The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1889-10-18
WESTERN MORTGAGE sEcURI-
TIES.
a Letter From Mr.. Richards, Late
Bank Examiner OF Maine.
[Wool Repcrter.I

PORTLAND. October Is, 1889.
Mr.. Editor.-I notice In the financial col
umn of the Beacon, published Saturday
October 5tn, statement that ''the savings
banks of Maine, New Hampshire and Yer
mont are heavily loaded up with western
farm mortgages. and the inquiry as to how
their managers will be able to weather the
storm which is threatening is financial
problem of the first magnitude"
Having been State bank examiner Of
Maine for nine years, resigning last Decem
Der, 1t may not seem out of place to correct
this statement published in an influential
paper, where Il Is likely to unjustly reflect
upon the high credit which the savings banks
Of Maine are justly entitled to claim from
their depOSitOrs and the public.
In the S45, ,000, 900 al assets which are held
by the 50 savings institutions Of Maine, there
cannot be found a mortgage Of a piece of
real estate located elsewhere than in the
State of Maine and the State of New Hamp-
shire, the statute regulating investments Of
savings banks deposits in this State, prOhib-
iting investments in mortgages in real es-
tate except in these States, where the limit
OF the loan Is restricted to 60 per cent of the
value Of the property, and this law has been
faithfully acquiesced in by the managers of
every savings bank under the jurisdiction of
this statute.
In correcting the statement published in
the Beacon, do not claim that the legisla-
tors of Maine have been wiser tnan law max
ers of neighboring States, for the statue of
Maine provides that savings banks may in.
vest in first mortgage bonds OF any complet
ed railroads in 21 different States In the I'm
ion, and that they may al,o invest in the
stock Of any. dividend paying railroad In
New England.
Following the provisions Of this statute in
discriminatory, it would be possible at any
time to impair the credit Of the strongest Of
our sdvings banks.
While it Is doubtless true that there are
many loan companies in the west, whose
business is to acquire mortgages for eastern
clients that do not exercise the great care
necessary TO render the security ample, and
little value, it will not be claimed that loans
cannot be made with safety upon real estate
in the west, where the same sound Judgment
and the same careful and conservative
methods are exercised, which are necessary
in lOaning money with safety In the east.
We believe there are trust companies do
ing business in the. west, whose long ex,
perience, careful management and substan-
tial capital are sufficient to protect the
holders Of their securities under almost any
financial conditions which may exist.
Such companies have confined their loans
to localities where failure Of crops by
drought or otherwise, has not been frequent
They have avoided one-crOp sections and
their loans have been placed, after careful
examination Of the property offered fol
security, by their own officers, and theil
loans restricted so that there has been
large margin in the actual value Of the prop
erty above the amount loaned thereon.
Bad management will, in time, bring fail
ure to loan company in the West, just as il
will to Il manufacturing corporation in the
East.
These failures, however, do not demon
strate that well conducted, legitimate bust
ness in manufacturing, banking or mercan-
tile enterprises cannot be managed with
profitable results in either locality.
III Is neither wise, safe, just, or profitable
ior investors to reject manufacturing stoek Ks
because they are located east, or real estate
securities because they are located west,
There are safe and hazardous securities In
all the different classes, and investors VINE
study and Judge the value of each security
offered upon its individual merits, Will real
ize more satisfactory results than those VINO
accept or reject securities which belong TO q
class their caprice leads them to approve OF
disarpr0ye. FRED H. RICHARDS.