Federal Farm Bankruptcy Act 48 Stat. 1289 (1934)
Farm Mortgage Moratorium Act 49 Stat. 942 (1935)
Congress passed the Federal Farm Bankruptcy Act in June 1934 in an effort to stem the flow of foreclosures caused by the Depression. Enacted as an amendment to a general bankruptcy act of 1898, the first Frazier-Lemke Act allowed bankrupt farmers two choices. Under the first, court-appointed appraisers would assess the "fair and reasonable value, not necessarily the market value" of the property, which the debtor could then repurchase within six years according to a graduated scale of interest. Alternatively, a court could halt all proceedings for five years, during which time the debtor would retain possession "provided he pays a reasonable rent annually," preserving the right to buy it after five years.
Within a year a unanimous Supreme Court struck down the act as a taking of property belonging to the creditor without just compensation in louisville joint stock land bank v. radford (1935). Congress passed a second Frazier-Lemke (Farm Mortgage Moratorium) Act in August 1935, effectively similar legislation to which they added a declaration of emergency and a discretionary provision allowing courts to shorten the stay of proceedings during which time the creditor retained a lien on the property. This act received the Court's approval in wright v. vinton branch of mountain trust bank of roanoke (1937).