Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1906-04-03
Shaw Opposes Measure to Make
Rural Real Estate Security
For Nationals
WHY PROJECT IS OPPOSED
Argument Is Made That They Could
Not Be Quickly Converted Into Cash
in Case of Run or Undue Pressure
Something About the Plan as Out
lined.

t'~>Ns.NA
non has given his consent to the consid-
Grafton by the house of the bill fav.
orably reported from the committee on
banking and currency. authorizing all
national banking associations to lend
money on farm lands when such loans
are properly safeguarded. Senator
Knute Nelson OF Minnesota, has APP
peared before the senate finance COM
mittee and urged 1t to report bill
of the same general character which
he introduced In the senate.
This project Is considered by bank
ing men in congress as one of the most
important in connection with agricul-
tural interests which has come up for
consideration in recent years. The
present system of national banking,
with the prohibition that banks could
not make loans on real estate. was
adopted forty years ago. 1t was done
on the theory that in times of depres-
sion banks could not promptly realize
on this class of security. Representa-
tive Prince of Illinois, who made the
report on the bill from the house COM
mittee on banking and currency, stat
ed In the document that great change
has occurred since the present system
of national banking was inaugurated.
".The real estate of the country" he
said, "has been settled largely by great
cities, towns and villages; large farm
ing interests have grown and extended
all of which has greatly increased the
domestic, commercial, and real value
of all real estate.
Real Estate Loans Usually Good.
at is a fact that all state banks are
permitted to make loans on real es-
tate, and most, if not all, states per-
nit their banks to loan any part or al
of the capital or surplus on real es-
tate, and record of a state bank fall
ing from this clause is exceedingly
rare. A note secured by mortgage
on real estate can be foreclosed as
promptly as any other debt ana IS
made negotiable and money can be
realized on it the same and as prompt
ly as in the case Of other notes, pohds'
or stocks We consider that loan
on real estate made under the provlsi-
ions of this bill would class up IN
soundness and stability with any Hrsl
class loans on commercial or persohai
security; therefore let us remove the
loan ban that has existed against Tue
landed interests of the country WINCH
is the bedrock foundation OF this great
American nation.
"The agricultural interests OF the'
United States are of great Importance
rhey largely are feeding and clothing
the world; they are largely the cause
of orr wonderfully large and growing
exports. and the prime factor IN mann
tanning the trade balances In our IA
yor: they are likewise the prime FACTOR
in having off the debts of our country
while they maintain our large STOCKS
of goods" ,;4+oa
II is the opinion Of the committee
that the enactment of its bill INTO law
would make the national banking sys-
tenn more popular and usetul IN SET
tions where it now is practically use
less 1T contends a national pank can
MOI he of use and serve the wants OF
large agricultural section because I'M
der the present law it cannot properly
serve and promote such interests. Ii
tbe restrictions which country banks
have complained of is removed then
national hanks will be useful in all
sections. and it is claimed will pro-
mote and enhance the value anu pros,
,naritv of the great landed interests OF
the entire country.
How Loans Are Safeguarded.
The bill which the committee mas re-
norted to the house for passage pro-
vides that any national banking assoc
citation may lend 25 per cent OF lts
capital and surplus on unincumbered
real estate. exclusive of all improve
ments thereon, to the extent OF oO per
cent of a conservat tive market valuation
thereof The committee believes the
faot that bank cannot lend more than
o. ner cent of it's capital and surplus
an farm lands is a prudent protection
to keep it from overlooking and lend
ing roo much money on this one class
of securities.
The bill forbids any loan to be made
on farm land ncumbered by prior liens,
mortgages or judgments, or to make
loans on any real estate outside or the
state or territory in which the bank is
located This latter limitation is made
for the reason that any we'll posted Of
ficer of banking institution is pre-
summed to have a fair and general
Knowledge of the location and value of
tho real estate in the state or territory
in which ne is doing business.
Secretary Shaw does not favor the
enactment of this project, and has so
Informed the senate committee on
finance, which referred to him the bill
introduced by Senator Nelson. Senator
Nelson believes his bill is more suited
TO the agricultural interests than the
house bill, and he is satisfied it will
nlace a greater safeguard around the
hanks He would not object to the
banks loaning one-half of their paid
I'm cauital and surplus, while the house
hill limits the loans on unincumbered
real estate to one-quarter. The latter
measure. however. authorizes a loan to
the extent of 30 per cent of the mar
ket value of the property, while Sena
tor Nelson's bill provides it shall not
exceed in any case one-third of the
real cash value. The house bill au-
thorizes any national banking associa-
tion TO make such loans, but Senator
Nelson wants only the banks in places
having population Of 10000 or less to
have this opportunity.
The White Star line steamer Celtic,
which sails for New York from Liver
pool April 6, will take among her pas
sengers Lieutenant Commander John