Omaha daily bee., 1888-04-16
Against Western Securities.

latures OF that section. Massachusetts,
is setting the example. We noted a
few days ago that a bill proposed in the
Legislature Of that state allowing savings
banks to invest in the bonds of Mime
sofa and of its cities and towns had been
rejected by an overwhelming majority,
and that this fact was referred TO by an
eastern journal as a warning to other
New England states that II was time to
call O. halt TO investments Of these in
stitutions in western securities. There
are now before the legislature of Mas
sachusetts bills providing for the gen
eral regulation of loan and trust com
panies, and also for the placing under
general provisions of law the western
farm mortgage business. A Boston paper
referring to the latter object urges that
the field Of these companies ought to be
divorced entirely from the western farm
mortgage business. SIT is far from
beng u business in which trust funds
should be invested, -" says this journal,
''nor should these mortgages he made a
legal investment for such funds" A
few of the companies are willing to give
up the privilege, but more are not. Yet
in view of the action of the legislature
regarding the savings banks it is alto
gether probable that Massachusetts will
prohibit its loan and trust companies
from investing in western farm mort
cages. And the example is more than
likely TO be followed by other New Eng
land states.
There is injustice in this policy to
everybody but the borrowers of that Sec
ton, who, by the shutting off of a large,
safe and profitable market for the in
vcstment Of the accumulated capt.
tai in savings banks and loan and trust
companies, will be assured of cheap and
ch%eapening money. This class, it is
safe to assume, are the most ardent adj
vocates of the policy. 1t is primarily
and especially unjust in the implication
it involves that western securities, and
particularly farm mortgages, are dan
gerous Investments. So long as this
was proclaimed simply through the col
umns Of the newspapers, by correspond
ents whose mission it was to hunt up
every fact that would make a depreci-
"lpiN SuoNlhS "Iu give IL UllS llOoU GA
aggerated application, no very serious
harm was to be feared. 1t was very
easy to refute such testimony by over
whelming facts, as has been done. But
when q legislature, presumed to act
honestly and disinterestedly in such q
matter, virtually ~stigmatizes the
securities and mortgages of a
great and growing section of the
country as something to be Stunned by
capitalists, the wrong and injustice done
become a very serious matter. II is an
injustice also to those who entrust their
capital for investment to the savings
banks and loan and trust companies for
hidden to invest in these securities and
mortgages, since it c~urtails the earning
power of this capital. The rate paid by
these banks and companies for the
money entrusted to them will be greater
OF less according TO the rate they are
enabled to obtain for it in safe invest
ments. II their field is circumscribed,
perhaps to the demands Of their imme-
date locality, a cheap and ~cheapening
rate is inevitable, with corresponding
small returns to the owners of the
money. To all but the local borrowers
this would be an Improbable and I'M
| just policy.
1t is not necessary to repeat the evil
dence, several times presented during
the past few months, which shows CON
clusively that there have been no safer
investments than western securities and
farm mortgages, and none others SO
profitable. The testimony to this effect
is uniform and of the most trustworthy
character. A very considerable portion
of the wealth of Massachusetts and of
other New England states is due to
these investments. Untold millions
have gone from the earnings Of the
farmers of the west and from the enter
prise and thrift of its people to augment
the capital of the east. Not one-tenth
of one per cent Of all the eastern capt.
tai invested or loaned in the west has
been lost, nor is it in any danger now
unless by a narrow, short-sightcd and
understandable policy of hostility on the
part of eastern Legislators something be
done to ieopardize it. The people
OF this section have not grown out
Of their way of honest and
upright dealing, nor are they likely to.
They have kept faith with the capital
lists of New England, and they in
tend to continue doing so. More than
that, they have gone on until now I'M
complalningly paying tribute to the
protected interests of that section
while they supplied it with food at free
trade prices. But they protest against
having their character misrepresented
and their integrity maligned before the
world, as has been so freely done by the
press Of the east, and they justly COM
plain of such unwarrantable hostility as
is being shown in the legislature of
Massachusetts.
Heads 4 Win, Tails You Lose.