The Bennington banner. [volume] (Bennington, Vt.) 1858-1894, 1889-02-21
Banner and N. Y. Daily Press,
c. A. PIERCE, PUBLISHER.
,o,Ns ON PERSONAL SECURITY.

LOANS ON PERSONAL SECURITY.
The time has come or is rapidly ap'
preaching, when National Banks anu
especially Savings Banks ard Trust Com
panies should use more care in personal
loans, and closer security on the part
of those examining the quality OF the
paper and collateral securities held by
the institutions entrusted to them. This
is the day of a wild mania for Western
loans on mortgage security at high
rate of interest and nearly every town
and hamlet has solicitor Of some West
ern investment concern until the East is
being sapped of it's moneyed resources
A crash will inevitable come, and Its
devastation will be widespread and
many an Eastern family will find their
small savings of years buried under
longtime mortgage or some Western
frog pond or embryo city which has no
existence only upon paper-gilded with
a beautifully ornsmented or Autograph
ed map.
The weakest spot in the line of invest
ments of Savings banks is that Of grant
ing unrestricted amounts, on personal
security as it is termed, or three-name
paper. Such loans are legal without col
lateral but are often granted on them
when the provisions are not supposed to
represent much property, with wild cat
securities pledged such as mining shares,
deprecated railroad shares and bonds
that have been saddled on the holders
aud are fiat on the market; Western
mortgages, with high nominal rates of
interest and long lapses of payment in
arrears; Western town and county bonds,
of doubtful value; manufacturing stocks
to which dividends are a forgotten fea-
ture; and promisors on the legal note are
usually the treasurer in his personal ca
pacity, the selling agent that draws his
commissions, and directors and clerks
who represent no property except what
they draw in salaries and commissions,
their only interest in keeping it afioat.
Three names are also potent when only
one of them has any financial standing.
Church societies. deep in debt give their
notes with many of the members names
attached who esteem it an honor to en-
dorse the paper, but do not feel under
any personal obligation to meet its pay
ment. leaving that for the contribution
box TO adjust, and it is often that they
remove or decease and their estates set
tied, and none responsible are left to give
value to the note. Mills, hotels and
other establishments of high cost and of
uncertain value, regarded as extra haz-
ardous, often secure heavy loans, and
are dead weight to carry if, as they
sometimes do, fall into the hands of the
banks. A member of the finance COM
mittee having charge of the loaning of
funds is not permitted a loan of the
bank funds, but there is nothing to pre-
vent his partners obtaining it at a mod.
crate rate, and they usually get there if
they are men of business.
Mortgage notes should be renewed
when possible, or re-endorsed as often as
once in five years. Whereas they now
run for an in definite period, in some
cases long after the promisor has de.
ceased and the property changed hands,
so that there is no personal RESPONSE
bilty. Such matters as here enumerated
do not come to the knowledge OF the
commissioners unless their attention is
called to it, by some discomfort who
has been denied a loan or
favors, and neither do the monthly ex-
aminers. who are not members of the
investment committee, know of the de-
fects. The remedy in part to correct
some of these weaknesses, is that no
loans be granted on three names for a
longer period than six months, without
d new note being given, and all collater
ais OF whatever nature to be endorsed on
the notr, as there should be no secrecy
in these transactions not open to the in
spection Of examiners; as IN these classes
of loans most of the losses are sustained,
and the frauds that have been discovered
are usually hidden. There are other
matters that should bear the light in
Banks, Sayings Banks and Trust Com
panies.
A large amount of New England capi.
tai has been diverted the past few years
to Western farm mortgages. The high
rate of interest has induced heavy pur-
chases. These obligations are beginning
to mature, and Vermont, which was one
of the first communities to invest in
them has begun to appreciate the uncer-
tain character OF the securities, and Its
investors are insisting upon payment in
preference to making renewals. Evil
dence is accommodating every day, that
the Western debtor is preparing to resist
the payment Of these obligations, except
Upon such terms as he sees fit 10 make.
An effort is being made IN the Kansas
Legislature this winter to pass bill that
will stay the collection OF liens upon
real estate until three years after they
have matured. We hope Vermont Saw
ings Banks feel the Importance of loan
ing mole money and at reasonable rates,
on property nearer home and of more
certain value. AS has been well said by
an influential swspaper that local loans
will tend to develope and improve the
property in the immediate vicinity Of
those whose suplus earnings furnish the
capital to our Savings Banks.