Law of 1875

When any final judgment recovered against the United States or other claim duly allowed by legal authority shall be presented to the Secretary of the Treasury for payment and the plaintiff or claimant therein shall be indebted to the United States in any manner, it shall be the duty of the Secretary to withhold payment of an amount of such judgment or claim equal to the debt thus due to the United States. . . -- Act of March 3, 1875.

This ancient bit of Federal law last week turned up as grit in the gear box of the Government's whole farm relief program. Did it mean that the Treasury could not pay Domestic Allotment bounties to farmers for plowing up cotton and cutting wheat acreage, without first deducting any debts these farmers happened to owe the Government? If so, some $200,000,000 in bounties would never leave the Treasury and farmers would get only a batch of receipted bills on their Federal loans. Or were bounties not "claims" against which farm loans could be collected? If so, the agricultural adjustment program could go forward according to schedule.

The law of 1875 was the reason why only three cotton planters -- a Texan at the White House and two Georgians at an Atlanta ceremony -- had received checks in payment for that part of their crop which they destroyed.

Henry Morgenthau Jr., Governor of the Federal Farm Credit Administration which inherited responsibility for all Government loans to farmers, invoked this old legal provision against Secretary Wallace's Agricultural Adjustment Administration. Farmers owed the Government $139,335,742 for seed, feed and crop production purposes. They owed local agricultural credit corporations another $70,982,175, more than half of which had been in default for years. Of the $64,204, 300 borrowings in 1932, $42,740,721 remains unpaid. Governor Morgenthau figured that crop bounties offered a fine chance to balance his books, get farmers out of debt to the Government.

Secretary Wallace took an opposite view. He wanted to sidestep the law of 1875, pay cotton planters $100,000,000, wheat growers almost as much as a direct means of upping agricultural purchasing power. He feared a rural revolt against all future crop reduction plans if farmers did not get quick cash for their cooperation.

To break the deadlock Attorney General Cummings was asked for a secret ruling which was carried up to President Roosevelt. The President's decision, it was reported, sided with Secretary Wallace against Governor Morgenthau that farm payments should be made regardless of the Act of 1875. Unreckoned was the possible action of Comptroller General McCarl who, legally independent of the Administration, passes on all Government expenditures, interprets Federal laws for himself.

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