Telegram-herald. ([Grand Rapids, Mich.) 18??-1892, 1891-04-24
BANKS And BANKING
Commissioner Sherwood Replies 70
the Senate's Inquiries.
THINKS yOCHlsCE OF LAW IS NEEDED
sixty-nine Banking Institutions Report
Loans Exceediax Twenty seven Mil
lions Mostly ON Farm Lands-fhs
LAws Are safe and Ample.

lansing, Mich, April 23.-The Bank
Commissioner, r. c. Sherwood, today
sent communication To the Senate, IN
reply to a resolution of that body call
ing for Information on the subject OF
farm mortgages.
''In response to said resolution" he
Gays, Il beg leave TO report that on
December 10 last-the last report re-
ceiyed-l06 State banks, slxty- y-seyen OF
which were savings banks or banks with
savings departments and two trust
companies reported 10 this department
commercial loans, S21 .62s 1916: stocks,
bonds and mortgages, sle,s4o, ,6S1 .0s.
OF the latter, 8. SOB. f52.s so We're stocks
and bonds and SlS, i92 ,ssi. . We're
mortgages. From examinations made
during the past year my opinion IS.
that large proportion OF money loaned
by the State banks on mortgage secar-
ity is loaned on farms and homes OF
laboring men, and that a very small
proportion is loaned on business prop
erty. as those loans are usually taken
by insurance companies, or eastern
than western banks charge, VIZ: 90
per cent. which Is the average rate OF
interest charged by our State banks.
In this connection | might say, that the
commercial loans are not all made 10
business men. Banks IN our farming
districts loan TO farmers more readily
than they do t. business men, and
without mortgage security.
Different Kinds of Banks.
In complying with your request to
"advise the Senate OF such changes IN
the banking law OF the State as may be
perfectly safe TO the investor and afford
relief to the farmer" l will say that, IN
our State, we have three classes OF
banks, viz: private banks, National
banks and State banks. Private banks
not being under supervision, l am
unable To inform you how, or IN what
manner they loan their deposits. Ma
tIonal banks are restricted to COM
mercial business, and cannot loan on
mortgage security. State banks are
permitted by law to transact both II
commercial and savings business. COM
mercial banks are especially for the
accommodation of farmers and busl-
ness men. They are and should he ex-
clusively devoted to the collection, safe
keeping and employment IN temporary
loans the floating capital OF the country.
Every farmer, merchant and manufac-
turer Is dependentupont the commercial
banks for funds TO enable them TO
market the products of the farm, and
the goods of the merchant and manu-
facturer. Our State banking law per-
mits commercial banks To loan on
mortgage security an amount not ex-
ceedlng 90 per cent. of their capital
stock, and in my judgment the law IN
this respect should not be changed.
No Changes Are Needed.
The savings departments of our State
banks receive and care for the surplus
money of the country, that Is not need
ed in active business. They are re-
quired by law to keep on hand Is per
cent. of their deposits III cash, TO pro-
vide for the current daily business de-
mands. Thirty-four per cent. they can
loan on negotiable paper secured by
coliaterals aud short time commercial
paper, that they may be able TO meet
unusual demands without being COM
PEELED to dispose of mortgage securities.
Fifty-one per cent. they are compelled
farming lands are the best real estate
security known, they are very desirable
for these permanent loans. ! can not
see now the law regulating loans could
be more just or equitable and at the
same time afford proper security TO the
thousands of depositors who patronize
savings banks.
In order TO benefit farmers and
others who desire to borrow on mort
gage security, suggested in my last
annual report pages l6 and 10 that
the banking laws be amended so that
certificates O. deposit could be ciassed
as savings deposits. The amendment
you wisely adopted, and when 81 ,054,-
72A25-the amount OF certificates of
denosit reported last December, which
were formerly classed as commercial
depos .ts-are catered and loaned ms
savings deposits are required TO be
loaned, think there will be no demand
for change in the banking law, or
complaints from borrowers that they
can not obtain money from banks on
suitable mortgage security.