The morning call., 1893-02-02
MORTGAGES IN SAN FRANCISCO.


show that out of 800 suits commenced last
year only 115 were for the foreclosure OF
mortgages One Of the most invariable
signs of hard times is a large number OF
foreclosures. When the skies are serene
creditors are not consumed with anxiety
when their mortgages fall due and remain
unpaid; so long as the interest is regularly
paid, and the security appears to be ample,
the creditor let's the mortgage run on. But
when commercial disaster unsettles the
value of property, or the legislative power
begins to tamper with the circulating me-
dunn, creditors fall back on the letter of
their bond, and want their money. 1t is
therefore to be Inferred from the small
number of foreclosure suits instituted last
year that capitalists are satisfied with the
financial outlook. and tOlerably well con-
WINGED OF the permanency Of real estate
values. For so much all classes should be
duly thankful
In almost all the States savings banks are
restricted by law to loans on real estate and
Government bonds. 1t is impossible for
Legislatures to discriminate between the
various forms of mercantile and more or
less speculative securities which might be
safe or might be unsafe collateral and
ings banks of this ciiy are required to lend
the S107, 0O0,0 600 which they hold on deposit
on real property But they would be in bad
case. and the city generally would be in bad
case, if it became necessary for them to
enforce their claims by foreclosure. Moth
ing worse could happen than the gradual
transfer of the bulk of the real estate to the
ownership of financial institutions. Such
owners never improve, nor do they turn the
property they own to good account for the
development of industry or the employ ent
of labor We know now ii was in the years
following 1873. when property Of all kinds
passed into the hands Of those who lad ad-
vanced money on 1t. In the East one of the
gravest consequences of a commercial panic
is the string of foreclosures by life insur-
ance companies. After time those instltu-
tions become so loaded with unstable real
estate that their funds are locked up aud
poicy-hoiders grow uneasy
The use of money in loans on bond and
mortgage is one Of the most beneficial uses
to which IL can be put. The owner of the
money gets an income with a risk so Slight
that Ii may almost be considered no risk at
all And the owner Of the property does
not bury the purchase money, but keeps a
portion of it available to breed in pr0duc-
tive industry or trade. But the conditions
Of the loan should never be so framed that
the mortgage creditor shall run a risk of
becoming an involuntary owner of property
which does not want. In he old times
in this country, when money disturbances
were chronic, ii used to be said that
a mortgage was equivalent to a sale, and
that people who loaned on bond and mort
gage never knew whether they were worth
anything or not. In our time increased
wealth and production have impaired more
stability to business. The volume OF mort
cages paid of in this city is about equal TO
the volume Of new mortgages recorded.
Mortgages do not often become sales. and
creditors, unless they have been very care
less, are rarely required to assume the
ownership Of property on which they have
loaned money.
This condition OF affairs, however, as is
shown by the market price Of money. is pc
culiar to this city alone among the cities
west Of the rivers. In such States as Mis-
souri,, Kansas and Nebraska not only are
mortgages generally equivalent to sales,
but the Legislatures have passed stay laws
10 prevent the lawful owners under fore
closure from obtaining possession Of their
property. High rates OF interest tempted
Eastern capitalists to advance money on
prairie Lands. which the farms would net
bring after one or two crop failures. Hence
chronic warfare between mortgage creditor
and mortgage debtor. ending in the i'm
p0yerishment Of the States where the war
ragged and the development OF fine crop OF
economical absurdities. The situation will
cure Itself in tme as it did in Illinois and
Wisconsin. But whichever way the pend
ing controversies end some Of the creditors
will be apt to wish that they had ended the
Their WaV