The Portland daily press., 1890-01-23
Farm mortgages and Savings Banks.


Hon. O. A. Gilbert has been sharply criti-
cised for some assertions made In his recent
address before the State Board of Agricul-
ture, especially bis allegation that while
Maine savings banks will not loan money on
Maine farm they invest freely in Western
securities. II Mr.. Gilbert intended this dec
laration to be taken literally, If he meant to
imply that the saving. banks of Maine arbi-
trarily excluded the Maine farm from their
Investments and recklessly placed their mon
ey In the West. he Is all wrong. II, however,
he meant simply to say that there was
marked tendency among savings banks man.
ayers to curtail their investments In Maine
farms. he stated simply what is the truth.
This is shown clearly enough by COMPARE
son of the reports Of the banks to-
W with those Of few years ago. In
2 the investments Of the Andr oscoggin
"a Bank amounted to about half mil
II which was mortgages on
'ay they amount to over
1000 in real estate, very
4 proportion. The Augusta
ak discloses the same condition Of
In 1882 Its deposits were three and
half millions, with real estate invest
.nents of 100000. In 1883 the deposits had
risen to $s,SOO.O0O. while the real estate loans
had fallen to $l3o,0Oo-a large actual as well
rs proportional decrease. The Portland and
Bangor banks exhibit the same tendency to
reduce real estate loans. The country banks
do not constitute an exception though the
tendency there is perhaps somewhat
less marked. Thus, in 1883, the
deposits In the South Paris savings
bank were 5000. and the real estate loans
$4,000; In 1888 the former were $780,, 200.
aud the latter Sl66, 000 The Franklin county
bank shows the same tendency, though less
strongly. There are some exceptions, OF
which the Houlton bank Is the most marked,
where the real estate investments have in
creased proportionally as well as actually
but In the great majority vf cases the tenden-
cy has been to reduce real estate investments.
This tendency has not been accidental. This
reduction OF real estate loans Is not due to
chance. 1t may be possible that in part 1t
results from better financial condition of
real estate owners, and consequent dimin-
ished demand on their part for loans; though
IL Mr.. Gilbert's assertion that the farmer Is
constantly growing poorer be true, this pos
sible cause has had very little to do with it,
But however much or little this has figured.
there can be no doubt that large part of 1t
is due to growing reluctance on the part of
savings bank managers to invest in this class
Of property. The disasters which befel our
savings institutions in 1877 and 1873 may be
said to be the proximate cause of this reluc-
tsnce. Those disasters opened the eyes of
bank managers to the dangers Of excessive
real estate investments, and from that time
onward disposition was manifest to curtail
investment In that kind of property. The
matter attracted the attention of the bank
examiner In 1873, and discussing it in his
annual report, he said
would suggest that loans to an Individual or
corporation on mortgages If real Estate be Inn t.
70 $2O, 1000 and that In all ca es loans on real es
value Of such property. In most of the banks
there Is prupo' tiohally too large hives ment in
on real estate that is unproductive and unstable
During the past year III this State the I rgest
Losses TO savings banks have been on this lass
OF investments.
In 1880 the examiner reported an inclina-
:. aop~ the part of the banks to reduce their
real estate leans, and characterized it as
Every gratifying" Two years later the ex-
Rminer recommended the passage of law
reducing the limit for real estate investments
from 70 per cent. of the bank deposits to 60
per cent. Meanwhile the banks were EVIL
drntly curtailing their transactions In this
kind Of property, for in 1884 the examiner
reported that the real estate loans during the
year had increased ''only $4,000" though
the total amount Of deposits had increased
That fhapafnra ,adu
tion Of real estate investments during the
last ten years has been largely due to the
reluctance of the banks thems elves to invest
10 this kind Of property admits Of no DOUBT
whatever.
Theie is nothing In these reports to show
that the tendency to restrict investments In
real estate has been stronger In case of one
KIND OF real estate than another, but we
nave not the slightest doubt that there has
been much greater reluctance TO accept a
mortgage on farm in the country than on a
lot Of land or building in the cities and
growing villages.
Mr.. Gilbert's address seems to imply that
he thinks the banks are to blame for this re-
luctance. II the banks have turned the cold
shoulder to real estate In Maine without
good reason then they are to blame, for other
things being equal, Maine banks are under
obligations to prefer Maine borrower to a
borrower out Of the State. II 1t we're true
that Maine savings banks were refusing to
invest money In Name farm mortgages yet
were investing money In no better Western
farm mortgages then they would be clearly
culpable. But such is not the case. Maine
savings banks are not allowed to invest In