The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1894-01-26

John W. Donnellan, cashier of the
Commercial National bank was in the
house soon after the passage of the
bin extending the time for redemp-
ton of real property sold under execu-
ton, foreclosure or trust deeds from
six to twelve months. He had with
him for presentation to one Of the mem
bers, TO be used in the consideration Of
this question, a letter, which will be
found in another column, in which loan
company speaks of withdrawal from
this field if such proposed legislation
should become law. Mr.. Donnellan was
sorry the. bill had succeeded in passing
before he had an opportunity to pre-
sent this letter. To a Herald man
he said:
There are several measures before
the legislature which are designed to
aid the debtor class in this territory,
but which are likely, if they are
passed, TO injure them great deal
more than they will help.
The territory is one Of the borrow
ing regions, and the debts secured by
mortgage amount in this county alone
to about $4,000, 000. The banks of the
city are able to handle only about one
third of this, and the rest comes from
outside investors. who operate gener-
ally Through loan companies. Thus
the consequence OF a withdrawal OF
these companies would be a great mis-
fortune.
Now, loan companies simply stand
between the borrower and the original
investor. The money they lend is OBJ
tanned, in the regions of low interest,
by the floating OF debenture bonds, and
me funds thus obtained are loaned
where interest rates are higher The
principal consideration with the COM
panies is the obtaining of prompt pay
ments of interest, so that they may
meet payments on their own bonds.
Anything which interfereS with the
payment of interest will inJure the
company as it then must draw on lrs
principal to meet payment ON its own
debts.
THE Lombard Investment company
and the Jarvis-Conklin Mortgage COM
pany, two of. the largest concerns OPP
Grating in the west, were compelled to
20 into the hands of receivers because
they did not receive their interest
promptly and were compelled TO make
too heavy drafts on their principal.
Other companies, quite as important
Ia the financial world, though not SO
prominent in the west, have been COM
PEELED to go into receivers hands for
the same reasons.
Because of this condition the loan
companies do not desire to make in
VestmentS in any state where they
cannot depend on their interest. Kan
sas has been and is the state most
Stunned, but all the western borrow
ing commemorative have a tendency
toward radicaliSm in legislation con-
corning financial matters, and the
companies are withdrawing from them
whenever this tendency becomes
marked.
Utah has been known to be con-
sentative in these matters and this
field is one into which all the great
western operators have entered. Thus
interest rates here. have become ex-
ceptionally low for this region. The
choice business property can command
money at 6 per cent, and the charges
on other security of lower grades runs
up 61s. z, IL and per cent. In Den
yer. for instance, l am told that choice
business blocks cannot command with
in per cent. Of this rate. This con-
dition in Utah has been brought about
because of competition.
The effect of such laws as that
passed today by the House will be to
make the interest Of the lenders less
certain to be paid on time. Borrowers
who VIII have a years grace without
losing their property are apt to con-
slider that there is no occasion TO en-
barIass themselves in order to pay in
terest. Thus the loan companies are
likely TO De exposed TO great 1HcOQ-
Venience and perhaps loss.
If the legislature should pass the
acts contemplated there is no doubt
but that the borrowers. whom it is
designed to protect, would be greatly
injured. Companies would be likely to
withdraw their investments in mort
cages, as soon as they can unload the
property they have already. The lack
of competition would result in the rails
ing of rates, while the withdrawal of
mortgages would result in numerous
foreclosures.
THE oldest and most enlightened
communities have recognized that the
best policy for a state to pursue in
matters of finance is to allow men to
make the contracts that in their 0pin-
ion are best suited to their interests.
Any legislation that is attempted is
likely to prove injurious to both bor-
rover and lender
THE WOOL MEMORIAL.