The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-01-03
THEY CANNOT AGREE
OPINIONS DIFFER ON PROPOSED
AMENDMENT TO NATIONAL
BANKING LAW
TO ALLOW REAL ESTATE LOANS
Congressman McCIeary Has Written
to Over Two Thousand Bank
Presidents Asking for
Their Views.

Congressman McCleary's proposed
amendment to the national banking laws
which will allow national banks to loan
money on real estate, is viewed different
ly by the bankers Of this city. Some Of
the heads Of banking institutions favor
the amendment, others are opposed to 1t,
and still others favor a compromise. The
reason for the amendment as given by
Congressman McCleary is to make the
| banks in rural communities more useful,
where real estate is practically the only
security that is given.
Congressman McCleary's letter to the
bankers is as follows:
Dear Sir-It has been suggested to me
by several gentlemen interested in ma
tional banks and DESTROYS Of rendering
them as useful as possible to the COM
munities in which they are located, that
| it would be we'll to amend the national
bank act so as to permit national banks
| in the smaller places. where the clientele
of the banks is largely rural to loan
| portion Of their resources on real estate
! security. If the proposition seems wise to
those who have practical knowledge OF
| such matters, l may introduce bill af-
ter the holidays providing for the amend
ment With that in view l desire the
| benefit Of your judgment in the matter,
and will appreciate an early answer to
| the following questions: +
FirSt-Do you believe that such an
| amendment would be in the public inter-
est? If so. why? If not, why not?
| Second-If your first answer be af11rrna-
| tive, where would you draw the line be-
! tween those national banks that may and
| those that may not make such loans?
| Would you make the capitalization Of the
bank or the population Of the town where
j the bank is located the basis of such
classification? Why?
Third-Just what percentage and of
what would you specify in the amend
| ment? That is would you grant the per-
| capital of the bank or as to a certain
| percentage of its loanable funds? Why?
| Suggestions running from Is per cent to
/ 40 per cent of the capital of the bank
| have been made.)
| Fourth-Would you limit the operation
| of the amendment to farm loans or would
you include town property? Why?
| t1fth-Would you permit loans under
| the amendment on first mortgages only,
| or would you permit such loans as meet
| the approval of the board of directors?
| Why?
Sixtle-Would you require that all loans
under the amendment should have the
| approval of the directors before being
| made? Why?
| tons as to the safe operation of the
amendment if it should be made?
| Eighth-Are You willing to have me
| quote you on the above points in any re-
Respectfully yours,
j. T. McCleary
A canvass of the bank presidents of
the city yesterday revealed the fact
that there would be no unanimity on
| the proposed amendment and that its
| efficacy was viewed in different lights by
| different men. The following are sam
pies of the opinions expressed:
President J. w. LusE, of the National
/ German-American bank: Il should be
| heartily in favor of this amendment as
| I believe that it would do just what Is
| expected. It would make the rural banks
more beneficial to the communities in
which they exist, and, in my opinion,
! it would be a safeguard. Under the pres
ent banking law, which prohibits ma
| tional banks from lOaning money on real
estate, the rural banks are frequently at
loss to find a safe investment, and
| in many cases have to accept question
able paper in order that they may get
their money out. All this time there are
| plenty of good farms in the neighbor-
hood which would be as safe an invest
ment as it is possible to discover.
Line Is Hard to Draw.
"As to drawing the line between those
| national banks that should be allowed
| to loan money on real estate and those
| that should be prohibited from so doing,
| it would take a great deal of time and
| study to answer correctly. That VIII
have to be slowly worked out, and am
! not prepared to say anything about it
at the present time. should think that
| the capitalization of the bank should be
the proper basis for the classification.
"As to what percentage of the cap-tai
| stock should be in favor of being loaned
out on real estate. do not know exactly,
but think that 40 per cent is entirely
too small. I would provide, however,
| that the aggregate Of such loans should
| not exceed the capitalization of the bank
in question.
Il would favor the loaning of the
| banks funds exclusively on farm prop
erty. 1t is always good and always ca
| pable of earning something, and it's
| value is comparatively stable. On the
other hand, city property is likely to be
| idle a good deal of the time, and then.
| it is susceptible to violent fluctuations
/ would also confine such loans to first
mortgages.
1.-The reason for prohibiting national
banks from loaning money on real estate
is that it is not considered quick as
set, that is one that can be turned
| quickly into cash should the occasion ar
rive. think that in a rural community
| all frst-class farms are fairly quick as
sets, and cash can generally always De
| found for them. Taking all this into
consideration, I think that the amend
ment would be helpful one
Kenneth Clark, president of the Mer-
chants National bank: IT am opposed
to the amendment and cannot see that
| there is any call for one of its nature
In the first place there are in every
community real estate offices and other
concerns of like nature that make
a business of loaning money on real es-
tate, and any farmer that finds himself
in need of ready cash can, if he has the
security, get what he desires from them.
! This being the case I do not see where
an amendment permitting the national
| banks to loan money on real estate is go