The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1888-10-24

excessive valuations are placed upon
the property accepted as security, and
there is general disregard of all bust
ness principles in the management of
these companies. The state is over
run with the representative of just
such companies. They do not meet
with much encouragement from the
savings banks, but they find fertile
field with the individual investor whom
they induce by the tempting offer of
higher rates of interest to withdraw his
deposits from the savings banks and in
vest directly in western securities.
Such, in substance, are the words of
the New Hampshire commissioner.
The more conservative savings banks
of New Hampshire are hedging on their
western investments, and some are not
renewing their loans as they mature,
but are reinvesting in marketable
securities. In this connection the New
Hampshire commissioner publishes an
extract from letter of the cashier of a
western national bank, himself the
active manager of western investment
company, and his testimony is said to
accord with much other testimony from
the West. The following is the letter.
it needs no comment to enforce its
moral.
81 am frank to say that condition of
affairs exists in portions of this state which
is to be deplored, and which will prove a
curse incalculable in its effects This con-
dition has not arisen out of the necessities
of our people. 1t is condition for which
the more careful and conservative COM
panies, handling western securities, are not
responsible 1t is due in part to the avarice
of eastern investors seeking higher rate of
interest than the farmer can afford to pay
therefore higher than responsible loan com
panies can provide the securities. In
vestors have therefore sought the higher
rate of interest from loans negotiated by
loan agencies neither morally nor fnan-
cially responsible. The system of doing
business through commission agents is bad
and productive of injury to the community
through over-solicitation of loans, which
carries with it train of evils, and to the
investor, who must suffer for the guile or
ignorance of the agent. The state is not, in
my judgment, invested with a greater curse
than hundreds, yes, thousands, of unprin-
cipled loan agents who now dwell within
its borders. For the past ten years loan
companies have been in operation on a
small capital conducted by men without
any financial experience, with no prestige
among bankers or standing with the class
of men calculated to give strength, tone or
character in their own community, de-
pendent upon local agents for their bust
ness, and upon the negotiation of each loan
before its proceeds could be paid to the
borrower. By such companies business has
been done in the poorer sections, and loans
made on comparatively valueless lands and
outside town properties. Thousands of
dollars of such loans must eventually de-
fault both interest and principal At first
defaults will be CLOSED over, the holders of
the defaulted paper misled by misrepre-
sensations, and the full fruit of such bust
ness will not be apparent for two or three
years. Then its influence will be damaging
to the community, to the state, to all re-
spectacle companies Anticipating the con-
sequences, we as a company have limited
what business we may do to choice sections
of this and other states, and loaned only at
legal rates, which are as high as are con-
sistent with absolute safety. That so
few losses, comparatively have occurred
through Western loans indifferently Sc
cured and placed by irresponsible represen-
tatives, is largely due to the fact that the
lands have steadily appreciated; but this is
an unstable basis for loan, and offers no
guaranty of payment at any subsequent
time.