorely desired, and even illegitimate financing might have been condoned as consistent with current * A.B., 1923, A.M. 1924, University of Missouri; M.B.A., I925, Harvard University. Associate Professor of Investment Banking, Harvard Graduate School of Business Administration. Lecturer, Yale University School of Law. Author of casebooks on investment banking and finance and contributor to legal and business periodicals.

The Relation of Federal and State Securities Laws

Abstract: State "Blue Sky" laws antedated by more than twenty years the Securities Act of I933 and the Securities Exchange Act of I934. At the time of the passage of those Acts every state but one had on its statute books legislation relating to the sale of securities. The entrance of the federal government upon the field did not result in a repeal of any of the state laws. Such laws remain extant and their administration has, if anything, received renewed vitality from the prevailing public interest in the regulation of transactions in securities. It is pertinent to examine briefly into the scope of the federal and state laws, to determine the extent to which they are concurrently applicable, and to ascertain the need, if any, for correlation of the regulatory functions of the federal and state governments. State "Blue Sky" laws differ widely, evincing a lack of uniformity both in objective and in means for attaining similar objectives. It is apparently the policy of some states, as disclosed by their statutes, the administration thereof, or both, not only to prevent fraud by requiring factual disclosures and establishing penalties for misrepresentation and deceit, but also to prevent the sale of certain securities (on the theory, perhaps, that they are unsound or per se fraudulent) or the sale of any securities on terms not considered fair.t Other states, less paternalistic in this respect,

Taxation in Aid of Farm Security

Abstract: Recent concern over insecurity of farm tenure and related conditions has given rise to proposals for adoption of various tax devices or modifications of the property tax system, of themselves, or supplementary to more direct measures, to aid in the promotion of farm security. These proposals have usually implied some form of differential taxation to favor the resident owner-operator and the small holding, or to penalize the absentee owner and the large holding. Others are designed to curb speculative land holdings or transactions. The usual premises are (i) that tenancy per se is undesirable and (2) that real estate tax burdens, absentee ownership, large holdings, and land speculation are prominent among the forces which tend to prevent the residents and operators from owning their homes and their farms. Without attempting to explore the validity of these premises, this article is intended to consider certain tax devices which have been proposed with particular regard to their possible effectiveness in accomplishing the desired end, namely, owner-operation of family-size farms, and their potential effects in other directions. It should be recognized that the general problem of encouraging farm ownership by operators has two distinct phases, i.e., maintaining present ownership against the various forces of reversion, and promoting the step from tenancy to ownership for those who have not been able to achieve it. The same tax measures may not serve both purposes or, as will be subsequently shown, measures designed to serve the one may actually impede the other. Differential taxation usually implies either preferential treatment in taxation favorable to some class of property, type of industry, or direction of development which it is considered desirable to encourage, or discriminatory taxation against some class of property, industry, or development which public policy sets out to discourage. In either case, the concept of differential taxation presumes a classification of property, through the use of which will result a difference in the effective rate of taxation on the property being considered relative to other classes of property. The

Some Problems of Exemption Under the Securities Act of 1933

Abstract: The writers have sought in this article to review briefly the history and scope of those provisions of the Securities Act of 1933, as amended, which exempt specified securities or transactiois from the registration and prospectus requirements of the Act, and to discussin some detail certain problems which have arisen in the application of these provisions. In their discussion of these problems, the writers have, with the consent of the Securities and Exchange Commission, made generous use of the body of interpretative material evolved in the course of consideration of questions presented by lawyers and laymen for advisory opinions of the General Counsel. However, although in many instances the situations discussed will have had some counterpart in matters which have thus been brought to the attention of the General Counsel, any opinions advanced herein are, unless the contrary is specifically indicated, to be regarded merely as the writers' personal views, and not as necessarily reflecting the previous expression of corresponding advisory opinions.